On (1), we started an FX team this year. (There are a lot of legal complexities here around how the funds move, who has title to what at which moment, and so on.) But we're investing significantly in improving it and it should get better soon. On (2), the core issue is card network pricing rules -- by design, they discriminate on the basis of where the business is located. We happily extend EU fees to all EU legal entities, however, and would be happy to work with you to set that up. On (3), refunds aren't free for Stripe, and we were previously in a position where businesses with a lot of refunds were being subsidized by those who didn't. We want to give this margin away more sensibly.
Still, all the issues you bring up are real and I'd like us to find better solutions.
Customer Service, UX and speed are amazing. But it took me a while to convince US companies to accept this structure.
I hope Stripe which is amazing will never have anything to do with TransferFraud.
We've moved hundreds of thousands of dollars through them over the last couple of years with no problems on their end (we've had problems with banks failing to transfer correctly though..)
My only issues with TransferWise have been having to ask recipients for their full addresses and then manually having to translate address schemes into something that fits in the boxes TransferWise provides in their forms. Sometimes things don't map over 1-to-1 (some Japanese and Taiwanese addresses, for example). I've also found that some Japanese banks only have one branch without a name and Transferwise requires a branch name. I eventually figured things out by researching the branch number online though.
All minor gripes though. Transferwise has let my business operate smoothly and make connections to vendors that would otherwise be cost-prohibitive to pay.
OTOH, I'm in Canada, and I've only used them for personal transfers. I have no idea how they perform for businesses, nor do I know whether they work well for individuals in other countries.
I am biased, but IMHO using a service like Routefusion solves all of these problems. Companies like Elliot use our API's to settle CC transactions that are in different countries. You hook your Stripe account in and then they re-patriate the money to wherever it needs to go.
Check us out! developer.routefusion.co
I understand they're not free, but I also understand Stripe does get a considerable portion back that they are no longer passing on?
Couldn't this just have been applied to the problematic businesses then rather than all?
In our analysis in making this change, we saw that this simply makes little difference for the vast majority of businesses. For example, if you're processing $100k/year and refund 5% of your payments (which would be on the high end of normal), it works out to about $12/month.
While refund rate of course is not definitively coupled to the quality of a business, we do see across our portfolio that it is strongly correlated. Given a basket of possible fees (for example, higher fees on Amex, which most other providers have), we prefer the fees that, on the margin, are least consequential for the businesses that are doing the best job of serving their customers.
Having said all of that, none of our pricing is cast in stone, and we always genuinely appreciate feedback, including contrary views.
Stripe has made the right call here - though the silent and vast majority won't have anything to complain about so won't be on here posting.
Do you know how often I have people buy something and then call me only to let me know they may have bought the wrong thing?
If you ISL6258AHRTZ & ISL6259AHRTZ, your refunds are likely not due to "business quality."
If you sell NXP610A3B and NXP1608, your refunds likely don't "business quality."
They reflect reality in a world where most people aren't savants with random long strings of seemingly meaningless letters/numbers that make up product codes for chipsets.
I used to employ a competitor in this field. We have taken different approaches to obtaining customers, and in setting up our respective online stores to be as simple as possible - to try and inform people what fits what even if they don't know what they are doing.
But lots of people don't read, then they buy things by mistake anyway.
>While refund rate of course is not definitively coupled to the quality of a business, we do see across our portfolio that it is strongly correlated. Given a basket of possible fees (for example, higher fees on Amex, which most other providers have), we prefer the fees that, on the margin, are least consequential for the businesses that are doing the best job of serving their customers.
What metrics are being used here to judge the quality of a business? How is whether a business is "quality" or not being judged by a credit card processing provider? What information is obtained to make judgments according to these metrics?
I've been in different online and in-person businesses. Some businesses have low refund rate with poor quality, others high refund rate with fine quality. I can say with certainty 100% of the refunds I gave when people sent back a product that was not the product I sent them(or even a product I sell) after they filed a chargeback had nothing to do with the quality of our business - the only thing the merchant would have access to is a he-said-she-said list of jpg files and ranting paragraphs. Hardly fitting information to judge the quality of a business on.
Honestly, I've looked as Stripe's offerings - I pay 2.15% right now with 40/60 online card not present/in-store card present and refunds are free. How is it with a 2.9% fee that people who rarely refund their customers have to pay the fee for those customers for the model to make sense? I'm not asking Stripe to match the fee of a large bank - but can we not charge an additional .7 percent and then say "it has to be done so we don't lose when people refund?"
This is outside the greater implications of this policy - if more merchant services take this on, we will be left with a world where only Amazon, eBay, and Walmart can offer "cancel" buttons on their site. Who will want to do business with small businesses if even something as basic as hitting the cancel button incurs fees?
If I buy a TV, or an ultrasonic cleaner, or a stereo, or some furniture from a small business vs amazon and I mess up something in my order, I have to pay a $45 fee - but when I buy it from amazon, I don't? Screw them, I'll use amazon.
If this is adopted by every single business, it will be just one of many factors that pushes customers in the direction of using Amazon over small businesses. It's hard enough competing with trillion dollar companies as is without erroneous fees being added in that were outside the overton window of business discussion 10 years ago.
To be clear, I have no problem with people choosing to make purchases from Amazon. I do have an issue with the industry slowly adding barriers to small businesses having the ability to compete on a level playing field. I'm all for them earning a good reputation, but we shouldn't be working to put sour tastes in the mouths of every customer who f'd up and made an order in error with someone that they will not have with a larger company.
> They reflect reality in a world where most people aren't savants with random long strings of seemingly meaningless letters/numbers that make up product codes for chipsets.
If you're selling products to people who aren't intimate enough with the product to tell them apart, and not doing a good enough job of guiding them before they put down their hard earned money, you're failing your customers. So it is very tied to business quality.
You should have warnings, or clear break downs of product descriptions they can use to confirm.
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A refund is not free for the user either, now they have to go and get a refund, hope they caught it quick enough for shipping, maybe ship it back.
So there is, almost by definition, no situation where you have a high refund rate, and aren't making your customers suffer, and that's not how a quality business is run
Patrick, please don't do that. It's scummy maths and unworthy of you. Either "if you're doing $8k/month it work out to about $12/month" or "if you're doing $100k/year it would work out to about $145/year" would be better. Using different units for the two different figures to make them look further apart is the kind of thing done by people trying to mislead with data.
Most people think of those kinds of expenses in monthly terms, maybe you're not aware of that. This isn't a press release, it's someone's comment off the top of their head.
This way regular members are not penalized by big refunders...
developer.routefusion.co
we will solve all of those nasty FX problems your customers are having. Already doing it for a few other e-comm platforms that link into Stripe.
However, Stripe offers SEPA direct debit, which is usable with any European bank account and may work better for you.
EDIT: This seems to have sparked some confusion. I'm not saying Germans don't do card payments, I was only speaking of credit cards. We do all have and use debit cards, however, those are of a national scheme with wonderfully low fees, but no online usability.
I have a credit card, but it is paid in full at the end of the month automatically, so for all intents and purposes it's essentially another debit card. Everyone I know in Germany who has a credit card uses it this way. In fact, my bank didn't even ask me if I wanted it set up any differently, so I have to imagine it's not just my social circle handling it this way.
Many UK banks used to issue Switch/Maestro cards which interoperated with the German bank card system so were accepted in German supermarkets, but these got phased out for Visa / MasterCard debit around 10 years ago meaning I had to start using cash everywhere.
When the EU capped the interchange fees in 2015, many retailers started accepting MasterCard and Visa here. AMEX is exempt from the regulation since it's a three-party system and less commonly accepted. I'm not aware of any retailers that accept MC/Visa debit, but not credit cards or vice versa.
How come Germany is so cash positive? Personally I think Sweden has gone a bit far, where some old people have been put in a weird spot where they can't pay because they're technologically illiterate.
As for why we're so cash positive: one of the factors is privacy. If you pay for everything electronically both your bank and merchants are in the position to build a profile on you. If you use a non-local scheme (e.g. MC or Visa), they can too.
I think the confusing part of your comment was where you consider non-credit cards (debit, prepaid etc.) to be distinct from VISA/Mastercard. That is not the case in most countries. It used to be the case in Germany, but is slowly changing as more and more debit cards are VISA/Mastercard cobranded.
which wouldn't be a problem for shopping online if they had a Visa or MasterCard cobrand, as these can be debit and tied to your bank account as well.
It's only slowly changing with some Sparkassen issuing MasterCard debit cobranded cards in late fall (https://www.f-i.de/News/ITmagazin/Archiv/2020/Einfach-mobil-...)
That's a peculiar choice, but I assume the decision was made to appeal to the typically skeptical German market. I do wonder why it wasn't made opt-in, though.
When asking around I got several answers. Everything from a cultural aversion to debt (and spending via cash makes it easier to track your spending), not wanting to be tracked where you shop due to not wanting the government to know (comes from Nazi/East German past), and just being culturally conservative and not really liking change all that much.
I didn't like it as being a tourist meant I was eating out a lot, etc. I had to carry a lot of cash around that I'd only have to pay a fee to convert back if I had any left.
Debit card means you're responsible and take money out of low/zero interest checking account at the principal bank where we Germans hoard our money.
Credit card means you're on shaky financial ground, deal with credit card companies with their fine print, risk punitive overdraft charges, and have probably no idea if you have any money left.
Sadly, things are changing and many people seem to take on irresponsible loans (i.e. for anything except real estate).
Associating Mastercard and Visa to credit and not debit as well.
Mostly banks and retailers colluding together to use a cheap domestic-only POS-only scheme (think Przelewy24, but offline or LINK but at POS).
In Germany, most banks still see these use cases as an opportunity to upsell their loyal customers on their expensive credit card products (not in terms of interest really, but rather because of high monthly and foreign use fees).
The interesting thing however, we A/B tested with and without SEPA and basically saw no difference. Only German people used it, but when it wasn’t available they managed to find a credit card or use PayPal.
I’d love it if banks were making instant payments simple and verifiable, but SEPA feels like something from the 70s to me.
These concerns still apply to direct debits, unfortunately. The reason being that there's barely any authorization for direct debits, you just need the bank account number and name. Isn't the situation somewhat similar to CC transactions without 3D Secure/whatever it's called? I seems to recall reading in my bank's terms that I can chargeback transactions for something crazy like a year. You always need a "mandate" to debit an account and if you get that properly signed by the customer, you should be able to get the bank to reverse the reversal, but I can appreciate the bureaucratic overhead.
I was only offering it as a potential solution if getting people to sign up is genuinely difficult.
The thing with PayPal is: they offer direct debit to customers and I'm assuming that's how most people who would've otherwise used direct debit directly with you ended up paying. It is my understanding that PayPal is also aware of the risks associated with this and offers merchants the option not to accept payments through it. I can't seem to find an article just now, but I remember instances where PayPal told me something along the lines of "this merchant does not accept payments via direct debit, please use a credit card instead". I can only assume this is because they at least partially pass on the risk.
That's unfortunately not true. There is no recourse to direct debit returns; there is no dispute resolution process or anything like that. The presence or absence of a mandate only impacts the timeframe for returns to be files, as far as I understand.
You are aware that this is possible with credit cards as well, right?
1) SEPA has an 8-week no-questions no-appeal refund model, which is fundamentally incompatible with a SaaS business
2) Stripe doesn't support SEPA on Checkout
3) Stripe doesn't support SEPA on non-EU/US accounts
Regarding 1): is it? Credit card payments can also be charged back, often for a period longer than 8 weeks. And both "aaS" products as well as certain retailers selling and shipping physical goods, do offer direct debit. I can't quote any fraud rates, but it certainly seems possible to do it.
SEPA doesn't. You have to sue your customer if you want the money back.
https://www.williamfry.com/newsandinsights/news-article/2013...
This used to be very common in supermarkets. Every time you had to sign the receipt this was happening. It's not as common nowadays as the fees are now more or less the same.
A lot of subscription based businesses were built around "no-hassle refunds" as a core feature enabled by Stripe and will now need to rethink this.
I deal a lot in USD as an Australian company but stripe won’t allow us to charge in USD and settle into our USD bank accounts. But others will.
Also the refund issue is crazy, no other provider we use does it.
By the way, my company has the opposite problem. Our Stripe account is registered in the UK and even though we process payments for Australian customers in AUD their local banks still charge them an extortionate "foreign transaction fee". This means that we had to open a separate Stripe account registered in Australia just to avoid that.
We charge in USD because we serve primarily US customers.
I pay for the business expenses in USD.
I've opened a US/USD bank account with Transferwise.
But I can't use it with Stripe [1]. Their only choice is to have them convert our USD earnings to AUD and pay out to an AUD bank account.
So when I pay those business expenses, I'm either:
a) paying on an Australian debit or credit card, which charge us another 3% for every international transaction (3% seems to be the standard rate across all of our banks here), or
b) carefully managing our cash flow to transfer AUD to our Transferwise account, use TW to exchange to USD, and then pay with our TW card.
We did (a) for a while, now trying (b), but I'd love to see (c): Stripe pays our USD earnings to our USD bank account.
[1] Funnily/strangely enough, I can actually ADD the USD bank account to our Stripe account. It just sits there, lonely, with a 0.00 USD balance. It took reading through the docs to realise that USD payouts are not supported for Australian Stripe accounts.
Depending on your volume, it's really not expensive to setup a legal entity in the UK. Since UK is leaving (unsure if EU financial access will continue) Ireland is a good alternative. A UK company costs < £100/yr to maintain. Depending on your volume, it may be worth exploring with your lawyer/accountant.
Perhaps there's merchant-of-record services too, that are incorporated in the EU and I believe legally act as an agent to sell your product.
A UK company costs < £100/yr to maintain
Off the top of my head, the Companies House filing fee of around £15/yr, an address for the company (around £50/yr) are all you require to hold a UK company.
For a tech company that uses Xero and feeds in invoices programmatically filing the statutory returns by an accountant might cost £1000/yr (or 0 if you wish to DIY, the UK's HMRC makes self-filing easy unlike the IRS). Plus £360/yr for Xero (free accounting software probably won't cut it).
VAT returns and PAYE returns are pretty easy to self-file; Xero does them automatically and HMRC provides free software for it. The annual statutory accounts are more difficult, and you probably want an accountant.
Rough figures: if you want to be cheap, use Xero discounts and DIY, it's around £500/yr. With an accountant, but you still doing some of the work, perhaps £1500/yr.
Care flicking me an email at [email protected] or DMing @StripeAustralia?
1) Many countries still only allow depositing a single currency (i.e. Aus/AUD), doubling the cost of transaction due to the currency conversion, even tripling when we have to convert it back to pay our bills. I always get told either "soon", or "not possible due to the law", despite competitors doing it.
2) If we were an EU company, we'd get charged 1.4%+25c on transactions in the EU, where most of our customers are. Instead, because we're selling from Australia, we get charged 2.9% for some arbitrary reason. This coupled with 1) puts our all-in transaction fees at 5%+ :(
3) I think billing the vendor for refund fees is a really retrograde step - it increases friction in the decision for us when a customer asks for a refund, and industry wide is going to cause less happy customers and less card users online. It's already hard enough convincing Dutch/German customers to use a credit card online.
If any non-EU companies know a cheaper way to process transactions in the EU, I'm all ears...