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The madness of SaaS chargebacks

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Re: The madness of SaaS chargebacks

#51

Post by evermike »

ToucanLoucan wrote: post #36
pjc50 wrote: post #17

Earlier quoted context omitted.

> no ridiculous fees incurs .. to the user. What do they charge the vendor, or it just the 30% of every transaction (which some might consider ridiculous).

As a customer, your business model isn’t my problem. I’ve had numerous frustrating experiences with cancelling these and similar things. If you make it a chore, even in the slightest way, chargeback. Suck it up. Life is hard enough and I have enough things to do that actually require energy and focus, and I refuse to spend any of it trying to convince you that don’t need your SaaS product.

Well, I treat other companies and people the way I’d like to be treated myself. Knowing that a chargeback is unpleasant and creates extra costs, I always first write to their support.

Re: The madness of SaaS chargebacks

#52

Post by evermike »

lotsofpulp wrote: post #44
evermike wrote: post #15

Earlier quoted context omitted.

I know for sure that if users start filing complaints against you with Apple, they can simply ban your account entirely and for long. Some companies never recover from that and end up shutting down.

Are you sure? I am not referring to Apple’s App Store, I am only referring to the Apple Pay payment mechanism, which presumably is a relationship between the payment processor and Apple. The bank would still be the one dealing with chargeback and chargeback related costs, I do not see why Apple would care or get involved. However, I wonder if the biometric verification of Apple Pay merits a different response to char…

Sorry, I probably misunderstood and confused things. I was of course talking about the Apple App Store, when users file complaints about the app itself.

Re: The madness of SaaS chargebacks

#54

Post by shkkmo »

evermike wrote: post #50
miyuru wrote: post #45

I just created an account, and the subscription page in the app shows a $50 charge, while the public pricing page shows $10 with 'Minimum 5 seats' in small letters. Your post says about $10 charge, I am not sure how it happened with current flow. Be very direct about the pricing, and please use your own product so customers are not confused. https://beeimg.com/view/d3295639248/

I appreciate your attention. Let me explain. In the post I mentioned that we build several products. I didn’t want to list them all, because I always feel a bit awkward about self-promotion. My goal with the post was to spark a dialogue, not to advertise. RE pricing page: yes, we do state that there’s a minimum of 5 seats. But there are no chargebacks here, since we don’t take a card upfront and we don’t bill in a hi…

> But there are no chargebacks here, since we don’t take a card upfront and we don’t bill in a hidden way. In the worst case, if you missed or didn’t read that detail, you can simply decline and not subscribe after the trial.

This is a dark pattern. You should display the actual minimum monthly charge in text that is at least as large as the price per user.

No, the worst case is the customer gets the $10 price into their head and then doesn't see the actual monthly charge amount when they subscribe. You are now charging the customer 5x what they expected to pay.

Re: The madness of SaaS chargebacks

#55

Post by Illniyar »

evermike wrote: post #2

TL;DR: We run multiple SaaS products on Stripe. Even with clear renewal reminders, invoices and easy cancellations, some users skip refunds and go straight to chargebacks. A $10 payment ended up costing us $43.95 recently. Banks almost always side with the cardholder, and the only reliable “win” I’ve seen is when the customer withdraws the dispute themselves. So here’s my question to the community: What’s really goin…

I assume if you are running multiple SaaS you already discovered this - but the expectation is that you will amortize the cost of a chargeback into your price if you are a legit business.

Card-not-present (I.E. internet transaction) has a lot more merchant fraud then friendly fraud (what we call these cases) and the incentives for both merchants and banks is to make sure the customer never loses trust in the system. If people were afraid to use their cards on the internet everyone loses.

It doesn't make sense for both the merchants and the banks to arbitrate every 10$ transaction. I doubt your case even reached a human, or if it did they even gave it a minute of thought - you are just someone who does not know the rules to them.

Now if a customer abuses the chargeback mechanism, he'll have is card revoked, probably be blacklisted and his life would be an insane amount of complicated from now on. But you'll never see these cases. Be sure that if someone could abuse the chargeback mechanism to the extent you mentioned, the system would be unusable, the fact you get chargebacks only rarely is a testemant that there is policing going on at the bank side.

It's just not 100%. Like Patio11 says - the optimal amount of fraud is non-zero[1]

If you have a large chargeback (let's say 1000$ and more) you might actually get someone to review it, and there's a slight chance you'll win if the case is good. But the system is not geared for that.

It's geared towards you amortizing the cost of chargeback into your price - and eventually the people who pay it is always the customer, not the merchant.

[1] - https://www.bitsaboutmoney.com/archive/optimal-amount-of-fra...

Re: The madness of SaaS chargebacks

#56

Post by madeofpalk »

sambroner wrote: post #28
amelius wrote: post #25

Earlier quoted context omitted.

What I don't understand is why my banking app does not show a "cancel subscription" button with the payment. When I click that button, the recurring payment is automatically canceled, and the SaaS company can check that and know that I unsubscribed. Or something along these lines. There is already a power-asymmetry between consumers and companies. This should not extend to unsubscribing. Here, the consumer should hav…

How would this be tooled? A chargeback, a deep link to the cancel page, an API connection between bank and subscription? Chargeback is easy because it's under the card co's control. Deep link would require knowing the cancel page of every sub, plus handling auth factors. API connection would two way integration, with scoped auth between every bank and every service. Hopefully managed by an SI or aggregator, but the b…

> an API connection between bank and subscription?

This already exists. Mastercard (and Visa?) has an API that lets banks notify subscriptions when your card changes to update the card number https://developer.mastercard.com/product/automatic-billing-u...

Re: The madness of SaaS chargebacks

#58

Post by evermike »

Illniyar wrote: post #55
evermike wrote: post #2

TL;DR: We run multiple SaaS products on Stripe. Even with clear renewal reminders, invoices and easy cancellations, some users skip refunds and go straight to chargebacks. A $10 payment ended up costing us $43.95 recently. Banks almost always side with the cardholder, and the only reliable “win” I’ve seen is when the customer withdraws the dispute themselves. So here’s my question to the community: What’s really goin…

I assume if you are running multiple SaaS you already discovered this - but the expectation is that you will amortize the cost of a chargeback into your price if you are a legit business. Card-not-present (I.E. internet transaction) has a lot more merchant fraud then friendly fraud (what we call these cases) and the incentives for both merchants and banks is to make sure the customer never loses trust in the system.…

Thanks for sharing. Appreciate.

Re: The madness of SaaS chargebacks

#59

Post by foofoo12 »

evermike wrote: post #38
foofoo12 wrote: post #23

Add a warning email 24 hours before the transaction. In the subject put "You'll be charged $10 for renewal in 24 hours". > we also provide a simple, self-service way to cancel the subscription It's hard to comment without seeing screenshots and description of the process. When people are cancelling under a perceived threat (will be charged otherwise), any inconvenience will become an extreme one.

Email about an upcoming charge is automatically sent a couple of days in advance, that’s Stripe standard feature. The other question is whether the user actually check their email (or which email they registered with). As for cancellation, the problem is that even though it’s easy to cancel a subscription, chargebacks usually happen afterwards. It doesn’t matter how simple cancellation is, what matters is that the us…

> Email about an upcoming charge is automatically sent a couple of days in advance

I'm talking about additional email. 24 hours before the transaction. With the subject "You'll be charged $10 for renewal in 24 hours".

This email will hit a lot harder. Most people's inbox is full of transactional email, as per recent post here on HN.

Re: The madness of SaaS chargebacks

#60

Post by ToucanLoucan »

evermike wrote: post #51
ToucanLoucan wrote: post #36

Earlier quoted context omitted.

As a customer, your business model isn’t my problem. I’ve had numerous frustrating experiences with cancelling these and similar things. If you make it a chore, even in the slightest way, chargeback. Suck it up. Life is hard enough and I have enough things to do that actually require energy and focus, and I refuse to spend any of it trying to convince you that don’t need your SaaS product.

Well, I treat other companies and people the way I’d like to be treated myself. Knowing that a chargeback is unpleasant and creates extra costs, I always first write to their support.

I treat other people like that, absolutely. Companies are not people and you can tell by the way they treat you.

The way a lot of businesses try to exist in this superposition between being "just pals!" when things are going their way but if you try and resolve a problem, they immediately start quoting policies and legalese is really off-putting tbh.

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