I've recently discovered that Stripe has updated their policies regarding disputes. If a customer disputes a transaction, there's now a $15 penalty for the vendor on top of the chargeback amount. Since I plan to sell digital products priced between $1 and $5, I'm seriously concerned that these fees could cripple my business. Low-cost products are often targeted by card testers using stolen credit cards, and with these new Stripe terms, it feels risky. Does anyone have suggestions for payment processors that are more vendor-friendly for smaller transactions?
4 Answers
Have you checked out Paddle? It has slightly higher fees per transaction compared to Stripe but takes on a lot of the liability for chargebacks. It might be worth your while since they typically handle refunds before the chargeback process even starts. Just be aware that you still incur a $15 fee even if they refund you, though the fee gets refunded if you win the dispute later.
I have a friend who's been working in this field for a decade and knows the ins and outs. I can send you his details if you're interested!
This situation isn't unique to Stripe; many traditional merchant accounts have similar rules regarding chargebacks. To mitigate risks, be sure to clearly state what charge will show up on customers' bank statements during checkout and confirm that in order emails. Having clear terms regarding refunds and disputes is crucial. Since you’re selling digital products, a good strategy may be to issue refunds for disputed charges and prevent problematic customers from ordering in the future. I've had my own experiences dealing with card testers and had to implement strict measures to protect my business. Turning off access to my payment form from the public helped, along with limiting failed transaction attempts and requiring substantial payments on invoices.
Thanks for the insights! I share your concerns and will implement a no-questions-asked refund policy to start. Hoping for the best!
You might want to take a look at polar.sh as another option. From what I understand, fraud is often more prevalent on larger platforms like Amazon than on smaller e-commerce sites. So maybe it's not as big an issue as you think until it happens to you.
I see! I didn’t know it worked that way. Sounds like a good plan, though I wish they were a bit more customizable.