Stripe raises $600M at nearly $36B valuation

might be nice for employees but borders on negligent when private markets are practically begging for you to take their money and going public has alot of hoops and disclosures

Josh, I appreciate you being receptive.

But I've been asking Stripe for this since 2015. I don't know what info I can possibly offer you that you surely haven't heard from tons of customers over the years.

Billing the vendor for refund fees is the biggest gripe I have. It is not only for the self-centered reason that it would affect my business – it is because it contributes to the consolidation of ecommerce to only a few select companies. It adds friction to consumer transactions with small businesses, causing consumers to become aggravated with these small businesses. It conditions consumers to believe it is easier to deal with large businesses that always seem to have a "cancel" button and easy-order-cancellation policies, opposed to the small businesses that just seem to make things hard and expensive for no good reason. This will contribute to the consolidation of ecommerce to a small number of multi-billion dollar players like Walmart, eBay, Amazon, etc. Allow me to explain:

If someone makes a purchase of a $1500 ultrasonic cleaner from me, and then realizes they made a mistake, I now have to tell them there’s a $43.50 restocking fee, even if they call me 2 minutes after they place the order. This will leave a disgusting taste in the customer’s mouth, but I have to do it, because I can’t expose myself to a $43.50 fee for something I have zero control over. That customer may eventually notice that Amazon, eBay, Walmart, etc, do not charge such a fee. The customer has no idea why – they just know dealing with Amazon means less friction. The customer will now utilize Amazon more.

Many will say that this is a dumb gripe. “If you don’t like it go somewhere else!” PayPal instituted this policy as well. They backed down temporarily after people made a stink about it, but months later continued forward with the policy. I currently use a merchant services provider that does not implement these fees, but for how long?

My time in my industry has taught me that companies will often wait for one “outlier” to make controversial reforms to their platform/products before doing it themselves. Whether it is gluing the battery inside of a cellphone, or adding strange fees to transactions. Once a profitable, anti-consumer move succeeds with the company not going out of business, it emboldens other firms to do the same.

My merchant services provider doesn’t charge this fee. Yet. But they saw Stripe charge it, and get away with it. They saw PayPal charge it and have another more profitable quarter. The outrage lasted a week, the increased profit lasted forever. “Gee, it isn’t a business killer after all. Maybe we should do it too!” will come up in corporate boardrooms across America.

Then, we’re left with a landscape where the only companies left in ecommerce who can offer customers friction-free order cancellations are Amazon, eBay, and Walmart. Who wants that? Yes, people can say “just absorb the fee if you don’t want your customers to be mad at you.” How? I am already competing as a dude with no outside financing with a trillion dollar company – I’m winning if I am making any sales at all! Now I’m expected to compete on price when I have to absorb fees when customers cancel an order?

Let’s say you manage to claw your way into a market by offering a better product, or after sales service on that product to the point where you can compete with Amazon. That is a miracle in and of itself. To then have to deal with a minefield of additional charges that your competitor doesn’t have to is just another nail in the coffin of small-business ecommerce.

I find it awful, and I protest using these services. I cut my exposure to paypal by about 95% and dodged a bullet in not signing up for stripe. I suggest the same to my listenership anytime someone brings up or mentions a merchant services provider that I know charges this fee. Even if they say it won't affect their business much because they do not deal with lots of cancellations, it is the greater implication I make them aware of. No one wants a market where the only companies with a free "cancel order" button on their site are eBay and Amazon.

Scott Galloway also has a lot of excellent content with arguments on breaking up Amazon. Whether or not one agrees with his solutions or assessments of the problems Amazon creates and how to fix them – it is clear that they are dominating the race. I am not suggesting that we hold Amazon back – just that we don’t purposely trip companies doing their best to keep up.

Among other things, it appears that Paddle

1. reserves the right to unilaterally vary the contract in any way, with immediate effect and without actively notifying the merchant

2. ensures that if anything goes wrong, any legal action against it by its merchants would have to be taken in another country and under another legal system, even if Paddle operates in the merchant's own country

3. takes extensive control of the product or service they are selling on their merchant's behalf, to the extent that they can sell it to whoever they want, sell it at whatever price they want, give demos to whoever they want, etc.

4. requires that any software it is selling on behalf of its merchants be bug-free, and that the merchants accept liability for anything bad that happens if it isn't.

It's hard to take any service seriously when it has terms like that in its standard agreement. Unless these kinds of terms are unenforceable where you are (or where Paddle is, given the above?) and you have a legal opinion telling you so that you trust enough to bet your entire business on it, it seems like you'd have to be crazy to accept them.

I've seen some very one-sided terms from other payment services before, but I take them at their word that those terms are typically required by the giants behind the systems like the card networks and banking groups. I think some of those should be also be unenforceable by law, but right now that seems to be the price of admission. I've never seen anyone else seriously suggesting the kinds of terms that Paddle is, though.

Edit: Changed to present tense, after checking Paddle's legal terms of use at the time of writing at https://paddle.com/legal/ to confirm that these criticisms are still current. The first two points above are in the preamble at the start of the document. The third is under 4.2 and 6.1. The fourth is under 13.1(ii) and 13.2(ii).

Not affiliated and no issues. These are sweeping generalisations and wholly unhelpful.