Stripe Chargeback Protection • Hacker News Board

Re: Stripe Chargeback Protection

#151

Post by trimbo » Mon, Jun 03, 2019, 4:26 PM UTC

jasonkester wrote: post #10

But this isn't the product I want. I don't want to ever fight chargebacks. Because my policy is to never take money from people who don't want to give it to me. I want to automatically refund every chargeback attempt without it affecting my ability to charge credit cards. One of my businesses targets consumers, who have this amazing ability to "forget to cancel" or to have "cancelled 3 months ago, but for some reason…

> We'll happily refund every penny you ever paid us if you simply ask

IANACFO, but I think your balance sheet for this business is going to be pretty wack. To guarantee this, you need to keep a pool for refunds (edit: and with your specific guarantee, isn't it all revenue ever?). If you don't, that can be a real issue with the business. This happened at Groupon:

https://www.cfo.com/management-accounting/2012/04/groupon-re...

Re: Stripe Chargeback Protection

#152

Post by penagwin » Mon, Jun 03, 2019, 4:26 PM UTC

jliptzin wrote: post #135

xpose2000 wrote: post #132

Earlier quoted context omitted.

So, .4% fee for $10,000 in sales amounts to $40. And losing one chargeback dispute costs you $15, plus time and effort to fill it in and submit it. Not to sound cynical, but odds are you will probably lose it anyways because the customer didn't feel like paying anymore. Am I missing something? The chargeback protection fee doesn't sound terrible

Yes I do lose most disputes regardless of what the situation is, and I did forget about the $15 fee. I guess it really depends on the type of business, will probably make sense for some, but as a consumer I do see a lot of small businesses out there that should be looking first at how to get their chargeback rate low enough that they don’t need something like this in the first place.

I believe it's happened before where people have setup bot accounts to buy game licenses from indie developers, just to resell the keys on G2A/Kinguin. However they do it with stolen credit cards, so the indie developers get hit with a 15$ charge PER order. If there's 1,000 keys, that's 15,000$ in chargeback fees.

So it might be reverse, it might be a no brainer to accept this extra protection because like you said, 40$ fee @10,000 isn't that big of a deal, given only 3 chargeback fees are necessary to break even. Unless you can REALLY manage your chargebacks. If your product costs 20$, so 500 people buy it, you only need a .6% chargeback rate before you should've taken the extra protection.

Re: Stripe Chargeback Protection

#153

Post by quelltext » Mon, Jun 03, 2019, 4:29 PM UTC

ijidak wrote: post #108

This is huge! Our business sales registrations to educational events for a specific industry. We use Stripe to process. We have a strict non-refundable policy on ticket deposits because, otherwise, we can't determine how many seats are left for each event and we lose the revenue on that empty seat. We often get unscrupulous customers who claim they don't recognize the charge because they decided not to attend in the…

What categories of disputes are those?

My guess is that as with 3D Secure only actually "fraudulent" (e.g. payment not authorize) disputes are covered, but "service not rendered" (?) ones are not.

Re: Stripe Chargeback Protection

#154

Post by Thaxll » Mon, Jun 03, 2019, 4:36 PM UTC

jasonkester wrote: post #10

But this isn't the product I want. I don't want to ever fight chargebacks. Because my policy is to never take money from people who don't want to give it to me. I want to automatically refund every chargeback attempt without it affecting my ability to charge credit cards. One of my businesses targets consumers, who have this amazing ability to "forget to cancel" or to have "cancelled 3 months ago, but for some reason…

You know that charge back costs you money right?

Re: Stripe Chargeback Protection

#155

Post by huac » Mon, Jun 03, 2019, 4:40 PM UTC

gist wrote: post #139

eeke wrote: post #24

Earlier quoted context omitted.

We can send you a webhook on every dispute being created ( https://stripe.com/docs/webhooks ) and you could use the API to either refund the underlying charge or accept the dispute (and refund the underlying charge). We can also give you access to receiving early fraud warnings from issuers (like Visa TC40s). These are notifications from the issuers that the customer is likely going to dispute a charge. If you're hap…

Is it possible to have the extra fee (.4%) only on some transactions or does it have to be applied to the entire account? For example in what we do we have very large transactions where we know the customer very well and we don't need this. But other transactions are typically small but more importantly they are of a different type where the risk of fraud is much higher and the protection is warranted. Just wondering…

adverse selection ;)

Re: Stripe Chargeback Protection

#156

Post by nickjj » Mon, Jun 03, 2019, 4:43 PM UTC

How did you arrive at 0.4%? That seems like a lot to pay for insurance.

If they take 2.9% normally, 0.4% is about 14% extra in fees for every transaction you make, but disputes on a legitimate product are probably 1 in 5,000 (and Stripe will charge you a $15 flat fee if you lose the dispute which you will if it was related due to credit card fraud).

If you sell 5,000 products at $50 that's $250,000 in revenue. Stripe would normally take 2.9% which is $7,250 but now with "fraud production" they would take 3.3% for $8,250. So you've just spent an extra $1,000 out of pocket to save yourself $15 in a dispute fee that Stripe charges you. That's really steep.

If you had 66 fraud charges within 5,000x $50 transactions (to break even on fees), I would really look into why you're getting so many disputes. That's astronomically high.

Re: Stripe Chargeback Protection

#157

Post by gingabriska » Mon, Jun 03, 2019, 4:43 PM UTC

jasonkester wrote: post #10

But this isn't the product I want. I don't want to ever fight chargebacks. Because my policy is to never take money from people who don't want to give it to me. I want to automatically refund every chargeback attempt without it affecting my ability to charge credit cards. One of my businesses targets consumers, who have this amazing ability to "forget to cancel" or to have "cancelled 3 months ago, but for some reason…

But what if you've physical products where you already inoccured sufficient cost. What if someone buys from you again and again and chargeback each time?

Re: Stripe Chargeback Protection

#158

Post by Illniyar » Mon, Jun 03, 2019, 4:48 PM UTC

jliptzin wrote: post #118

Has anyone done the math on this? You’re paying an extra 0.4% fees per txn which is a lot. So your dispute loss rate would have to be > 0.4% for this to make sense. That seems pretty high. That probably means your overall dispute rate is above 0.6%. In my experience you can get your dispute rate well below 0.1% (effectively a non-issue) by making sure your support channels are working and not clogged, and you have a…

Chargebacks happen. Wven if you do all you mentioned, sometimes people see a charge they don't recognize or forgot about and do a chargeback.

Beyond everything that 0.4% also buys you ptedictability, which is often more precious than margins.

Re: Stripe Chargeback Protection

#159

Post by nickjj » Mon, Jun 03, 2019, 4:50 PM UTC

eeke wrote: post #8

I’m the PM on Chargeback Protection. Startups told us they don’t want to deal with the hassle and unpredictability of chargebacks; that’s why we built this. Happy to answer any questions you have.

Before this, if a customer opened a dispute and you won, you (the business owner) didn't have to pay any dispute fees without having to pay for anything extra. It was just a part of the standard Stripe offering.

You even wrote this on your site's documentation[0]. Here's what it says as of right now:

> There is a dispute resolution process through which you can respond and submit evidence to make your case that the payment was valid. If the dispute is found in your favor, the disputed amount and fee is returned back to you.

If we don't opt into this new fraud protection service, are all dispute fees still waived if the business wins the case?

[0]: https://stripe.com/docs/disputes

Re: Stripe Chargeback Protection

#160

Post by scarface74 » Mon, Jun 03, 2019, 5:03 PM UTC

amyjess wrote: post #129

scarface74 wrote: post #22

Earlier quoted context omitted.

Would you feel that way if you were selling physical goods or even services where you had to pay workers - like a lawn business? It sounds like you are selling a near zero marginal cost software business.

People who sell physical goods bake the cost of these losses into their pricing. In fact, any large business will have financial analysts whose sole job is to calculate exactly how much they'll need to inflate their prices to make up for losses due to fraud, theft, accidents, and the like. It's kind of like being your own insurer, except the customer pays your premiums.

But I doubt that I could order $5000 worth of furniture, have it delivered, dispute the charges and then the vendor just shrugs.

But, I’ve never disputed charges outside of obviously being double charged. Most of the time, I’ll speak with vendor.