Ask HN: Stripe is holding 50% for 9 month

Some staff members from Stripe already replied that they are looking into this. But if you take a look at reviews on Trustpilot this (withholding funds) seems to be a very common complain, which is terrifying.

What's the interest they are paying to borrow this money?

Every time one of these Stripe posts shows up, I always wonder what'll happen when Edwin retires or moves on.

There was someone before him, there would be someone after.

Stop using Stripe, this is what you sign up for when you use them. PayPal is not much better. Use Adyen, or a processor that doesn't have to squeeze every dollar out of the transaction like Google Payments.

This is a regulatory problem not a business problem. Payment processors need to understand a client's risk profile and what business they do in order to prevent money laundering, and in practice, regulators only care about clients that have a certain volume.

Paypal, Stripe, and any other major payment processor have developed a strategy of letting users use the service with no restrictions until they hit that volume then they begin doing things like this.

Ultimately, this is caused by regulation and needs to be fixed by regulation, but it won't because practices like this are extremely lucrative.

Does regulation requires them to "understand" the business model or withhold the funds? These are two different things. For $600K, Stripe could send one of its support agents (which doesn't exist now) to verify that OP has a legitimate business. Instead, it took the much easier option of withholding these funds (from their offices in Alto) and earning interest on it... for 9 months...

I'd say good for them. If you accept that kind of shit (in business or in a relationship) you deserve it.

Its not really well known what is the motivation for witholding funds, but in some cases, it has been shared that is stuff around AML and people have extrapolated.

Conventional payment processors like Wells Fargo, BoA, and others do the paperwork up front, and then give you access. They don't have the spiffy features that Stripe and Paypal has.

Ultimately, I think Paypal and Stripe could have a better system, but they profit immensely this way. Like you said, good for them, but sucks for the industry because it is one of the barriers to growth is getting hit like this as you are scaling is huge.

The regulation will never change, but you get a huge advantage by working with smaller processors in terms of them being willing to work with you in a reasonable way.

There are 3 stages:

You are small: Stripe and the like work best because they are easy to set up and your small payments are low risk

Your are medium sized: You start to hit restrictions with these services but can not get any real support. You should work with a small indie processor.

You are big: You can get support (probably) so going with the big powerful solutions starts to make more sense again.

For 600k, get a lawyer. That's ridiculous.

What is the alternative to stripe? I was going to set it up for a new service in making but with all these posts I'm not so sure.

A quick google brings up paddle, is that going to have the same issues?

Update:

Learnings: “Rolling Reserves” : the safety margin on non-guaranteed payment methods such as credit card, this margin is released after X days.

Mollie says all PSPs, especially after Corona, keep a rolling reserve with customers active in Travel / Hospitality.

Mollie standard is 20% for 90 days.

With additional info (financial report two year record with balance sheet, P&L, CF statement and org chart) they’ll look at lowering this to 15 or 10%.

No answer from Stripe on their take and no relieve. They asked for latest financial statement but told me they do not go into their arguments or structure.

9 month is long. I thought credit card companies only hold for 3 months at the most so not sure why Stripe needs it 3x longer

Because it’s a loan they get to take out, interest free.

This isn't just to air grievances publicly, although it would naturally be great if this helps solve the issue, but also to better understand the playing field.

We are building our own booking engine and need to make choices about a payment provider. Yes, we're considering Mollie again. For this, we would have to build everything outside of our PMS, which in turn lowers the added value of our expensive PMS.

The development in "open banking" software is also interesting. As I understand it now, this could potentially eliminate Stripe as a middleman. Is this already a viable alternative? Any suggestions?

As for risk management, I could imagine that, in addition to macro numbers and global averages, you would also look at specific situations.

In our case, I could demonstrate that we have existed for multiple years with positive figures, payment terms for guests are 20% at the time of booking and 80% two weeks before arrival, the average processing time is 3 months, and we can add metadata to track things for control purposes.

Currently, we already have €600k tied up, but if you had warned during onboarding that we were in a risk group based on macro figures, I would have been happy to provide additional information. So don't just let anyone in, but screen at the front door.

Furthermore, I'm wondering to what extent it is Stripe's responsibility to estimate risks and fully cover these for the end user, as opposed to simply transferring funds from A to B. If you wish to do this, guard that front door better, even if it comes at the expense of the lucrative pile of money being held back. But this would be challenging when wanting to serve startups?!

There are a bunch of factors—we look at your refund and chargeback rates, then your revenue and how much you have in your Stripe balance. For macro factors, the card networks may also sense an uptick in refund requests depending on the product/service you're selling.

That said, I see your email into our support team and we're taking another look at this now.

As always, why bother having real support when you can instead wait for paying customer to bitch publicly on HN?

Sickening.

Sickening is hardly the word for a comms lead of Stripe being the first reply to a post about a customers issue, complete with some informative context and saying they will double check the issue.

Not the place for many reasons. As an example this discussion should not be publicly indexable whenever a customer Googles this same problem in the future.

Basic Marketing and Customer Care Management.

Are you new here? This website seems to be the only way to get human help from stripe. THAT is sickening.

What would you say the percentage of the total support requests that Stripe receives per day is compared to issues raised on HN?

Just wanted to say I appreciate seeing the responsiveness here. First comment on the thread even. Always better if it doesn’t reach this point, but it’s nice to know you can get a human’s attention one way or another.

Hoping to @edwinwee will share the outcome for other businesses who might need to evaluate Stripe.

Search this website. Outcome is always the same: something resolved just this once. No procedural changes made. Stripe remains unreachable unless you get enough upvotes on HN

The outcome isn't always the same.

It's 50/50:

- The poster was doing something shady and upon further investigation it turns out the situation is warranted

- The poster was indeed let down by a broken support system and Stripe staff chimes in to save the day

The outcome is not always, or perhaps even often, the same.

The last time I paid attention to one of these complaints, someone was using stripe to sell cellphone accessories (and yes, at least on my Stripe application, they asked what I was selling.)

After selling accessories for a while, he then used it to sell a minivan, and had a tantrum when Stripe -- quite reasonably -- said this flags all the flags, and Stripe was going to hold onto the money until they were sure things were kosher.

Getting dollars before multiple months post transaction basically leaves someone holding a bag of risk, and if you act shady AF, you can't be surprised if Stripe declines to hold that bag of risk for you.

You know what would be better? Maybe a support email? Or this crazy thing called a 1-800-number? The fact that Stripe de facto uses HN as their support forum and that people are lauding them for it is pretty laughable.

It's a bit horrifying it takes a disgruntled HN post and the pure chance you happened across it. It's also discomforting how comfortable Stripe employees like yourself think holding 50% of someone's earning for any amount of time is acceptable. I really don't care if Stripe is HN's baby, this is awful customer service and gives me great pause in recommending or using Stripe.

I feel like these posts should be disallowed. Seems like Stripe is using HN as a free help forum, and it's customers have accepted that this is the place to go when you need to talk to a human. I don't think HN should encourage it, and I don't know why we all play along. I've seen a solid handful or two of these posts, and most of the time users aren't looking for discussion, only enough attention to get the Stripe team to act. My opinion only, obviously I sympathize with OP whose just trying to get their money and this seems to be the tried and true way to get a response, but I definitely don't think it adds anything positive to the site other than a recurring warning to other would-be Stripe customers.

HN should encourage it, because startup founders read HN. They should think twice risking their business existence, after seeing this benevolent approach.

> I don't know why we all play along

Sunlight kills all infection.

Tell that to Edward Snowden, Julian Assange, or one of the billions of working families all over the world that everyone knows is getting f*cked over on a constant basis.

Sunlight is not a disinfectant. Better to try gasoline.

Sunlight only works reasonably well for waterborne pathogens, and only when you've got time.

As with disinfecting anything, and especially for societal issues, we need more than sunlight alone.

> other than a recurring warning to other would-be Stripe customers

that seems like an exceptionally high-value positive in a site with a large number of users who need payment services.

The alternative is likely not being able to work with the business at all due to their risk profile and chargeback rates.

That seems... better? At least you know what you're in for (ie. you can only take crypto or go with a risk-taking payment processor that has an explicit net 120 payout schedule), so you can plan your business around it.

These types of companies are often frauds (anything involving large amounts charged for travel, or housing of some sort). A bunch of big charges comes in, and then months later there are massive chargebacks and the company in question no longer exists. Stripe is left holding the bag. Their only option with these large charges for services to be delivered in the future is to not release funds until they are quite certain there won't be a charge back.

For every instance of what appears to be bad behavior by a payments company, consider the angle of the fraudster. They are really screwing things up for everybody.

In a working payment system, the scenario where someone initiates a valid dispute nine months after the fact would be extremely rare: it would be limited to a few types of physical card theft where the card owner is unable to report the card missing for some relatively unusual reason. We just don’t have a working payment system, so unfortunately this stuff is incredibly common and everyone has to suffer because of it.

There are genuine cases (travel and lodging are the obvious ones) where people tend to pay for things months in advance. I don't see it going away. If you can come up with a cheap, effective, convenient payment method to cover these things, you are on a winner. I don't think it's possible because the time horizon creates risk, there is no avoiding it.

When you hold on to someone's money for an extremely long time, do you earn any interest on that money?

Yes, since it is all going into the same bank account... $600K on 9 months at 5% (best I see is 5.25% for 1 year https://www.bankrate.com/banking/cds/cd-rates/ ) would be 75% of $30K = $22.5K .

Thank you for submitting your support request through the Stripe back channel support network. Your ticket will be reviewed by nobody, unless you happen to be extremely lucky and win the Hacker News lottery. Best of luck!

I'm sorry your request has been denied by some schmuck you slighted in 3rd year of uni who works at stripe.

Too bad there is no incentive for companies to put in place adequate volume to deal with necessary customer support.

The shareholders have proclaimed that such a strategy is illegal due to fiduciary duty /s

Dang, $30k just in interest. That's a nice game.

Are you going to switch back to Mollie?

I'm guessing your account is over 50% disputed.

0.03% chargebacks, Stripe says it's average.