What Are The Key Reasons For Stripe to Terminate a Merchant’s Account?

Stripe terminates the account of merchants they categorize as high-risk. And that's just the beginning of sorrows for such merchants.

Stripe was built by entrepreneurs who got fed up with the hurdles they encountered with payment processors of the day. Merchants generally see the company as the special one. But there are times when Stripe seems to stand between a vendor and their money.  

Les paiements sont le moteur de votre entreprise. Sans système de paiement, votre activité est paralysée. Et parfois, votre vie personnelle en pâtit tout autant.

Unfortunately, if Stripe terminates your merchant account, undoing it and bringing the account back to life is an incredibly daunting process. NOBODY wants to face the hysteria.

Prendre des mesures de précaution pour éviter de vivre ce cauchemar est sans aucun doute la meilleure chose à faire. Et notre objectif, avec cet article, est justement de vous aider à y parvenir.

Why Stripe can terminate a merchant’s account

Let’s start with an understanding of how Stripe categorizes vendors.

Per industry best practices, Stripe uses three tags for categorizing merchants that wish to onboard their platform.

La première catégorie concerne toutes les activités non autorisées, telles que les contenus et services pour adultes, les opérateurs de jeux d'argent, les accessoires liés à la consommation de drogues, etc., pour lesquelles les prestataires de services de paiement refusent généralement tout traitement par défaut.

La deuxième catégorie concerne les commerçants classiques. Il s'agit généralement d'entreprises de commerce électronique qui vendent des produits physiques dont la livraison peut être vérifiée à l'aide de divers systèmes de suivi et de confirmation de livraison.  

Dans la troisième catégorie, on trouve les entreprises jugées à haut risque. Cette catégorie regroupe les commerçants proposant des biens et services numériques sans preuve physique de livraison, les entreprises opérant à l'échelle mondiale et acceptant des paiements internationaux, ainsi que les entreprises actives dans des secteurs sujets à des taux de rétrofacturation élevés.

Unfortunately, the metric for deciding high-risk businesses isn’t always static. As one merchant noted, “you could start processing payments with Stripe as a regular merchant and still end up labeled high risk at some point. And even if your chargeback rate is way below average, you still may end up labeled a high-risk merchant if you operate in industries that usually get high chargebacks.”

Stripe can terminate a merchant’s account due to two crucial factors

1. Retours de paiement excessifs

Les rétrofacturations ne constituent pas seulement un fardeau pour le commerçant. Elles peuvent également poser de sérieux problèmes au prestataire de services de paiement. Chaque prestataire de services de paiement s'efforce de maintenir les taux de rétrofacturation sur sa plateforme aussi bas que possible afin d'éviter tout problème avec les sociétés émettrices de cartes de crédit et les banques. Ainsi, les entreprises présentant un taux de rétrofacturation excessif constituent un risque pour les prestataires de services de paiement. Ces derniers préfèrent se séparer de ces commerçants plutôt que de s'exposer à des problèmes réglementaires avec leurs partenaires.

De la bouche même de l'intéressé :

“Behind the scenes, we work closely with payment networks (such as Visa and Mastercard) and banking partners across more than two dozen countries. Each institution has strict legal regulations that govern them and specific rules about the types of businesses they do and do not work with. Through our partnerships, we are bound to uphold those requirements. In addition, we must also—of course—uphold the laws of the countries we operate in. Lastly, we need to be careful regarding the financial risks that different businesses may pose to their customers or Stripe.”

Here’s the pulse: If your dispute-to-transaction rate is approaching the established benchmark of 0.75% (varies by card network), know that you are in deep waters. Excessive dispute activity not only affects your ability to process with Stripe but with other processors as well. And can even result in fines from the card networks.

2. Pertes financières et atteinte à la réputation

As I intimated earlier, chargeback mediation involves multiple parties and Stripe is the middle person in that process.

If a fraudulent merchant closes their Stripe account and disappears due to a high volume of disputes, Stripe will be liable to cover the damages. That’ll be bad news for Stripe, more so due to the stringent industry rules regarding chargebacks. Instead having your business model put them in hot waters, they'd rather terminate the merchant account.

Stripe can also drop a merchant if the industry they operate in in known to be of high risk of fraud.

Voici ce qu'ils ont dit à ce sujet :

“If a business becomes insolvent and fails to deliver goods or services it has already sold, Stripe loses money: the business’s customer can initiate a chargeback, and Stripe covers the loss. This is a more significant risk in companies with a long wait time between purchase and delivery or pre-sales of highly speculative or pre-production products.

Nous examinons chaque entreprise au cas par cas afin de déterminer son niveau global de risque financier en fonction de son secteur d'activité, du stade de développement et de commercialisation de ses produits, ainsi que de son exposition globale.

Financial institutions and payment networks care about the brand and reputational risk that associated businesses pose. Our financial partners do not want to be associated with a set of companies even if there is market demand for them. Stripe doesn’t independently reject businesses based on brand risk—we have many unpopular companies and causes on Stripe—but we’re at times obliged to enforce the restrictions of our partners.”

How to avoid losing your Stripe merchant account

Stripe’s reputation as a great payment processor is not limited to its seamless onboarding processes or API functionality. Many merchants have confirmed that it's easy to work with Stripe. That notwithstanding, their chargeback mediation process is not always favorable to vendors. It’s just one of those things that happen when some companies scale. So, if you want to keep using their platform, you might as well arm yourself with crucial precautionary tools.

Voici quelques conseils :

1. Respectez leurs conditions d'utilisation. Lisez attentivement leurs documents et renseignez-vous sur les activités et les comportements qu'ils n'approuvent pas.
2. Keep your chargeback rates as low as they can get. Ensuring you get as little chargeback incidents as possible is easier said than done in today’s e-commerce landscape. But with chargeback and fraud mitigation frameworks such as Chargeflow, it’s a joyous ride. You can quickly grow your business without having chargebacks slow you down or risking your relationships.

If the experience of several other entrepreneurs is anything to go by, when Stripe shuts down your merchant account, your chances of restoring your account are pretty slim. Stripe’s decision is final for the most part.

Being proactive and working with fraud mitigation experts might seem like an expensive investment at face value. But the cost radically pales in comparison with the dangers of losing your merchant account. Don’t leave your digital security to chance. Learn more about Chargeflow and see how to protect your business from the increasingly damaging effects of chargebacks and digital fraud.