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Stripe Chargeback Protection

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Re: Stripe Chargeback Protection

#181

Post by mattferderer »

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.

I'm curious if there is a way we could avoid the cost all together if we don't need the money deposited in our bank accounts right away?

I work for a non-profit & we had some very large donations come in online through Stripe. Someone did a typo donated $10,000. I'm sure we could set some max limit & say no donations larger than $X but it was common to have $1,000 donations. Even with a $1,000 donations the fee gets expensive.

In our case, we don't need those funds immediately. We would much rather not have access to them for a month & not have to worry about a request for the funds to be refunded.

Re: Stripe Chargeback Protection

#182

Post by amyjess »

scarface74 wrote: post #160
amyjess wrote: post #129

Earlier quoted context omitted.

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.

Unfortunately, this is exactly what happens with identity theft.

Imagine if someone stole your credit card number, ordered $5000 worth of furniture with it, had it delivered, and then you discovered the unauthorized purchases on your account and disputed the charge. The vendor has no choice but to just eat it.

It's unfortunate, but it happens, and the only way to mitigate it is to raise prices to offset this kind of losses.

Re: Stripe Chargeback Protection

#183

Post by Spooky23 »

wbl wrote: post #109
Spooky23 wrote: post #51

Earlier quoted context omitted.

Keep in mind that making it easy to terminate subscriptions eliminates most of those chargebacks. It’s one of the reasons that I use Apple whenever possible to handle recurring subscriptions. It takes about 10m to file a dispute with American Express. If figuring out how to cancel a subscription takes longer, I’m cutting my losses at 10m and heading to Amex.com. Perhaps industry standards around subscription manageme…

There is no legitimate retention management. If I want to cancel I've made clear what I want to do. Making it take longer then a few minutes is a waste of all our time.

There is a fine line in my POV.

Word trickery and playing games with buttons is over the line.

I think it is ok to say “Hey, you’re paying $20/mo for the super plan, and don’t use feature X, but can do the middle plan for $12”. I think it’s ok to make sure that people understand that data is deleted if they take the action. But it’s easy to drift into dark patterns.

Re: Stripe Chargeback Protection

#184

Post by amirhirsch »

nickjj wrote: post #156

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…

The value is there is you have greater than 1 in 250 transactions charged-backed and lose. This is high, but certainly within the range -- consider that Signifyd has business for their chargeback protection at a 1% rate. Of course Stripe has more data for better risk modeling....so perhaps Stripe should not be allowed to charge for additional charge-back protection services since it implies they now have a dis-incentive to prevent charge-backs for customers who aren't paying extra.

Re: Stripe Chargeback Protection

#185

Post by nickjj »

amirhirsch wrote: post #184
nickjj wrote: post #156

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…

The value is there is you have greater than 1 in 250 transactions charged-backed and lose. This is high, but certainly within the range -- consider that Signifyd has business for their chargeback protection at a 1% rate. Of course Stripe has more data for better risk modeling....so perhaps Stripe should not be allowed to charge for additional charge-back protection services since it implies they now have a dis-incent…

I guess I'm out of touch on what it is like for physical products.

I only sell digital products but the dispute rate is over an order of magnitude less than 1 in 250.

Re: Stripe Chargeback Protection

#186

Post by amirhirsch »

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.

Will Stripe still take efforts to prevent fraudulent transactions for customers who don't pay an extra 0.4% for it?

Re: Stripe Chargeback Protection

#187

Post by amirhirsch »

nickjj wrote: post #185
amirhirsch wrote: post #184

Earlier quoted context omitted.

The value is there is you have greater than 1 in 250 transactions charged-backed and lose. This is high, but certainly within the range -- consider that Signifyd has business for their chargeback protection at a 1% rate. Of course Stripe has more data for better risk modeling....so perhaps Stripe should not be allowed to charge for additional charge-back protection services since it implies they now have a dis-incent…

I guess I'm out of touch on what it is like for physical products. I only sell digital products but the dispute rate is over an order of magnitude less than 1 in 250.

I sell a physical product on a Shopify store. Charge-backs cost me $8000 out of >$3,000,000 revenue (14 orders out of 11362). At least one of them (totaling $2000) I should have known was fraudulent because I even asked for photo ID confirmation and received a scan of a print-out which I didn't check well enough.

I simply started to require PayPal for international customers instead of Stripe checkout and that reduced fraud to zero.

(edit: PayPal fees are like 4.4% for international, but it's cheaper than using something like Signifyd on-demand which takes 4% on top)

Re: Stripe Chargeback Protection

#188

Post by eeke »

amirhirsch wrote: post #186
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.

Will Stripe still take efforts to prevent fraudulent transactions for customers who don't pay an extra 0.4% for it?

I work at Stripe. Yes, absolutely. We’re continuing to invest in Stripe Radar and our machine learning fraud prevention (the team is doubling by the end of the year!). Radar is included at no additional cost in our standard payments processing pricing (2.9% + 30 cents in the US, with similar pricing elsewhere).

Re: Stripe Chargeback Protection

#189

Post by amirhirsch »

necubi wrote: post #168

Chargeback insurance/protection is not new in the industry. And despite how nice it sounds to not have to worry about chargebacks, I think it's a bad deal for almost everybody. The basic problem is that your incentives are not aligned with Stripe's: you make money when a good sale goes through, but that's when Stripe might lose money (if the transaction ends up being fraudulent). So they have an incentive to block an…

I agree with you. Incentive alignment is a major issue--I asked the PM in this comment thread and hope for a response, because I think this issue needs to be discussed.

Re: Stripe Chargeback Protection

#190

Post by thom801 »

I just have to point out this little page of caveats: https://support.stripe.com/questions/payments-that-qualify-f...

Biggest thing for our company: "The payment must be submitted to Stripe by your customer via Stripe Checkout. This means that recurring charges are not eligible for Chargeback Protection"

Meaning this does not protect our B2C subscription company from any recurring charges which is a huge percentage of our charges if not all of them.

Also: "The dispute must be one of the following types of reason codes (as identified by the relevant Card Network) listed in Appendix 1 of the Terms of Service: Visa: 10.4 Other Fraud - Card Absent Environment Mastercard: 4837 No Cardholder Authorization Mastercard: 4840 Fraudulent Processing of Transactions Discover, Diners Club, JCB: UA01 Fraud Card Not Present Transaction American Express: FR2 Fraud Full Recourse Program American Express: FR4 Fraud Full Recourse Agreement American Express: F29 Fraudulent Transaction - Card Not Present American Express: 4534 Multiple Records of Charge (ROCs); Card Member denies participation in Charge American Express: 4540 Card Not Present; Card Member denies participation in Charge"

Many of our chargebacks fall outside of these chargeback reasons so it would likely not be worth it for us to use this feature, as I'm sure is the case for many other subscription based companies.

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