What happens when you pay PayPal $15k in fees?

https://www.reddit.com/r/paypal/comments/6lhxme/what_happens_when_you_pay_paypal_15k_in_fees/

by cft • 9 years ago

105 35 9 years ago

ben_jones• 9 years ago

TLDR; don't use paypal unless your business can sustain large amounts of frozen funds, terrible customer support, and shady fees and business practices.

Lazare• 9 years ago

I'm pretty sure you shouldn't use paypal even if you can sustain that. :)

jseliger• 9 years ago

I'm baffled by the ongoing willingness to use Paypal. It's been a terrible company since seemingly forever. 116 days I wrote a comment about how terrible it is: https://news.ycombinator.com/item?id=13851855 that in turn references my own horror story, from more than a decade ago, 28 days before that: https://news.ycombinator.com/item?id=13624393.

RcouF1uZ4gsC• 9 years ago

This is because consumers love PayPal. It means I am not giving my credit card to a potentially shady person and that I have a way to cancel the service. I also have 1 place where I can see all my subscriptions, so I don't keep subscribed to services I don't use but forgot about.

In general, if there are two equivalent options and one takes PayPal and the other doesn't, I am going with the one that takes PayPal.

tedmc• 9 years ago

Because my conversion rates go up when we use it, and down when we don't. Sure, you can add social proof, but like any platform you take your chances and plan for when they lose their mind.

thedarkginger• 9 years ago

Who is the payment processing leader at this point for digital payments? I assume Stripe, no?

smitty1110• 9 years ago

https://www.datanyze.com/market-share/payments/

That chart is for number of domains. PP is still the market leader by a huge margin. I'm sure if you looked at the number of transactions per month, Amazon might move into the top 3, but PP would still be the largest.

Consultant32452• 9 years ago

Which one of those does all the CC processing for the big porn companies?

gnicholas3• 9 years ago

We've had issues with Stripe as well. For example, one of our customers forgot they were paying (happily) for a subscription to our software, and they flagged a recurring charge with their CC company. When Stripe notified us of the flag, we quickly showed them server logs showing that the customer was still actively using our software. We also provided the original purchase information and screenshot of what the user saw right before making the purchase.

Stripe said we lost the dispute because we didn't provide the customer's driver's license. (What?!) We persisted and at this point contacted the customer, who readily admitted that he was still using our software and was happy to pay for it. Unfortunately, even this was not enough for Stripe, who refused to reverse their levy on us. They claimed that someone had stolen the CC from its true owner, signed up for our software, and was emailing us from a fraudulent email address.

At this point, the customer (who was really nice) called their CC company several times to say that it was all a misunderstanding and that the charge was justified. But Stripe refused to accept this as proof. They might not be as bad as PayPal, but they're not saints either.

nikanj• 9 years ago

The margins in CC processing are so low, the companies need to pull stuff like this to stay solvent :(

dplgk• 9 years ago

What load of horseshit on Stripe's part. From anecdotes I've read on HN, they're the same as PayPal or any other payment company just with a newer brand and better API.

cft• 9 years ago

We disputed perhaps 1500 chargebacks with Paypal and won only 2 or 3. Chargebacks for "virtual goods" are unwinnable. Be sure to keep your chargeback rate under 1% by the number of payments, otherwise reserves will be applied.

edwinwee• 9 years ago

Hi there, I work at Stripe. Sadly, the cardholder's bank ultimately makes the decision on who wins disputes, and we don't have the ability to reverse them. For some context, when a dispute is initiated, the bank automatically refunds the payment, and provides a window for you to submit evidence—and then they decide who wins the dispute. Frankly, this system's pretty antiquated—and oftentimes, they do favor the cardholder, but we want to help you fight back in any way we can (both in preventing disputes, and also responding). I'd love to take a closer look into this if you email me at edwin@stripe.com

phil214• 9 years ago

To be honest, this sounds like the experience you would have with any other merchant bank. They have zero impact on if you win the dispute or not, and most of those charges from them are likely (marked up) pass-thru.

The deeper you go into this world the more upset you are going to get. Basically the answer in pretty much absolutely any dispute or anything out of the ordinary is "merchant pays". It's not worth your time to dispute it in the manner you did, as you will likely find out over time.

Your story sounds like at least a dozen merchant banks I've worked with in the past in various capacities, I'm honestly surprised they even spent that much time talking to you about it. Things may be changing this day in age, but 10 years ago basically any card not present transaction that was disputed you automatically lost, and the Visa or Mastercard network would charge you the $35 for the trouble of you being defrauded by a customer :)

CodeWriter234• 9 years ago

My question to you, the payee identifier configured for your company's Stripe profile (what appears on the customer's CC statement), did it make the product name obvious?

tbrock• 9 years ago

This company is pure scum.

Without sharing the details of my personal grievances I can assure you that you are better off sending money to others securely using any other payment system on the planet.

URSpider942• 9 years ago

This is not unique to PayPal, it's standard in the credit card processing business. https://www.merchantmaverick.com/understanding-rolling-reser...

However, they do seem particularly aggressive in applying a reserve in this case.

We are missing a lot of data here, for example the business' chargeback rate.

joenot443• 9 years ago

It's worth noting that our chargeback rate is well under 0.1%

URSpider942• 9 years ago

Thanks for highlighting. This does seem pretty aggressive.

This does stink, but they have options. If their revenue is as large as they state, they can likely go to a bank and get a line of credit with their receivables as collateral. If they were in a B2B business, they would likely be facing Net 45 terms from their customers anyway. http://www.comcapfactoring.com/blog/line-of-credit-secured-b...

droopyEyelids• 9 years ago

Chargeback rate is low, but:

1) NZ company operating out of Australia- complicated international ownership structure.

2) Industry is software. Software is a high risk product category.

3) Very quick unexpected growth in transaction volume. Another big fraud red flag.

This isn't an aggressive reserve, it's a defensive one.

pentae• 9 years ago

Industry standard holdback rate is 10% for six months. I've been in the payments industry 15+ years and never heard of anyone holding more than 10% except for PayPal. Not giving a timeline on when the holdback is returned is also unique to PayPal. There's no defense here. What they are doing should be against the law.

baybal2• 9 years ago

Back in my college years, the standard procedure was to have multiple accounts. Paypal guys can easily close/freeze like 10 out of 20 accs after first chargeback dispute, but to leave remaining 10 even when they were listed on the same webpage. I thank their lazyness

JoeAltmaier• 9 years ago

Lots of complaints about receiving money from a stolen credit card, and surprise surprise Paypal takes the money back. What, they should eat the cost of cheaters? Why? They should use their resources to get your goods back? Why?

Selling stuff mail-order is risky; you get cheated sometimes. Paypal is not going to fix that for you.

petraeus• 9 years ago

Are we talking paypal or payflow? Because 15k in fees is virtually nothing.

What happens when you pay PayPal $15k in fees?

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