DirectPayNet

Category: STRIPE

  • Stripe Closing Accounts for IPO, Is Yours on the List?

    Stripe Closing Accounts for IPO, Is Yours on the List?

    Is your online business at risk of being shut down? Many store owners are scrambling after seeing the news that Stripe, one of the world’s largest fintech companies and currently a private company, is prepping for an IPO.

    News of this has been trickling through, but the biggest and most damning is Stripe bringing on investment banks JPMorgan and Goldman Sachs to explore a direct listing, instead, as well as employee cash out alternatives. Since it started talks of an IPO last year, it has decreased its internal valuation three times.

    While co-founders Patrick and John Collison are mulling over how investors and employees can sell Stripe shares, these pre-IPO talks are spurring doubts in those that matter most: the businesses that use Stripe’s financial services.

    If you’re dependent on Stripe for transactions, make sure you have a backup processor—otherwise, you could be left high and dry come closing time.

    Why would Stripe going public hurt my business?

    The news surrounding online payments startup Stripe, headquartered in both San Francisco as well as Dublin, Ireland, going public could have a detrimental impact on your business, as the company wants to clear its portfolio of any issues before its IPO.

    This could mean that their current online retail store model is no longer viable, meaning these businesses may have to close. Such an event would have far-reaching effects, from lost customers and potential early investors not wanting to join in due to the instability of business operations.

    As a business in the private market, Stripe has been itching to grow its valuation through funding rounds. Over the past few years (yes, over the pandemic), the Irish-American company fundraising led to investments from companies like Fidelity, Sequoia Capital, and other venture capital/retail investors.

    However, we’ve seen what happens when businesses go public, and often times it can hurt their growth. New technology might never make it to the platform, like crypto wallets or cryptocurrency payments. The company could no longer be innovative, thus losing money for everyone.

    Because of this, it’s important for businesses to prepare for tougher times ahead and understand that Stripe’s move could significantly affect them.

    When a company goes public, doesn’t that mean they have even more financial security?

    It’s true that Stripe’s IPO could potentially mean more funds, resources, and stability for the payment processing giant.

    However, companies going public are often under increased pressure to prove themselves financially—which means they can be much stricter with their policies. As a result, businesses using Stripe may have to meet even more stringent requirements, such as heavy compliance with anti-money laundering laws and other regulations.

    Additionally, Stripe has the right to terminate any accounts they deem too risky or not compliant with their standards—so if you’re running an online business that falls into this category, it could be in danger of being shut down if Stripe decides to tighten its policies.

    How can you tell if your account is on the list to be closed?

    If you’re an online retailer operating with Stripe, it is important to stay informed of their plans in the lead-up to their public offering. Unfortunately, if your business is on the list to be closed, you won’t receive any warning; it is only after the fact that changes will take effect.

    This can also mean major losses for businesses that are unable to navigate through sudden account closings, so be sure to check up on reliable news sources and keep yourself updated with Stripe’s terms and policies. Taking these precautions can save your business from potentially perilous debt in the future.

    Having a backup for everything, including your checkout, merchant account, and payment processor, will help prevent your business from taking a hit.

    What should I do if I’m worried about my Stripe account being shut down?

    If you’re concerned that your business may be at risk of having its Stripe account closed, the best thing to do is make sure you have a backup plan in place.

    Look for other payment processors and consider diversifying your payment methods so that you have more than one option for making transactions.

    Additionally, it would be wise to look into other e-commerce solutions such as Shopify or BigCommerce that use multiple payment methods and providers.

    By taking the necessary steps now, your business will be prepared for any changes Stripe may bring about in the future.

    What are some alternative payment processors you can use instead of Stripe?

    Understanding which alternative payment processors are available to you is becoming increasingly important as Stripe inches closer to its initial public offering.

    There are many options available that can enhance an online store and provide customers with secure checkout. Here are some good alternatives similar to Stripe.

    • PayPal
    • Square
    • Braintree
    • Shopify Payments
    • Ayden
    • 2Checkout

    These are similar options to Stripe, meaning they provide aggregate services to give you an all-in-one experience that’s compliant with local, federal, and international regulations.

    But there’s a catch…

    What’s the problem with using services like Stripe or PayPal?

    These services are called payment aggregators. They do not provide you with a merchant account.

    A merchant account is a type of bank account that allows you to accept credit and debit card payments for goods and services. That means that when you use a payment aggregator like Stripe, you need to already have a business bank account.

    Using a payment aggregator means that all your transactions are processed through one service. This can be good in terms of simplicity, but it also means you are subject to the rules and regulations imposed by the aggregator.

    Additionally, the fees associated with payment aggregators can be higher than those associated with merchant accounts and payment processors, and some providers may not allow certain types of transactions.

    Most payment aggregators do not approve high-risk businesses, and you are a high-risk business. Roughly 90% of all online businesses are high risk. Aggregators don’t notice you until you start scaling into roughly $20k/month. That’s when your funds get frozen and your store is shut down.

    For these reasons, it is important to weigh the pros and cons before deciding which payment processor or aggregator is right for your business.

    The Only Thing You Need to Secure Your Business Through Stripe’s IPO Is This.

    We don’t know Stripe’s IPO valuation will be or how much Stripe stock will cost, but it doesn’t matter. Less investment can lead to even more businesses being cleaned out, and more money means more control from investors about which businesses are able to use Stripe. It’s a lose-lose situation.

    Stripe’s decision to close accounts before going public will have far-reaching impacts on online businesses – many of which may not survive the transition. Bloomberg reports that Stripe will go public before next year, within the next 12 months. That means you have less than one year to find an alternative.

    If you’re relying on Stripe for payments, it’s important to be aware of the risks and have a plan in place in case your account is suddenly closed. No one wants to deal with the hassle of changing payment processors, but it’s better than being left high and dry with no way to accept payments at all.

    That’s where DirectPayNet will help. This is the only thing you need to secure your business through and beyond Stripe’s public offering. We will set you up with a real merchant account linked to a payment processor with no fine print to screw you over.

    Get in touch with our team today and tell us about your business so we can start setting you up for a successful 2023 (and beyond).

  • Stripe Users: Stripe EEA Is Causing You Chargebacks!

    Stripe Users: Stripe EEA Is Causing You Chargebacks!

    Chargebacks can quickly cause major losses for online businesses and merchants who use Stripe.

    If you’re one of the thousands of merchants who use Stripe to process international payments, we have news for you: Stripe EEA is appearing on customer bank statements and increasing your chargeback ratio.

    If you want to continue using Stripe, that’s fine. Below are all the facts you need to know about Stripe EEA and methods for avoiding chargebacks when using Stripe payment processing for international transactions.

    Too many chargebacks will lead to your funds being frozen and Stripe account being shut down.

    NOTE: Stripe EEA only applies to international transactions, specifically those that happen in Europe.

    What is Stripe EEA and is it different from Stripe?

    Stripe EEA, or European Economic Area, is a system that Stripe has implemented to protect consumer data and improve cross-border payments. With Stripe EEA, merchants are able to accept payments from customers within the European Economic Area, as this version of Stripe processes Euros and Pounds.

    It differs from regular Stripe as it requires two parts of authentication to complete an online payment instead of just one. This helps reduce fraud and provides added security for customers making purchases within the EEA.

    Remember, Stripe is a payment aggregator.

    Some, but not all, merchants or even transactions use Stripe EEA. How is that possible?

    Easy, Stripe is a credit card payment aggregator, not a processor. When you sign up for Stripe you get a payment gateway (PCI compliance guaranteed) linked to all the payment processors Stripe, itself, is linked up with.

    In Europe, requirements are different. Gateways, processors, and e-commerce businesses must adhere to PSD2 regulation, which is stricter than in the US.

    Stripe EEA appears on bank statements because it’s getting the best rate.

    As an aggregator, Stripe submits transactions through the payment processors it’s connected to. But sometimes, Stripe will put in part of a transaction through one credit card processor and the other part through another processor. The company does this to get the lowest possible rate.

    Only Stripe benefits from this tactic. You will always pay the same rate because Stripe—like most aggregators (PayPal, Square, etc.)—uses a flat-rate pricing model.

    Most of the time, Stripe EEA appears late on a customer’s credit card statement.

    Meaning, the charge won’t appear right away. You know what happens when customers see charges show up that they don’t recognize AND at a time they didn’t use their card? Chargebacks!

    Stripe collects a bunch of transactions from various vendors and merchants, then piles it all together as one single transaction through the processor(s) they choose. Again, this is to save them from spending too much on fees.

    Stripe EEA only applies to the European Economic Area.

    EEA stands for European Economic Area, so it makes sense that this credit card descriptor only appears for:

    • Customers purchasing from Europe
    • Stripe businesses operating in Europe

    That also applies for European customers buying from a European shop that uses Stripe, not just international customers. And, yes the United Kingdom is included here. Stripe EEA is actually based out of Ireland.

    How can I avoid chargebacks when using Stripe?

    We know how frustrating it is to start scaling your business only to see it come crashing down due to chargebacks. What a nightmare!

    Luckily, we have to tips and tricks for you to use that should help balance out your chargeback ratio and keep your business on the up-and-up.

    Stripe EEA is a billing descriptor, so change it.

    Easy as that. Go into your Stripe settings and store settings to make sure your billing descriptor appears exactly as you want it.

    We have some tips for you about what makes a good billing descriptor here. No matter what you choose, typing in something is always better than leaving it up to Stripe.

    With the email receipt, send a graphic of how the transaction might appear.

    If you know this is an issue and you just can’t seem to shake the consequences of it without leaving Stripe altogether, then tell the customer what’s up.

    When the customer places and order, the confirmation email they receive should include a graphic or a screenshot of how this purchase might appear. Don’t be afraid to show them two options: one with your store name and one with Stripe EEA.

    Describe why it might appear that way and when it could show up. Stripe EEA transactions usually don’t settle for at least one day after the purchase was made. Tell your customers that if they don’t get charged immediately, they should expect to see Stripe EEA tomorrow on their billing statement.

    Use chargeback prevention tools to help banks know the transaction is real.

    There are many ways to help prevent and reduce chargebacks. In this case, using a tool that puts a roadblock between direct-to-chargeback actions within banking systems would be most helpful.

    When the bank receives a chargeback request from a customer, they contact you first to check the accuracy of it. When you provide the details of the order for that cardholder, the bank can tell the customer directly and stop the chargeback process before any fees accrue.

    These tools are not the cheapest, but if you’re suffering from high chargebacks due to Stripe EEA, they’re worth purchasing.

    To coincide with these tools, you need to collect important customer data. Strong customer authentication (SCA) methods along with well-documented customer transaction data is crucial for winning a chargeback dispute at Stripe.com.

    Use another credit card processor for European transactions.

    Did you know you can have multiple payment processors and gateways on the same store?

    If Stripe EEA is ruining your international business but you don’t want to leave Stripe, then find an alternative only for international customers. It can even be another payment aggregator.

    The best one would be a local account within the EU. But you can find domestic accounts that process foreign transactions without issue.

    Adding another processor or gateway won’t disrupt the checkout process. It will look different from the Stripe checkout you’re customers are used to, but it can be just as simple. And let’s not forget to mention the added functionality another gateway comes with:

    • more payment methods (e.g., Apple Pay, local payment types, ACH, direct debit, Visa, Mastercard, American Express)
    • subscription, recurring payments, and buy now pay later payment options
    • additional security API plugins (like 3D Secure)

    The best solution is to leave Stripe and find a real payment processor.

    We’ve said it before and we’ll say it again: Stripe is an aggregator, not a payment processor. Aggregators are cheaper, but also come with their own set of risks, like the one discussed here—Stripe EEA.

    The Stripe support team is notoriously bad at caring for merchants and impossible to get ahold of.

    If chargebacks have become an issue for you due to this descriptor, then it’s time to find a real payment processor with better fraud prevention protocols in place. This will help you save money on fees and keep chargebacks at bay.

    A real payment processor is one you get with a merchant account or a merchant services provider like DirectPayNet. With a real merchant account, not an aggregator account, you get full control over how to handle payments.

    Get a merchant account for your online business through DirectPayNet and scale without risk.

  • Stripe Fees Increase, Avoid Paying More This Black Friday

    Stripe Fees Increase, Avoid Paying More This Black Friday

    Black Friday is right around the corner and Stripe, the world’s largest payment service provider, has increased transaction fees for MKE (manual keyed entry) payments.

    MKE is used by every category of merchants, sometimes as a backup solution and others as the primary method of payment. By increasing the fee for this type of transaction, businesses are stuck between paying even more money to an already stringent Stripe pricing structure or losing the sale altogether.

    Follow our guide below on understanding what manually entered payments are and how you can avoid paying the price this holiday season (and beyond).

    Stripe increases MKE fees by 0.5%.

    The increase means instead of paying 2.9% + $0.30, you will now pay 3.4% + $0.30.

    While a seemingly insignificant percentage increase, think about how much goes to Stripe at the end of the month when you check your Stripe billing statement. 2.9% is on the higher end of the processing fee spectrum (especially considering this is flat rate pricing). Increasing it to 3.4% pushes it into the offshore processing range, which is typically between 3% and 5% depending on your provider.

    The additional cost is unnecessary and we believe you shouldn’t have to pay it.

    Please note, this does not apply to all payment methods, only MKE via Stripe’s virtual terminal.

    The price hike is due to higher fraud rates.

    Fraud is always a risk for merchants and customers, alike. Merchants generally see fraud as a chargeback. Customers see it as a stolen card and unrecognized transactions.

    Chargebacks occur when a customer disputes a charge they see on their bank account directly with the bank to receive a refund without requesting a refund from you first.

    So, why is there suddenly more risk of fraud than yesterday?

    There are two things we can think of: interest rates and holiday shopping.

    To quote the official Stripe support article, “This price increase reflects the cost of higher fraud rates associated with collecting customer card details by phone or other unencrypted sources.” Because of the recent increase in interest rates, it’s more expensive for Stripe to handle these fraud cases. In order to combat the increased Stripe cost, they will charge customers more (whether that customer suffers from a higher chargeback ratio and has a history of fraudulent transactions or not).

    The second reason is holiday shopping. Black Friday, Cyber Monday, and the holiday shopping season, in general, is right around the corner. We’re already seeing pre-Black Friday sales happening. This shopping frenzy directly correlates with increased fraud in Q4. Most businesses won’t see the consequences until January when chargebacks start rolling in. How is Stripe combatting this? By increasing the transaction fee.

    Which merchants are affected most by the Stripe processing fee increase?

    All types of business are affected, but there are a couple of industries in particular that will end up paying significantly more if they stick to using Stripe as their processor. MOTO merchants (mail order and phone order) use MKE for all transactions, meaning this category will suffer the most.

    Manual keyed entry transactions are often used as the backup for in-store purchases. When a chip or magnetic strip isn’t working properly, or the customer doesn’t use a digital wallet, MKE is the go-to solution.

    Even online merchants use MKE when customers need to change their payment type without canceling an order or if they have issues with checkout and attempt to make a purchase through customer support. MKE is much more common than most merchants realize.

    During the holidays, MOTO transactions increase as customers often call in to secure their orders. Or when online shopping overwhelms the payment gateway, a common solution is to manually enter the payment details.

    Understanding the MKE payment process to avoid paying the extra fee.

    In order to completely avoid the new 0.5% increase, you need to understand how the payment process works for MKE transactions.

    What does MKE mean and when is it used?

    Manual keyed entry, usually phrased as manually entered transactions, is when a business owner or associate physically enters the credit card details of a customer.

    When you hand over your card to a cashier in person for them to type in the numbers because it doesn’t swipe, that’s MKE. When you speak your credit card details out loud over the phone, that’s MKE.

    MKE transactions in Stripe require the merchant to go into their Stripe account dashboard and type in the payment details.

    Is every card-not-present transaction a manual key entry transaction?

    You’d be right in thinking so, but the answer is no. MKE transactions are CNP transactions, but not all CNP transactions are MKE.

    Online payments rely on CNP transactions. At checkout, the customer always types in their credit card details unless they used a pre-saved card. These are technically manual key entry transactions because the customer typed in their details as opposed to swiping their card—but there’s a catch.

    MKE is unique to merchants typing in customer card details into a virtual terminal. So when customers enter their details into a secure payment gateway, the transaction is not considered MKE. But it is considered CNP.

    What’s the difference between a virtual terminal and a payment gateway?

    Payment gateways are what customers interact with at checkout and are required for e-commerce businesses. Virtual terminals are software that allows merchants to process credit card transactions. You don’t need a payment gateway to use a virtual terminal, it’s more of a backend feature that generally comes alongside your PSP.

    For example, the Stripe payment gateway is used when customers make a payment after shopping on your site. When merchants log into their Stripe Dashboard, they will see a virtual terminal that allows them to manually enter payment details on behalf of the customer. Both transactions go through Stripe, but the virtual terminal bypasses the security measures implemented by the gateway.

    Virtual terminals are not the same as a POS system (point of sale), either. A POS is used for in-person payments and credit card processing where the customer swipes or taps. Your POS may include a virtual terminal within.

    Here’s how you can avoid paying the extra fee Stripe charges this holiday shopping season.

    The shopping craze is just around the corner. Here’s how you can avoid Stripe’s increased transaction fees and pocket the profits.

    Have a Backup Processor and Gateway

    If your payment gateway isn’t working, as in an error comes up after the customer attempts to make a payment, notify the customer that something went wrong and refresh the checkout page with a new gateway.

    Merchants can have as many processors and gateways as they want. It’s such a good idea to have at least one backup in case your primary payment gateway glitches. This will help you combat declines and errors.

    Stripe is convenient, we know. It’s often used by startups and small businesses. But you can use other gateways and processors that accept:

    • Apple Pay
    • Google Pay
    • Debit Cards
    • Credit Cards
    • American Express
    • ACH and Direct Debit
    • Wire Transfers
    • International Cards

    Credit card payments may be the most popular, but it’s not the only type. If you are in an industry like MOTO, then a processor that accepts ACH over-the-phone would be highly beneficial to you.

    A backup processor is also a great idea if you sell different types of products, like subscriptions as well as one-time purchase products. You can configure each API to automatically be used for the type of product you want. This also applies to currency conversion and getting the best rate possible for your foreign customers.

    Obtain Level 3 Processing

    You can save big if you can set up your payment and fulfillment processes to meet the level 3 processing requirement.

    It’s not difficult to obtain, but it will take some rearranging and serious organization on your part. Read how to get it here.

    Get a Merchant Account

    Stripe is not a merchant account nor is it a payment processor. While it’s convenient and has a place in your payments ecosystem, it’s not the be-all solution that you want. The same goes for PayPal and Square.

    A real merchant account, one that matches your business model and accepts merchant category, will provide incomparable processing rates and negotiable fees with a real payment processor that backs your business.

    Even if you are a MOTO merchant where MKE and CNP fraud is highest, a real merchant account will help you avoid the additional fees and even prevent fraud/chargebacks.

    Secure your business for the holidays and avoid Stripe’s fees.

    DirectPayNet is a merchant account provider for e-commerce, MOTO, and most other high-risk merchants. Our experts can set you up with a processor that provides heightened fraud protection with no monthly fees and secure payouts as well as a PCI-compliant gateway or card reader.

    Get in touch with us right now for a real merchant account and avoid Stripe’s increase before the holiday rush.

  • Stripe for Dropshipping? Solutions and Alternatives

    Stripe for Dropshipping? Solutions and Alternatives

    The most common way to accept payment online is through credit cards. Stripe is one of the most popular credit card gateways to use at checkout, but is it good for dropshipping?

    Recently, we got an email from someone distraught about their new dropshipping business they set up with Stripe.

    We don’t recommend using Stripe for your dropshipping business for several reasons, of which we’ll get into below. But it is possible to use it and probably your best bet when just getting started.

    Find out all you need to know about using Stripe for dropshipping and it’s better alternatives.

    Can I use Stripe for dropshipping?

    Yes! And no.

    Stripe can be used for essentially any online business and offers a powerful, user-friendly payment gateway that gets customers through your sales funnel in a snap. But there’s a caveat: Stripe only supports low-risk ecommerce business.

    Dropshipping is considered a high-risk business model. Because you have no inventory and essentially act as a middleman between supplier and customer, there’s a lot that credit card companies and payment processor will say is “up in the air”. There’s just too much at stake and not enough in your control for your business to be consider safe.

    For new businesses, Stripe is great to get started. You can rack up some processing history before anything bad happens. And in the meantime, you should be applying for a real merchant account that does support dropshipping.

    To answer the question: yes, you can use Stripe for dropshipping, but you need to have a backup option that supports your business.

    Stripe is great for businesses of any kind that process LESS THAN $25K/MONTH. If you approach that limit or see your business scaling quickly, open an alternative account ASAP. There are alternatives to Stripe that do work well with dropshipping merchants.

    Why does Stripe flag low-volume dropshipping accounts?

    Stripe can choose any reason they want once they see which category your business falls under. In the case of the business owner in this email, there’s something a bit more complex going on.

    If you operate a store in one country (even if it’s incorporated there), but you’re logging into your Stripe account from another country, they will see that your IP doesn’t match your business location and flag your account.

    It does seem inappropriate given the connected state of the world and business, but that’s how Stripe operates.

    What is better Stripe or PayPal?

    If we had to choose, PayPal would be better for new businesses.

    Both Stripe and PayPal are terrible for dropshipping stores, though. They should only be used to either:

    • Build processing history (low sales volume only), or
    • As a backup payment gateway

    Stripe is popular and familiar to all, so it is easily misconstrued as a good option. PayPal is super simple and a consumer favorite. But neither support your business, both will shut you down and freeze your funds, and customers don’t really care that much in the end.

    What can I do if my Stripe account is frozen?

    Many people get in touch with us directly because Stripe or PayPal shut down their store. When we received the email we mentioned at the beginning, the entrepreneur had their ACCOUNT FROZEN AFTER JUST 4 TRANSACTIONS.

    That’s insane. In fact, Stripe is usually not that fast to shut down a business unless the ticket size is too high. the specifics don’t really matter here because in the end, you just want two things:

    Getting Your Funds Back

    This is tricky and takes some time. First, you need to send a physical letter to the head of Stripe’s risk department. Send it with tracking and require a signature upon arrival. There is no phone number to call, so don’t hold your breath for speaking with someone directly.

    This is the only way to speak with a human at Stripe. The Stripe support team is notoriously impossible to get in contact with.

    You won’t be able to ask for all of your money back right now, but you can ask for about 50%. Stripe needs to keep some of it in case chargebacks come through and they need to refund the transaction.

    Every month, ask for another 50% from the customer support contact you’re in touch with. Stripe can only hold your funds for a total of 180 days. This method will get you as much money back as possible before that 180-day mark.

    Accept Major Credit Cards Again

    The second thing you want is to immediately start processing payments again. You can’t leave your customers out in the cold, or else they won’t come back to buy from you again.

    What you want to focus on here is the basics: accept Visa and Mastercard payment methods first. Credit card payments (and debit cards) are the most popular forms on online payment. If possible, add American Express as well as ACH.

    First thing’s first, set up yet another payment gateway. You can choose Stripe, if you want. There’s also PayPal and Authorize.net.

    Yes, there’s the risk that your account will be shut down again. But this is only a temporary option.

    While you’re operating with either payment processor, keep ticket sizes low and make sure you’re not approaching a sales volume of $25k/month. You should be fine if you can stay clear of that threshold.

    After you set that up on your site, immediately start applying to a real merchant account (i.e., through DirectPayNet). This is the only way to secure your business without the risk of your fund being frozen or account shut down.

    What are some alternatives to Stripe as a dropshipper?

    The only real alternative service provider to Stripe is a real high-risk merchant account.

    Stripe, PayPal, and WooCommerce (on WordPress) work so quickly because they don’t give you a merchant account. They set you up with a gateway and allow you to process transactions within their own merchant account…up to a certain volume.

    Once you reach $25k, that’s when they start looking into your business and provide you with a real merchant account. Many people complain about this process because things work wonderfully for a few weeks or a couple months, and then one day they get hit with a bunch of due diligence stuff.

    If you’re a high-risk merchant (which you are if you’re a dropshipper) then Stripe won’t approve your application. Instead, they’ll freeze your account until all of the pending transactions go through and the refund/return window closes. 180 days.

    Some popular alternatives are us here at DirectPayNet, authorize.net, and 2checkout.

    Don’t use Shopify Payments. It’s Stripe with a different name. We understand the Shopify dropshipping ecommerce platform is very popular, but we also know they don’t realize Shopify Payments isn’t required. You can use virtually any online payment provider with Shopify. Just check their API for compatibility and you’re Shopify store will be set for success.

    Dropshipping outside of your own country?

    If you’re sending products to other countries (e.g., your business is in the US but you’re selling to non-US residents) and accepting payments from those countries, then you MUST get a local merchant account.

    You can hold several merchant accounts for the same business. You’re not limited to just one account. Use that to your advantage. Open a couple backups, just in case. Set some up that have better rates for certain card types. And definitely open one up for international transactions.

    Conversion Rates on Stripe and PayPal Suck

    It’s a fact. These rates are abysmal. You’ll make far less by using either of these for international transactions.

    If you don’t yet have a local payment processor or merchant account, then you should turn on dynamic currency conversion on your current gateway. This allows foreign customers to at least view and buy products in their local currency, which is then converted in the backend upon purchase.

    If you have been approved for a local merchant account, then you can set stipulations within the gateway. Tell both your site and your gateway to show amounts in the local currency (euros, pounds, etc.) if being viewed by someone in that location.

    You can also play around with the pricing in other currencies. Maybe customers are willing to pay a bit more!

    Then, if you’re worried about being paid in that other currency, you can open an account with Wise (formerly TransferWise) or Payoneer. They allow online businesses to transfer payouts in other currencies with solid conversion rates.

    How can I build a good relationship with my processor?

    Your first 60 days are crucial to the success of your account and relationship with your payment processing provider. Here are some tips to keep your account in good standing, no matter who you’re processing with.

    After 60 days, your processor will have a bit more flexibility with you. That will increase as time goes on and you remain in control of your business.

    Fulfill Every Order

    Don’t leave anyone behind. If you’re low on stock, tell the customer and find a solution. Don’t keep them waiting. No order should be left unfulfilled for more than 24 hours (48 on the weekends is acceptable).

    Provide Tracking

    You want to minimize any possibility of a chargeback. Therefore, you need to provide tracking information for your sake. It’s not just for your customer’s convenience, it’s for your records as proof of delivery.

    Offer Refunds

    If a customer doesn’t want their product anymore, accept the return and offer a refund. It’s better than having them dispute the transaction within their bank account and creating a chargeback instead.

    Where can I open a dropshipping merchant account?

    The team here at DirectPayNet is more than happy to help you with your business goals by providing you with a high-risk dropshipping merchant account—we even give you a human to talk to when you need!

    Open an account today and start dropshipping like a pro.

  • Is Stripe a Good Processor? The SMB Killer

    Is Stripe a Good Processor? The SMB Killer

    Business owners across the world know Stripe. Either from 1st-hand experience with the payments giant or because its difficult to not recognize due to it’s market share.

    In fact, Stripe is so popular that many people are blinded by the $$$ and ignore the red flags in front of them.

    What is Stripe.com? An aggregator, not a processor.

    Is Stripe a good processor? Depends on what you sell.

    Does Stripe support its users? Customer support is abysmal.

    Is Stripe safe? If you do small-scale sales, yes. Otherwise, no.

    Ask the thousands of merchants who’ve lost their entire business at Stripe’s hand and you’ll hear an outcry of, “Stripe destroyed my business!”

    Stripe is one of the biggest payment processors in the world.

    Is Stripe a legit company? Yes. Stripe is one of the biggest “payment processors” ever. It’s used by a huge number of businesses, startups, and e-commerce sites around the world to accept credit card payments online.

    Stripe was founded by Irish brothers Patrick and John Collison when they were still teenagers (they’re now 30). The company has raised billions from investors including Sequoia Capital, Visa Inc., and Peter Thiel at Founders Fund.

    The company boasts that it processes billions of dollars worth of transactions every year, making it easy for companies to collect money through its platform and then convert it into their local currency via bank transfer or PayPal.

    On paper, that all sounds fine and dandy. But in reality? Experience paints a much darker picture.

    Stripe has agreements with banks called PSPs.

    A PSP is a Payment Services Provider. It’s the party that actually accepts your customer’s card information and processes the transaction.

    Stripe has agreements with PSPs in the US, the EU, and other countries/continents, making accepting payments from customers around the world easy via currency conversion (disregarding the hefty transaction fees and pricing model).

    PSPs are the companies that actually take your money from customers and deposit it into your bank account.

    Contrary to what you likely believe, Stripe is not a merchant account provider. It is a payment platform with international payment functionality and a PCI-compliant POS card reader/gateway.

    With Stripe, you pay for convenience with flat, non-negotiable monthly fees.

    The agreement between Stripe and PSPs says that they can terminate your account at any time.

    Stripe has the authority to terminate your account at any time. They can also prevent credit card processing and prevent you from accessing customers’ credit card details.

    You may be wondering why Stripe would ever want to terminate an account, since they make money when their customers do. But there are many reasons why Stripe might want to terminate an account. The most obvious one is if they find out that you’re doing something illegal, such as stealing credit card information.

    The most relevant reason to you is this: violating their Terms of Service (ToS).

    The ToS are the rules that all Stripe users must follow in order to use their service. Unfortunately, their terms exclude most online merchants from using their service especially after reaching a certain sales volume.

    The last thing you want to be is on Stripe’s radar. Which is ironic considering how badly they need you, as a business, to implement their service.

    Stripe uses that authority liberally, opting to hold funds, prevent payment processing, and close accounts.

    Stripe has the power to freeze your account at any time. They can hold funds, prevent payment processing, and close accounts—sometimes without giving a reason. This is a major issue for business owners who rely on Stripe’s payment processing services to operate their businesses.

    Stripe uses that authority liberally. A simple Google search will feed you hundreds of threads, stories, and posts about how Stripe destroyed their business and stole their money.

    Businesses that use Stripe as their sole provider often lose all access to their customers’ credit card details.

    Because Stripe is an intermediary, it does not hold the payment information itself. Instead, it passes along this sensitive data to payment processors and banks.

    If a PSP chooses to terminate your account without notice and without legitimate reason, you could lose access to all of the credit card data associated with your business—including thousands of dollars worth of payments made by customers who have paid you in full but whose accounts have been frozen by Stripe or one of their partners.

    Stripe takes no responsibility for these actions by their partners and even goes so far as to warn you not to rely on them.

    Many businesses end up closing down because they can’t recover CC data and can’t process orders.

    Once they lose access to customers’ credit card details, they can no longer process new orders or renew existing ones.

    The reason for this is that Stripe doesn’t give you access to your own data. It keeps all of your customer information in its own database, which means you have no way of accessing it if something goes wrong.

    Stripe gives you some basic tools for managing customers, but these tools are nowhere near as powerful as the ones provided by other payment processors. And most CC information isn’t stored within Stripe, it’s accessed by Stripe from their PSPs.

    So when your Stripe account goes bye-bye, so does all your data.

    If you have recurring billing, this is a major issue as you need to constantly collect cards to charge people.

    If Stripe loses your card details, the customer won’t be able to pay and will have to cancel their subscription.

    It’s not just that this creates an inconvenience for customers; it also creates frustration and ultimately damage for your business.

    If someone has signed up for 6 months of service but finds they can’t pay because Stripe lost their debit card and credit card information, they are likely going to cancel immediately.

    Other popular payment processors like PayPal and Square follow follow the same path as Stripe.

    PayPal and Square terminate accounts just as much as Stripe does, though they don’t get as much attention because they’re not as big of players in the space.

    When Stripe terminates an account, it doesn’t refund any chargeback fees or give advance notice to its users. Instead, it closes down an account without warning and takes all of your money away with it. Expect the same treatment from other 3rd-party processors.

    They’re not there to protect your business; they’re just trying to make money at your expense.

    If you’re asking the question, “Does Stripe do high risk?” The answer is a hard no. And this is exactly why.

    A good processor is one that backs your business.

    Small businesses, online businesses, and anyone else looking for a processor need to know that Stripe is not a good option.

    Stripe is one of the most popular payment processors on the market today and it is easy to see why: it takes just a few minutes to open an account and the payment gateway checkout experience is familiar.

    However, these benefits come at the cost of security and reliability. If you are working with sensitive information like credit card numbers then this may not be a good fit for your business model. You need a service provider with stronger API security integrations for both your own backend and your customer’s important online payment data.

    Stripe is not safe for business owners. Accessing frozen funds can take up to 180 business days—unacceptable. Your funds shouldn’t be frozen in the first place (especially considering the processing fees)

    It is a company that holds your money and customer data hostage while they decide whether or not they want to terminate your account.

    We’re here to tell you there are better companies out there. Ones that accept any payment method you need: debit, credit (Mastercard, Visa, American Express), ACH. No matter what you sell, from dropshipping and supplements to adult content and firearms, there’s a processor that supports you.

    At DPN, we connect you with those companies. Give us a call today and start working with a payment’s system that will support every transaction you receive.