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Ask HN: Stripe holding funds for 120 days for no reason

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Re: Ask HN: Stripe holding funds for 120 days for no reason

#41

Post by JumpCrisscross »

edwinwee wrote: post #31
jjallen wrote: post #28

Sounds like they could be using your cash as funding. If they hold a bunch of cash from people it is effectively theirs for that period of time. This could prevent them from needing to raise a funding round if done enough. Some businesses are literally customer funded like these. If you want to read more search for "negative cash operating cycle".

We don’t touch reserved funds (and don’t earn interest off them either). The funds are saved for individual Stripe accounts and are only used to cover refunds and disputes from their customers.

> don’t earn interest off them either

Why not? You could use it to lower the cost of your services. (Someone is obviously earning interest on it. Better you than your bank.)

Re: Ask HN: Stripe holding funds for 120 days for no reason

#44

Post by KptMarchewa »

colechristensen wrote: post #14
etaioinshrdlu wrote: post #13

Sounds exactly like PayPal. Is there a law of nature that forces payment processors to act like this?

The business of payment processing is actually the business of managing fraud, and everybody tries to lower costs as they grow and age. Unless there’s specific external regulation, there’s a regression towards being awful.

I would guess AML, not fraud.

Re: Ask HN: Stripe holding funds for 120 days for no reason

#45

Post by citizenpaul »

etaioinshrdlu wrote: post #13

Sounds exactly like PayPal. Is there a law of nature that forces payment processors to act like this?

Payment processing is an unbelievably competitive business. I've done some work there and wow the owners... I can't speak to the whole world but what I saw of it. The intent is to start off scummy on purpose and hope to make a business of it later if you get traction is how I would describe it.

Re: Ask HN: Stripe holding funds for 120 days for no reason

#46

Post by shaburn »

c7b wrote: post #21

Sue them for lost interest. You should have a strong case in principle, however, in practice, it's most likely not worth it for you (which is the real reason why this is happening). But if you have a lawyer friend who can give a first opinion for free, you could give 'em a call.

Sadly, because you are incorporated, I do not think you can go the small claims court route. Maybe hit up the legalist for funding and or check with an attorney who does financial class action in San Francisco. You are probably not alone and considering the nature of your business being small, you may have a claim that it destroyed your operations and ability to earn(which they probably did in reality). *Not a lawyer and not legal advice.

Re: Ask HN: Stripe holding funds for 120 days for no reason

#47

Post by inetknght »

JumpCrisscross wrote: post #39
jjallen wrote: post #36

Earlier quoted context omitted.

They can make stuff up, right? They are allowed to say "we are keeping your money for 120 days because of some security ...". Who is ever going to know this is valid/true or not, unless it goes to trial somehow and there is a lot of discovery done. They are literally funding themselves out of deposits, in a small way if they keep any persons money for any period of time. If they start doing it to lots of people for m…

> are literally funding themselves out of deposits No, they probably are not. It’s illegal and money transmitters are regulated. What they are doing is collecting interest. One tends to see less scrupulous transmitters hold funds longer when rates rise. I didn’t think Stripe fell in this category, but it’s becoming difficult to say. > good one is business selling gift cards You’re right. (Also customer deposits.) Thi…

> It’s illegal and money transmitters are regulated.

It's only illegal if the regulator enforces action. Good luck getting regulators to enforce action on something like this.

Re: Ask HN: Stripe holding funds for 120 days for no reason

#48

Post by unethical_ban »

WheatMillington wrote: post #38
johnhaddock wrote: post #35

I’m the person leading the project to make sure that people have fewer bad experiences with Stripe. I’m not sure what is driving the uptick in posts on the subject to HN in particular (obviously we pay attention to broader online discussion in addition to monitoring our support systems, though we know it creates an incentive for people to publicize their situation). On the topic of Stripe and these kinds of incidents…

>I’m the person leading the effort to make sure that people have fewer bad experiences with Stripe. No offence, but you're doing a bad job.

The person posts an essay on their perspective and that’s what you have to say?

Re: Ask HN: Stripe holding funds for 120 days for no reason

#49

Post by Zebfross »

TAForObvReasons wrote: post #43
Zebfross wrote: post #23

We switched to Authorize.net because the business risk at Stripe was just too high. The api isn't near as good, but it works, and we don't worry about random account freezes.

How hard / how long did it take to switch?

It all depends on your setup. The technical work was only a week for us. Getting approval and setup with a merchant account takes more time though, and they even came to do a physical inspection of our place.

Re: Ask HN: Stripe holding funds for 120 days for no reason

#50

Post by consultutah »

juanse wrote: post #9

This should be illegal. It is literally a loan with no interest.

That would be an interesting way to solve this type of problem: make the payment processor pay interest on money withheld. Even at a low interest rate, it would hopefully incentivize them to figure out better ways of handling the risk. Are there any US legislators on HN?
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