One of the things that we value at BusinessLabsPro is transparency. In one of our recent staff meetings we talked about the possibility of making our blog more relevant by not just providing instructional articles and how-to’s…..but also an honest, real-world, “look behind the curtain” peek at the kind of challenges that affect a start-up. The final push to do this was when we got notice from Stripe — the credit card processor — who said we were no longer welcome to use their services….but who also wouldn’t tell us why.
In our other companies, we’ve been processing millions of dollars with providers like Authorize.net, FirstData, and Paypal with no problem. Like any business, we had the occasional dispute or chargeback but we always resolved them quickly and our reputation was solid. So, we weren’t really looking for a new provider.
However, last year, we switched to a new CRM software and we noticed it had lots of extra features available for Stripe users. We’d heard a lot about Stripe from customers, clients and colleagues and had encountered them in our own online purchases as well. We had our programmers take a look at Stripe and they loved it. Integration would be easy. The documentation for the API was fantastic.
Simply put, getting started with Stripe was a breath of fresh air.
Our first year of using Stripe….
When I land at an airport and someone asks me how my flight was, my favorite answer is, “It was boring.” That’s how I like my flights: no excitement whatsoever. (There are only a few things that can happen on a plane that make a flight “exciting” and most of them aren’t good.)
We feel the same way about merchant processing. So, if you’d asked us what we thought about using Stripe for the first year, we would have said, “It’s boring. And that’s how we like it.”
Literally, I don’t think we ever needed to contact Stripe support a single time in the last year. The customer places their order….Stripe processes the charge….and sends us our money. Simple. Reliable.
After several months, we were excited about building our credit-card processing with Stripe and decided to start using some of our new CRM’s functions that would only work with Stripe. We were excited that our customers would have an even better “Business Labs Pro” experience than normal.
During that time, we developed the new My Inspired Media platform (v2.0) which allows small-businesses to get more traffic and leads through organic search engines by using our video marketing software. And, we launched a new marketing course that was specifically designed for home-based entrepreneurs, affiliate marketers, network marketers and direct-sales representatives.
Our volume went up substantially after these two launches but we were still processing far less with Stripe than we were with our other companies which we hadn’t yet migrated over to Stripe.
All in all, things were going well.
That’s when things started unraveling…
A few weeks ago, we received an email from Stripe’s customer service that said:
Thanks for signing up with Stripe.
Unfortunately, we will only be able to accept payments for businesslabspro.com for a bit longer. Stripe can only support users with a low risk of customer disputes. After reviewing your website and account information, we’ve found that your business presents a higher level of risk than we’re able to work with.
As noted above, your service will not end immediately—we understand that moving away from Stripe can take time. To help with the transition, we are able to provide you 14 additional days (beginning today) to switch to a new provider. After that, you won’t be able to accept additional charges on your account, but we will continue making transfers to your bank account until you receive all of your funds. If you need more time, please let us know and we will try our best to work with your schedule.
We’re sorry that we can’t offer you ongoing service and wish you the best of luck with your business.
It’s important to mention that we’ve never had a single chargeback on our Stripe account.
In fact, we’ve never had any dispute of any kind. Any refund requests were always honored quickly and professionally. So, for Stripe to say that we were “high-risk”…or that they could only serve customers with a “low risk of customer disputes”, we knew that this has to be a misunderstanding.
Our operations manager responded and let them know that we’d had no disputes or issues of any kind and asked for clarification on what their actual concern was. Was it the amount of volume were were doing? Was it the offer?
Finally we got a response…
Stripe responded 18 hours later but gave us no new information. The email was basically a more eloquent version of what they’d already told us: that they had been doing a “standard review” of our account and that “it came to our attention that your business presents a higher risk for chargebacks than we’re able to allow”. The letter put the blame on the “conservative views of our banking partners” and that it was because of “their history with your industry”…..and it flatly stated that “our business is a violation of their Terms of Service.”
What? “Our business”? “Our industry”? “A violation of Stripe’s terms of service?”
What did they think we were running? An online casino? A porn site? We sell software and business training. That’s all we do.
In hopes that there was still a chance for resolution, I reached out to them directly and told them that I was 100% certain we had not violated any policies. I clarified that the only two products that we sell through Stripe’s processing were a software subscription and a sales training course….and I asked for them to tell me, specifically, what portion of their terms of service we had allegedly violated. I also requested the issue be expedited to the manager of the risk-assessment department.
I was still certain it was a misunderstanding of some kind and would be resolved. Nonetheless, we asked the project team for those products to work over a weekend to get a contingency plan in place in the event that Stripe persisted in being unreasonable.
And I’m using that word “unreasonable” deliberately.
Because Stripe never provided any reason (motive) for our dismissal…nor where they providing any reason (logic) in their decision-making.
What company arbitrarily terminates an account in good-standing without letting them know why?
While we were waiting….
While we were waiting for a response, we learned that we aren’t the only companies who’ve been subjected to this kind of arbitrary heavy-handedness. You can do a Google search and find that there’s no shortage of businesses who have dealt with this same issue. Like this one. And this one. And this one. And this one. And this one. Or this one who said:
“No warnings, no chance to appeal, no heads up and absolutely no possibility to call them. [We] Lost around half a million euros before we could get our customers exported to another payment processor. Thanks Stripe!”
Finally, we received a response from a woman named Selina who identified herself as “a supervisor on the risk team”. Unfortunately, it was just as vague and ambiguous as the previous exchanges but included all the same language: standard review….came to our attention….your business might have the potential for high risk…..our financial partners. It was all the same information we’d heard before.
But she still never told us what “business” she thought we were in….what “industry” she thought was high-risk…..and she refused to cite what portion of the Terms of Service we had allegedly violated.
What she did do, however, was point out Stripe’s right to be arbitrary and capricious. She said:
“I’d like to direct you to the section in our Terms which states that “We may suspend your Stripe Account and your ability to access funds in your Stripe Account, or terminate this Agreement, if (i) we determine in our sole discretion that you are ineligible for the Service because of significant fraud or credit risk, or any other risks associated with your Stripe Account; and (ii) you use the Services in a prohibited manner or otherwise do not comply with any of the provisions of this Agreement; or (iii) any Law or Financial Services Provider requires us to do so.”
Which, to us, seemed like another way of saying, “We don’t have to tell you anything. We’re just going to terminate your account because we can.”
At this point, it seemed that any further dialogue was a waste of time. Clearly Stripe was more interested in being mysterious and arbitrary than actually having an open, authentic conversation about business.
And, to add insult to injury, remember their offer to be flexible about the deadline and to help us make the transition to another provider as smooth as possible?
That didn’t happen. They turned us off yesterday morning with no further comment.
It could have been a lot worse…and for many businesses, it is.
Fortunately for us, we have options. We’ve got other payment processors and merchant accounts. And we’re fortunate to have a great staff and programmers who switched us back over to our old processor in just a couple of hours. As far as we can tell, we didn’t lose a single sale. But now we have the unenviable task of dismantling a large amount of work that we’ve done in the last three months so that we could use all those new features that relied on Stripe.
So it’s not the end of the world for us. It’s just frustrating and unnecessary.
But, here’s what concerns me:
- What about the wine store owner who doesn’t have a knowledgeable staff who knows how to configure APIs?
- What about the startup who doesn’t have a few extra processing options in their back pocket?
- What about the T-shirt store owner whose inventory collects dust while she figures out a solution?
- What about the husband and wife who are running their company part-time out of their house while working full-time jobs?
The whole reason these people use Stripe in the first place is because it’s supposed to be “simple, quick and easy”. Where would they find the time to tackle the onboarding process of working with a company like Authorize.net or FirstData?
Also, it’s worth mentioning that this entire process played out over emails.
Why? Because Stripe doesn’t allow you to actually contact them by phone for any reason. I can understand ticket-based support for low-level customer support issues. That makes sense. We do it, too. Ticket systems are more helpful and provide a record of conversations.
But we were genuinely surprised that, even in matters of this magnitude, you can’t speak to anyone on the phone. Needless to say, that compounds the frustration because you’re never quite sure if the other person is clearly understanding what you’re conveying and the length-of-time between emails stretched for days. (Our longest wait between exchanges was four days….almost 1/3 of the time they gave us before shutting us off.)
There’s no other way to say it: Stripe could put these startups, entrepreneurs, home-based businesses and smaller companies out of business with their heavy-handed and arbitrary decision-making.
I wouldn’t be surprised at all to find that it’s already happened.
Stripe was started by founders who were frustrated with the merchant-processing industry and they wanted to disrupt the industry in a positive way. But, somewhere along the way, they became the thing that they were fighting against.
As a result, you’re as likely to hear someone say Stripe as “just as bad as Paypal” as to praise it.
One of the things that we’ve taught over the years in our training calls, courses and workshops is that the most dangerous number in business is “1”. Because when you have only “1” of something, any disruption can cause that “1” to become a “zero”.
That logic applies to vendors, traffic sources, advertising channels, hosting companies…….and it most certainly applies to merchant accounts.
If your business only has one merchant provider right now, you should consider having a second one. That’s good advice if only to cover the possibilities of a service issue or a down-time. Being able to switch to another processor quickly and continue taking orders is a life-saver.
But, if your business’s credit card processing relies solely on Stripe, be forewarned: if a company that sells something as innocuous as software services and sales training can get terminated arbitrarily, I’m not sure if anyone who processes with Stripe is truly safe.