Stripe can completely ruin your 6-figure business in one minute
twitter.com
twitter.com
> In addition, per card network rules, you and your business have been added to MATCH or another terminated merchant file operated by the card networks.
This is now a problem between Flurly and Visa/Mastercard/whoever decided to fine them. Stripe is really just delivering the bad news on-behalf of whichever network decided to bring the axe down. Also, obviously, being added to MATCH/TMF means that your business cannot process credit cards. Just...at all. It doesn't matter which gateway you use in this case. The same outcome would happen with Braintree or any other gateway.
The blog post makes clear this is a regulatory issue and that the decision wasn't made by Stripe. A card network found the business in violation (due to illegal transactions) and issued the fine.
In any case, this is a sad situation. If you're building a marketplace on Stripe, you need to use Connect (as the majority of businesses accepting multiparty payments do) and ensure you are clear on who assumes liability (as mentioned in the blog post).
But Stripe seems just like the middleman here? All these actions are originating from "a card network", presumably Visa or Mastercard.
Go figure there will be problems.
Pro-tip: if your system is easy to be misused by bad actors, they will be most of your users
Paying for a non-physical item seems way too perfect for that.
If you’re taking liability for what your customers do, you can end up getting fines like this. Stripe doesn’t want this. It’s not like they get the money from the fine, if anything they’re on the hook for it.
So, why again is this a scam?
I agree with you though there is sometimes value in payment gateway aggregators. Having one for managing multiple processors, including payment methods stripe doesn’t support.
Stripe itself is a payment processing aggregator: you could just implement the direct integrations from the banks/card networks.
But yes fintech is built on middlemen building on top of middlemen. Sadly it’s too expensive to build from the lowest layer, so businesses tend to start from the highest one and only rebuild a layer below if they’re successful and have money.
It’s only fixable with more open source fintech layers imo.
How is that shady?
1/ sounds very much like "Make $10k/month from the comfort of your couch. No strings attached"
2/ "sell any digital product" sounds like "we're not looking". " in under a minute" is an exaggeration most probably. "99%" is clearly psychological bait. "After processing fees" is a red flag because it's the one place in two description that is not metered.
It's the accumulation of small things that draw a big red flag, to me.
2 are available. Helmet A mentions its certifications. Helmet B doesn't, but claims to be as safe.
Would you consider helmet B?
I'd be happy to answer your hypothetical question, but I don't want to stray further off topic, so I'll decline.
The discussion and your point was about presumption of lawfulness and I made an analogy about presumption of safety.
Illegal processing is no joke. This isn't as much "Stripe ruining a business" as it is "a business appears to have been processing illegal activity, which puts it into liability".
To be clear, in some jurisdictions and depending on the activity, illegal processing also carries a jail sentence! The most extreme of which is, of course, terrorist financing.
I don't mean "they had a chance to avoid the problem by switching everyone to Connect". I mean, how come Stripe and the card network both get to say "I'm good, just one of my customers is bad, so I'll just get rid of them now that you have told me you don't like them." But Flurly doesn't get to say that?
The card network gets to keep running as long as they do something about their bad customer Stripe. Stripe gets to keep running as long as they do something about their bad customer Flurly. They recieve a consideration that they don't grant in turn.
Don't base the answer on how obviously dodgy Flurly seemed to be "asking for it", without being able to show that Visa is never used for any illegal activity.
As it turns out, nobody is interested in paying the fees of a network that pays a lot of fines, chargebacks, and fraud.
>Over time, this set up proved risky with legal liabilities. So last year I migrated to Stripe Connect’s direct charges model where customer payments would go directly into sellers' Stripe accounts
Sadly, he thought he could keep existing users on the old scheme:
>there were still legacy sellers that depended on Flurly for their living. Thus I "grandfathered" in these accounts and let them keep using the old Flurly system
So it was just a matter of time before one of these accounts were used for selling non-compliant things or doing illegal transactions. So it's not Stripe which ruined his business as the title indicates; it was one of Flurly's customers breaching Stripe's TOS and still being linked through Flurly's Stripe account. Only logical they shut him down, a risk the owner acknowledged in this blog post.
The fines haven't been decided upon from what I understand, and you could fight them once they've been announced, Stripe is simply freezing their assets to cover the potential fine.
I'm sure the card networks can do what they want and it'd be months before a court could catch up though.
A judgment in 2015 clarified the test of a penalty clause:
"[T]he true test is whether the impugned provision is a secondary obligation which imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. The innocent party can have no proper interest in simply punishing the defaulter. His interest is in performance or in some appropriate alternative to performance."
via https://www.pinsentmasons.com/out-law/guides/practical-impli...
The problem in this case would be that Stripe passes on the liability for the penalties to its customers if those customers are breaking the contracts. Obviously a problem for the customer, but also not unreasonable from Stripe's perspective. If you're setting up a marketplace and want to act as a payment-provider for third parties, you're creating a very different liability environment than if you're setting up an account to sell your own products. If you start with a seller-account and then transition your product into a marketplace, someone will have to eat that additional risk, and I can't see a good argument for why Stripe would be the one.
Fixed that for you. This isn't a Stripe problem, it's a "you need to learn how to color inside the financial lines" problem.
Legally speaking, can Stripe keep that money? Flurly will be broke and cannot payout their customers. Aren't those customers as entitled to their money as is Stripe or the card networks?
The issue of Flurly's debts is between them and it is creditors.
https://news.ycombinator.com/item?id=34747702
It seems that Flurry's well intentioned call (not asking legacy customers to move immediately to the right payment mechanism) backfired.
According to the blog post, they would have been fine if all Flurly accounts would have been migrated to Stripe Connect direct charges.
Those last 4 words there are key.
> Despite our efforts to provide evidence to the counter
In other words, they were trying to help. Your problem is the card network in question.
And from what I can tell, BTC has lost 60% of it's USD value from the peak only a bit over a year ago. And you want people to depend on this for payments?
The rotten orgs around the service are getting flushed, which is good for honest users and uses. Don't trust other orgs with your holdings. Hold your own crypto keys.