The madness of SaaS chargebacks
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The madness of SaaS chargebacks
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Re: The madness of SaaS chargebacks
#2TL;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 going on here? Why do banks completely ignore the terms customers agreed to when they subscribed, or even in cases where the claims are obviously false? And why aren’t customers required to provide any proof at all?
What actually prevents someone from using a SaaS product, filing chargebacks every time they cancel, and essentially getting refunded for the last several months of usage?
Would love to hear your thoughts.
Re: The madness of SaaS chargebacks
#3TL;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…
Just consider it cost of doing business and move on. You can also offer discounts for alternative payment methods but something tells me cards will be more attractive.
Re: The madness of SaaS chargebacks
#4TL;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…
Just consider it cost of doing business and move on. You can also offer discounts for alternative payment methods but something tells me cards will be more attractive.
Yes, that’s pretty much how I look at it. And in all of our products I do everything possible to keep chargebacks to an absolute minimum, sometimes even making decisions that aren’t the most profitable from a business perspective.
When I look at some other companies, I often see all kinds of "shady" tricks that clearly boost revenue, but also inevitably increase the number of cases like this.
Re: The madness of SaaS chargebacks
#5TL;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…
This could also be from fraud. Card testing for example, where they aim to figure out missing card details. Or some other nefarious use of stolen card details.
Re: The madness of SaaS chargebacks
#6TL;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…
Just consider it cost of doing business and move on. You can also offer discounts for alternative payment methods but something tells me cards will be more attractive.
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Re: The madness of SaaS chargebacks
#7TL;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…
Seems like banks and payment networks are incentivized to make it simple to collect all those chargeback fees.
Re: The madness of SaaS chargebacks
#8I got an Ad for a company that aims to reduce your chargebacks, I wont say who it was. Who knows if it works.
Re: The madness of SaaS chargebacks
#9We have very few chargebacks, not even 10 in 10 years and we consider us lucky. Stolen credit card happens more often than chargeback. I don't attribute it to better messaging or easier cancellation options, we do the same as many others, I guess it's just the type of product of customer.
Even in HN comments I've seen people saying they use temporary card numbers (valid for one transaction only) or click a button to dispute instead of a single email. That button in the banking interface might be "block future payments" or such. They must've bad experience with companies in the past?
Actively emailing with the customer sometimes helps. It worked for us. Sometimes it didn't. For example if it's a company credit card and the employee left the company. Their accounting team simply doesn't know what our service is for.
At this point the fees are part of "cost of doing business".
https://news.ycombinator.com/item?id=44382686 is an example where a customer was unhappy about merchant charges and seems to contact the banks only, not the merchant.
Re: The madness of SaaS chargebacks
#10TL;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…
The credit card business of banks wants customers to spend money so they earn transaction fees. Everything the bank does is in service of this goal. Making it harder to do chargebacks would measurably reduce the transaction fees they earn in aggregate.
Your SaaS is a dime a dozen to them. They dont care about you. You dont make them any money, especially when the customer is actively trying to stop doing business with you.