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.  

Betalingen zijn de levensader van je bedrijf. Zonder een betalingsverwerker loopt je bedrijf vast. En soms raakt je leven dan ook in de war.

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.

Het nemen van voorzorgsmaatregelen om te voorkomen dat je die nachtmerrie moet meemaken, is absoluut de beste aanpak. En met dit artikel willen we je daarbij helpen.

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.

Het eerste label geldt voor alle niet-toegestane activiteiten, zoals inhoud en diensten voor volwassenen, aanbieders van kansspelen, drugsbenodigdheden, enz., waarvan betalingsdienstaanbieders de verwerking in de regel standaard weigeren.

Het tweede label is bedoeld voor gewone verkopers. Dit zijn doorgaans e-commercebedrijven die fysieke goederen verkopen, waarbij de levering kan worden gecontroleerd via diverse trackingsystemen en leveringsbevestigingen.  

In de derde categorie vallen bedrijven die zij als risicovol beschouwen. Tot deze categorie behoren verkopers die digitale goederen en diensten aanbieden zonder fysiek bewijs van levering, bedrijven met wereldwijde activiteiten die internationale betalingen accepteren, en bedrijven die actief zijn in sectoren die gevoelig zijn voor hoge terugboekingspercentages.

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. Overmatige terugboekingen

Terugboekingen vormen niet alleen een last voor de handelaar. Ze kunnen ook ernstige problemen veroorzaken voor de betalingsverwerker. Elke betalingsdienstaanbieder streeft ernaar het percentage terugboekingen op zijn platform zo laag mogelijk te houden om problemen met creditcardmaatschappijen en banken te voorkomen. Bedrijven met buitensporig veel terugboekingen vormen dus een risico voor betalingsdienstaanbieders. Zij geven er de voorkeur aan om dergelijke verkopers te laten vallen in plaats van in conflict te raken met hun partners op het gebied van regelgeving.

Uit de mond van de bron:

“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. Financiële schade en een slechte reputatie

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.

Dit is wat ze daarover zeiden:

“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.

We bekijken elk bedrijf afzonderlijk om het algemene niveau van het financiële risico te bepalen, op basis van de sector, de fase van de productontwikkeling en levering, en de algemene blootstelling.

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.

Hier volgen enkele tips:

1. Houd je aan hun servicevoorwaarden. Lees hun documentatie zo zorgvuldig mogelijk door en zorg dat je weet welke activiteiten en handelingen zij niet toestaan.
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.