Deliberately ruining my stripe account by refunding customers

[DaddyWarbucks]

I have been running a business for a year now. Turnover has been £350k.

Stripe has been my payment processor but I have just obtained a new merchant account with a different provider (Rapyd).

Through a number of unfortunate circumstances I have a backlog of orders which I cannot fulfil. I plan on doing a mass refund which will total approximately £20k and disconnect Stripe from my website, disconnect my bank account from Stripe and proceed accepting payments using the new merchant account I have just created.

Fulfilment will not be an issue for any new orders. This backlog has caused me operational and cash flow issues. It was much larger and I have brought it down significantly using a lot of my own money but I’m pretty much at the end of the road now and this is make or break.

What steps will Stripe take to recover this money? I am not looking to rip my customers off who are waiting for their orders so the mass refund at the likely expense of my stripe account seems the best option now I have an alternative merchant.

I have gone through lots of compliance with Stripe as my business was deemed high risk. I have also completed their reserve hold periods and even had the account closed by them twice and still got it back. I know the refunds will result in my account being closed but I would rather be upfront with my customers and refund them than they file chargebacks.

 

[CyprusLawyer101]

Maybe write an email to stripe explaining clearly your situation. You may manage to keep the account afterall.

 

[polonieth]

I have been running a business for a year now. Turnover has been £350k.

Stripe has been my payment processor but I have just obtained a new merchant account with a different provider (Rapyd).

Through a number of unfortunate circumstances I have a backlog of orders which I cannot fulfil. I plan on doing a mass refund which will total approximately £20k and disconnect Stripe from my website, disconnect my bank account from Stripe and proceed accepting payments using the new merchant account I have just created.

Fulfilment will not be an issue for any new orders. This backlog has caused me operational and cash flow issues. It was much larger and I have brought it down significantly using a lot of my own money but I’m pretty much at the end of the road now and this is make or break.

What steps will Stripe take to recover this money? I am not looking to rip my customers off who are waiting for their orders so the mass refund at the likely expense of my stripe account seems the best option now I have an alternative merchant.

I have gone through lots of compliance with Stripe as my business was deemed high risk. I have also completed their reserve hold periods and even had the account closed by them twice and still got it back. I know the refunds will result in my account being closed but I would rather be upfront with my customers and refund them than they file chargebacks.

The topic of the post should be "How can I do Stripe out of £20k"

What have you done with the customers' cash for the product/service?

Anyway, it won't work unless Stripe can capture the money from your bank account; the refund will be in a pending state and won't be credited back to your customer.

 

[DaddyWarbucks]

The topic of the post should be "How can I do Stripe out of £20k"

What have you done with the customers' cash for the product/service?

Anyway, it won't work unless Stripe can capture the money from your bank account; the refund will be in a pending state and won't be credited back to your customer.

Ok this is basically what I wanted to know. I thought if I processed the refunds then the customers would be refunded and I could deal with stripe myself at a later date but your comment suggests otherwise.

Prior to having my own factory I relied on a third party who decreased the product quality behind my back resulting in a lot of replacements at my own expense. Eventually the costs of funding my factory setup and subsiding replacements and shipping costs has swallowed up a lot of the funds. Not trying to screw anyone over and sucks to be in this position close to resolving it but a clean break may be my only option.

 

[JustAnotherNomad]

Anyway, it won't work unless Stripe can capture the money from your bank account; the refund will be in a pending state and won't be credited back to your customer.

Are you sure? I believe I have seen it before that Stripe issued the refund immediately and only clawed the money back from the next payment to the merchant - and since they were not using Stripe a lot, there were actually years between these events.
But that was years ago, so I may not be remembering this correctly, and things could also have changed.

 

[Sols]

Refunds may or may not be capped by available balance. It's up to the processor to determine.

Stripe is pushing merchants towards direct debit mandates. But if you don't have one of those, Stripe's only recourses are to cap refunds by balance or by going after your company in court.

 

[DaddyWarbucks]

Refunds may or may not be capped by available balance. It's up to the processor to determine.

Stripe is pushing merchants towards direct debit mandates. But if you don't have one of those, Stripe's only recourses are to cap refunds by balance or by going after your company in court.

In this instance my best option may be to just email all the customers I intended to refund and advise them to contact their bank and file a chargeback.

 

[polonieth]

Refunds may or may not be capped by available balance. It's up to the processor to determine.

Stripe is pushing merchants towards direct debit mandates. But if you don't have one of those, Stripe's only recourses are to cap refunds by balance or by going after your company in court.

First it wil draw from any available balance, then it will go to the connected bank account.

I am pretty sure if you disconnect your bank, then they aren't going to refund £20k for you to manually pay.

 

[Sols]

In this instance my best option may be to just email all the customers I intended to refund and advise them to contact their bank and file a chargeback.

If this makes your chargeback ratio exceed the various thresholds (varies by card scheme and other factors, but usually 0.50–1.50%), Stripe may terminate the account and you and the company risk ending up on blacklists with Visa and Mastercard. Rapyd may receive an alert at some point about this and reassess your merchant account.

then it will go to the connected bank account.

That's only possible if there is a direct debit mandate. If there isn't, the refunds will simply be refused since there isn't enough cash available to cover them. In that case, Stripe will have to pursue the merchant through other means (debt collection and/or courts).

 

[DaddyWarbucks]

If this makes your chargeback ratio exceed the various thresholds (varies by card scheme and other factors, but usually 0.50–1.50%), Stripe may terminate the account and you and the company risk ending up on blacklists with Visa and Mastercard. Rapyd may receive an alert at some point about this and reassess your merchant account.

The stripe account is registered in an EU company and the new merchant is in a UK LTD name. I am the director of both.

That's only possible if there is a direct debit mandate. If there isn't, the refunds will simply be refused since there isn't enough cash available to cover them. In that case, Stripe will have to pursue the merchant through other means (debt collection and/or courts).

Currently the DD mandate is setup. When I have had to process a refund usually the money for the refund is deducted from the sales that occur on the same day or the following day. I’ve rarely had money deducted from my bank account by stripe. If I remove the bank account prior to processing the refunds I assume they will cap it or reject refunds after a threshold amount. If I leave the DD mandate in place and process the refunds they will try and withdraw the money around 5 days later which will bounce back.

I am going to try and keep the account alive whilst being realistic about the fact that some of my customers will want refunds I cannot afford or will file chargebacks. This will cause the account to be closed and stripe will pursue me for the money owed anyway.

 

[Sols]

The stripe account is registered in an EU company and the new merchant is in a UK LTD name. I am the director of both.

All the more reason to be careful with chargebacks. If the chargeback ratio goes through the roof, then your EU company and you personally risk ending up on VMSS, MATCH, TMF, and similar lists. This can disqualify you (your company and you personally, or your websites' URLs) from having merchant accounts for years to come.

I am going to try and keep the account alive whilst being realistic about the fact that some of my customers will want refunds I cannot afford or will file chargebacks. This will cause the account to be closed and stripe will pursue me for the money owed anyway.

Good idea to discuss it Stripe. They might offer you to wire money in and increase the balance on your merchant account that way.

 

[Dandyline]

I have been running a business for a year now. Turnover has been £350k.

Stripe has been my payment processor but I have just obtained a new merchant account with a different provider (Rapyd).

Through a number of unfortunate circumstances I have a backlog of orders which I cannot fulfil. I plan on doing a mass refund which will total approximately £20k and disconnect Stripe from my website, disconnect my bank account from Stripe and proceed accepting payments using the new merchant account I have just created.

Fulfilment will not be an issue for any new orders. This backlog has caused me operational and cash flow issues. It was much larger and I have brought it down significantly using a lot of my own money but I’m pretty much at the end of the road now and this is make or break.

What steps will Stripe take to recover this money? I am not looking to rip my customers off who are waiting for their orders so the mass refund at the likely expense of my stripe account seems the best option now I have an alternative merchant.

I have gone through lots of compliance with Stripe as my business was deemed high risk. I have also completed their reserve hold periods and even had the account closed by them twice and still got it back. I know the refunds will result in my account being closed but I would rather be upfront with my customers and refund them than they file chargebacks.

Just end everything correctly and avoid any chargebacks, refund the customers manually through IBAN.

Rapyd is like Stripe known for terminating accounts and holding funds for no reason, so you should be careful before ditching Stripe. You should also be aware that Stripe is a big investor in Rapyd.