DirectPayNet

Category: STRIPE

  • Your Payment Gateway Is a Powerful Fraud Prevention Tool

    Your Payment Gateway Is a Powerful Fraud Prevention Tool

    Fraud is something most e-commerce business owners are familiar with – whether it be chargebacks, false orders, or other methods. There are many different tools that can help your business prevent and protect against fraud – however payment gateways are one of the most powerful and understated tools.

    Payment Gateway Fraud

    You might think that you only need a payment gateway to process and accept credit card payments. But, your payment gateway can do way more than that. It can actually help you prevent fraud as well.

    What is Payment Gateway Fraud?

    Payment gateway fraud happens when a customer uses a stolen credit card to make a purchase from you. The fraudster will make the purchase, but the real credit card owner will report the charge as fraudulent. If a chargeback is filed, you’ll have to return the money. You also may be on the hook for other penalties and fees.

    Chargebacks aren’t the only downside of payment gateway fraud either. You’re also going to have to deal with unhappy customers dealing with theft from their accounts and poor reputation from negative customer reviews.

    Your payment gateway is a powerful fraud prevent tool. When configured properly, it can halt fraudsters in their tracks and save your reputation.

    Not all gateways are the same, though. Some actions you can do on your own, some require a 3rd-party developer, and others can be done by contacting your provider.

    Is Stripe a Payment Gateway?

    Yes, Stripe is a payment gateway. While Stripe does connect you with payment processing services, those services aren’t their own. Stripe offers you a sub-merchant account beneath their own and allows you to process payments via the relationship they have with credit card payment processors.

    This is why we call company’s like Stripe, Shopify, PayPal, and Square payment aggregators or 3rd-party processors.

    How can I make changes to my payment gateway?

    If you have your own merchant account, then there are two ways to make changes to your payment gateway:

    Log in. Simply log into it and you’ll see options, messages, and more. Every gateway is different, so we can’t say definitively what you’ll see, but there will be areas for viewing messages in the gateway, data, options, code, plugins, etc.

    Contact your provider. Some providers don’t allow such easy manipulation to the gateway. But if you want to make changes, you can simply call or email your provider and ask them to turn features on or off as well as add in addition items from plugins or APIs.

    Depending on what you want to do, the level of difficulty when implementing features on your payment gateway varies. Some things are literally a flip of a switch. Others require developers to program in the new feature.

    Can I make changes to my Stripe gateway?

    Stripe generally only allows cosmetic changes to their gateway. There are some other things you can do, but they all require a developer to implement the approved integrations.

    Stripe doesn’t offer direct access to their gateway, but they do allow you to perform some actions when it comes to fraud. For example, if a card gets declined then you can have the gateway automatically send that customer an email asking for a new card or new payment method. You can also read decline codes from the gateway.

    If you’re looking to up your game against fraud, then it’s probably best to look for gateways beyond Stripe. That’s not to say Stripe is a bad gateway—on the contrary, it’s one of the world’s leading payment gateways to date. But it doesn’t offer the customization a lot of businesses require, especially when faced with specific types of payment gateway fraud.

    Why Use Your Gateway for Payment Fraud Prevention

    If you’re not using your payment gateway for fraud prevention, you’re leaving money on the table.

    By taking advantage of the tools that come with your payment gateway, you can easily set up a few simple rules that will help you prevent fraud and reduce bad transactions.

    Preventing fraud is important for several reasons. First and foremost, it’s important to protect your business against chargebacks and disputes. These are very costly and they can quickly eat away at your bottom line. Second, it’s important to protect your customers from having their cards stolen or their accounts taken over.

    While there are many ways to defend against fraud (even friendly fraud), leaving it up to solutions past your payment gateway is a huge risk. Once that fraudulent payment reaches the payment processor, eyebrows start getting raised, approval ratios get lowered, and banks get suspicious about your business. You don’t want any of that.

    Ways to Prevent Fraud in Your Payment Gateway

    Here are some really simple things you can do right now using your payment gateway as a fraud prevention tool.

    AVS

    The Address Verification Service (AVS) is a system used to verify the identity of the person claiming to own the credit card being used. This system checks that the billing address provided matches the address on file at the bank that issued the credit card.

    AVS is a good preliminary security measure, matching card information with customer input, but it doesn’t protect you from everything especially if you feel your business is under attack.

    CVV/CSC

    Card Verification Value (CVV) or Card Security Code (CSC) is the three or four digit code on the back of the credit card. CVV helps protect against fraudulent transactions by verifying that the person using the card has physical possession of it.

    Again, this is a great preliminary security measure and should be turned on no matter what, but it won’t entirely protect you from fraud.

    3DS

    3D Secure (3DS) is an important security protocol used by Visa and Mastercard (it’s sometimes called Visa Secure or Mastercard Identity Check). It helps prevent fraud by allowing the issuing bank to verify that the cardholder is the same person making the purchase.

    Every time you make a purchase with your credit or debit card, the merchant must ask the issuing bank whether your card is eligible for the transaction. The issuing bank will then authorize the transaction, or decline it if it suspects fraud.

    The 3DS process takes this one step further by adding an extra layer of authentication for both parties: the consumer and the merchant are given a “proof of ID” to complete the transaction in an added level of fraud protection. Consumers can verify their identity directly through their online banking account or via SMS verification, while merchants can use 3DS to generate a unique code that they can use in their anti-fraud system. This ensures that they know exactly who they’re dealing with and reduces their liability if something goes wrong with the payment.

    This process makes it more difficult for criminals to use stolen credit card details, because even if they have access to someone’s financial information, they won’t be able to perform the security check.

    You can think of 3DS as 2 Factor Authentication (2FA) for transactions.

    Transaction Limits

    One of the cool things about payment gateways, when you have access to them, is the ability to set limits based on time of day, card number, and amount. You can really get into the specifics and customize it depending on the type of fraud you’re experiencing.

    Transaction limits can be set at a specific hour, on certain days, for holidays, specific weeks, and even months.

    You can also set a maximum number of transactions per card based on either the credit card number, the BIN (which is the first 4-6 digits of the card), or even the customer’s IP address and email. BIN is the most useful, based on our experience, because fraudsters like to bombard gateways with hundreds of attempts using the same BIN.

    reCAPTCHA

    This free tool from Google allows you to block automated attempts to use stolen credit card numbers by requiring visitors to take an extra step to prove they’re human before submitting their information.

    This tool is usually used before submitting forms, logging in, and other non-financial activity. Having said that, it’s still a good tool to use that can take you one step forward in preventing fraud.

    Void Transactions

    As a final layer of security, you can void transactions if the email receipt bounces.

    Many gateways allow you to set up rules that automatically void transactions that do not provide an email address or phone number. If no contact information is provided, there’s no way for you to reach out to the customer later and warn them of a fraudulent purchase or ask them to confirm the purchase was legitimate. Consider setting up rules to reject these orders as well.

    Fraud Scoring

    While it’s not a gateway manipulation, fraud scoring tools use data to create a risk score for each transaction, which can be used to determine whether to accept or reject the transaction. They use algorithms and machine learning to analyze thousands of data points, including IP address, geo-location, device type and ID, email address age, proxy usage, payment history and more.

    A fraud scoring tool is a software layer between your checkout and gateway, and can also help prevent you from paying gateway fees for fraudulent transactions. However, these tools do add their own fee for every transaction they score.

    Stop Fraudulent Activity Before It Reaches Your Processor and Keep Your Approval Rating High.

    If you’re struggling with fraudulent activity on your online store, follow these steps to keep your business protected. Most payment gateways like come with fraud detection and some level of fraud management (like decline messages) as well as PCI-compliance. But there’s always something more you can do to protect yourself.

    DirectPayNet can connect you with a gateway that allows all the features mentioned and more, as well as a payment processor that won’t shut you down the second someone tries to scam you.

    Get in touch with us to get started.

  • RIP Square, iPhones as POS Devices — What Merchants Need to Do Next

    RIP Square, iPhones as POS Devices — What Merchants Need to Do Next

    Square built it’s merchant empire by providing (at the time) easy-to-use dongles that turned your smartphone into a point-of-sale (POS) device. Over the years, those devices have been upgraded to fit other pieces of technology including tablets like iPads, more operating systems like iOS and Android, and target more merchant categories.

    How many times have you been to a coffee shop and seen those giant white POS with an iPad and an awkward card reader?

    That’s all changing now, and it spells the end of Square as we know it. Apple announced Tap to Pay for iPhone, and it’s the new 3rd-party POS killer.

    Upgraded, Not New, Contactless Payments

    Digital wallets with the functionality to make contactless payments are nothing new. Apply Pay and Google Pay have been around for years. The technology, however, is getting a major upgrade for those in Apple’s ecosystem.

    Reading the headlines can be a bit confusing. We already have tap-to-pay, right? Yeah, we do. So what’s different now? Apple products have always been ready to be transformed into POS devices through third-party apps and add-ons, like the Square card reader. Apple products have also been able to be use to make payments at stores via Apple Pay for several years now.

    The tap to pay feature is the only way to use Apple Pay through the Apple Wallet app on iOS devices, including iPads and Apple Watches, when making in-person purchases. It uses NFC for contactless credit card and debit card payments, and it’s come a long way since its announcement. This new feature is the next evolution of the Apple payments ecosystem, though it’s limited to iPhone devices as of right now and no older than the iPhone XS.

    Now, an iPhone can accept payments from cards directly. Not Apple-to-Apple (that already exists with Apple Cash). But using the phone as a point of sale payment terminal for accepting direct contactless payments from a card on any payment network. That could be Apple Pay, sure. But it could also be Google Pay or payments from a Samsung phone. Or American Express, Discover, Visa, or MasterCard (including the Apple Card).

    This news isn’t about P2P payments, it’s about merchants accepting payments with no additional hardware. Retailers are free to carry their small business with them wherever they go with no plugins, no dongles, no cases. Just a phone and a merchant account.

    Is Square Really Dead?

    Not right now, and they’ll live on in other ways. The iPhone/Apple isn’t a merchant account nor a payment processor. Square can still provide sub-merchant accounts as a payment aggregator and use Apple’s new tech to avoid shipping out and producing their dongles. In fact, it’ll probably save them a good chunk from halting manufacturing of said devices.

    The real Square killer is how open the mobile-device-as-a-POS market it is now. Before, there were just a handful of providers and Square pioneered it. Now, as long as you have a merchant account and a payment processor that is approved by Apple, then you’re good to go.

    Square will most likely continue providing payment processing services for merchants, and they’ll continue to use the idea that they’re simpler and easier to use than traditional merchant accounts. While that’s true in some ways and they won’t need to send out physical card readers or point of sale devices, there’s nothing left that makes them stand out.

    Does Square have competitive rates and low fees? Not really. They have competitive rates in comparison to other 3rd-party processors like Stripe and PayPal, but no 3rd party has good rates or low fees.

    Is Square easy to use? Absolutely. It does offer an all-in-one solution at the expensive of customizability. So while you can take care of your whole business within Square’s offerings, you can’t turn on/turn off/add features, customize your payment gateway, or offer customers more ways to pay.

    Here’s What Merchants Who Use Square Should Do

    If you’re an online seller only, then you don’t need a POS anyway. If you’re using Square, then you should ask yourself what you’re benefiting from it, analyze if you’ve grown since you started with Square, and identify how Square is helping or hindering your progress.

    Consider Your Risk Profile

    If you are a high-risk business or a startup, then we urge you to leave Square and open a high-risk merchant account. Square doesn’t allow you to sell what’s considered as high-risk or high-ticket options due to the higher risk of fraud and chargebacks. The service may be convenient, but it’s certainly not sustainable.

    If you notice a lot of features that Square provides, but you only use a fraction of them. Or they don’t offer features that you do need or would like to implement, then you should open your own merchant account. This doesn’t mean closing down your shop and starting all over again. You can keep your Square account open as a backup but swap over to your new, more powerful merchant account and payment processor as your primary source.

    Speaking of risk, security is one requirement and aspect of your business you should pay close attention to (especially for high-risk merchants). With Tap to Pay on iPhone, you benefit from built-in biometric security features like FaceID and TouchID, which will automatically add some level of fraud and chargeback protection to the checkout.

    Identify Necessary Payment Options

    Are customers paying in a way that’s most convenient to them? Square does offer a user-friendly payment gateway that accepts the major card networks, but what if you need something else? Or what if your customers prefer something else?

    If you sell to foreign markets, you need a gateway that can not only display local currencies, but also accept them and the payment methods that locals use. Credit cards aren’t the only payment type. People are more eager to spend their crypto these days, others only use debit or ACH. You need to identify the payment methods your customers prefer and offer it.

    Square offers some of the these features, but not all of them. If you find that you’re losing sales because customers can’t pay in the way they want, then it’s time to make the switch.

    Weigh Your Need for Omnichannel Sales

    Square’s biggest gimmick is offline sales, as in in-person sales. If you don’t sell your product in person, then there’s no need for a service whose entire business model is stacked on that concept.

    But if you do sell offline, then consider how your business is with Square and if you’d be better off using another provider. With Apple opening up a merchant’s iPhone as a POS, you could essentially take your pick and use a service provider that better meets your needs. Or you could stay with Square, the choice is yours. The point is that now you have options.

    How Merchants Can Expect Square to Respond

    Square’s in trouble here. While they’ll be saving resources by shutting down production of their credit card readers, they’ll also be losing their entire hardware revenue stream.

    Merchant’s who use Square for online sales only will probably see no change (hopefully). It wouldn’t be fair to raise prices for an entire customer base who doesn’t use the feature Square is losing.

    For those who do perform live sales, we would expect transaction fees, monthly fees, or device activation fees to increase. Square will have to make up for their lost revenue in some way, and unless they become the sole partner on this new Tap to Pay on iPhone endeavor, then the burden gets transferred to the merchants.

    We can say with 99% certainty that Square won’t be a sole partner here. On Apple’s Tap to Pay on iPhone info page, they clearly state, “Apple will work closely with leading payment platforms and app developers across the payments and commerce industry”. Nothing about Square and the notion that there will be multiple providers. The feature will roll out in the coming weeks with SDKs being send to iOS app developers and payment processors. Now’s your opportunity to audit your own business model and decided if Square is helping or hindering your growth.

    Ditch Square Before Your Prices Are Hiked. Open a Merchant Account Today.

    Opening your own merchant account provides you with the ability to customize your features and negotiate your rates. You’re not stuck with a flat fee for the entirety of your career.

    Get in touch with us here at DirectPayNet to open your own merchant account. We’ll pair you with a payment process that works with the Tap to Pay on iPhone once we know which processors have the capability so you can do business the way you want.

  • Is Shopify Payments the Same as Stripe?

    Is Shopify Payments the Same as Stripe?

    If you’re an online store owner looking for a payment processor to help you accept credit cards, you have likely come across two of the biggest names in credit card processing: Shopify Payments and Stripe.

    From the start, it seems like those two providers are competing head-to-head with each other. They have different names, signing up is a different process, and–most obviously–Shopify Payments is linked directly to Shopify stores and its users. However, they’re not all that different but also not exactly the same, even though at first glance they both seem to offer a lot of similar features.

    Shopify Payments vs. Stripe

    Let’s outline what each service is, what they have in common, and how they differ so you can make an educated decision on which one is best for your online store.

    What is Shopify Payments?

    Shopify Payments is a payments solution that allows you to accept credit cards (Visa, MasterCard, American Express/AMEX, Discover), debit cards, Apple Pay, Android Pay, Bitcoin, and popular cryptocurrencies on your ecommerce store. As you can infer from the name, it’s dedicated to Shopify users and integrates with Shopify-specific seller tools. They also offer a “buy” button to use on an existing site or blog once you register for Shopify.

    What is Stripe?

    Stripe is also a payment solution. Stripe is a financial technology company, built to help online business owners accept and manage payments. Stripe focuses on providing the simplest experience possible for accepting all forms of payment, from credit cards and Apple Pay to Bitcoin and Alipay.

    Stripe is even easier than Shopify Payments to integrate into your own site because Stripe isn’t an e-commerce platform like Shopify. It focuses solely on payment services.

    What do Stripe and Shopify Payments have in common?

    Great question. First, you’d be interested to know that Shopify Payments is powered by none other than Stripe. In fact, as of 2020 it has changed its name to Shop Pay. But even though it’s powered by Stripe, it still has some differences as well as similarities. Here, we’re covering what they have in common.

    Fees

    Both of these credit card payment processors have the same transaction fees. The standard 2.9% + $0.30 per transaction is the same on both platforms. They both also have different and additional fees for types of payments being processed.

    Easy Registration

    Both services require no merchant account to apply for, which saves about a week of time. You simply sign up and start processing after about a day. Both services make it really simple to register for, whether you choose a Shopify account or Stripe account, making them equally user-friendly and accessible.

    Types of Payment

    Stripe and Shopify Payments accept the same payment types. You can accept all of the same payment methods on Stripe as you can on Shopify, which include credit cards, debit cards, bitcoin, digital wallets (Apple Pay and Google Pay/Wallet), ACH, and wire transfers. Not all of these payment options come out of the box, but they are all possible.

    Online and In-Person

    Stripe and Shopify Payments offer point of sale (POS) terminals, card readers, and mobile apps to accept payments. Merchants can use these services to accept in-person payments with their devices or by using their mobile phone to scan a QR code at checkout.

    How do they differ?

    As you can see, the general concept for both third-party payment providers overlaps. But they do differ in many ways, too.

    Tiered Pricing vs. Flat Rate

    Shopify Payments offers tiered pricing based on volume and transaction type. They offer a Basic Shopify Plan which is the same rate as Stripe, at 2.9% + 30 cents. Then they offer a Shopify plan, which lowers the percentage down to 2.6%. And then they offer an Advanced Shopify Plan, which lowers it even further to 2.4%. On top of these credit card processing fees per transaction, you have to essentially subscribe to Shopify. This is because it’s an entire ecommerce platform and the only way to access Shopify Payments is if you use and pay for Shopify. That will cost you from $29 per month up to $299 per month.

    If you use Stripe, you’ll be charged 2.9% + 30 cents per transaction regardless of the size of your ecommerce business or the type of purchase being made. Stripe offers a flat rate pricing model to keep its terms simple, making it as easy as possible to sign up.

    Platform and Ease of Use

    This one is arguable depending on your level of savvy when it comes to technology. Shopify makes it easy to set up a shop with ready-to-go themes and simple design tools, along with a gateway to process payments via Shopify Payments or Stripe out of the box. You can start accepting payments in minutes without having to edit any code or worry about keeping up with security updates. This is because Shopify payments is only available if you’re using Shopify’s integrated point of sale system . If you’re looking for an all-in-one solution with a wider breadth of functionality, then this may be what you need.

    Stripe uses an API that you must integrate into your own website manually — if you don’t know what an API is and how to use it, this might be a deal breaker for you. With Stripe, you are not limited to any ecommerce hosting platform. You can integrate it into any site (including Shopify). This makes Stripe better if you don’t want to use the Shopify platform.

    Worldwide Availability

    Both of these payment processing companies differ in where they are available throughout the world. Shopify and Shopify Payments is available in 17 countries and covers 85 different currencies. Be aware of your customer base and make sure that if you want to use Shopify Payments that it’s available in the places you need.

    Stripe, on the other hand, is available in 37 countries and covers over 135 different currencies. This service is much more widespread.

    Both Stripe and Shopify Payments Are Viable Solutions for Low-Risk Merchants ONLY

    Please be aware, both Stripe and Shopify Payments are terrible solutions for high-risk merchants. When working with a high-risk merchant, the main concerns are reducing fraud and chargebacks.

    High-risk merchants are more common than you might think, especially with online businesses. Supplements, subscription boxes, therapy/advice, coaching, and dropshipping are just some of the more popular high-risk industries out there.

    Stripe and Shopify Payments provide a convenient way to take online payments, but they don’t provide coverage for these types of merchants, and here’s why.

    They’re Not PCI Compliant

    High-risk merchants are required to follow the Payment Card Industry Data Security Standard (PCI DSS). Stripe and Shopify Payments do not comply with PCI DSS, which means they can’t be used by high-risk merchants.

    A high-risk merchant account provider like DirectPayNet will get you a PCI-compliant payment processor.

    They Aren’t White Label

    Many high-risk merchants want to white label their payment processor in order to protect their brand reputation. Neither Stripe nor Shopify Payments allow for white labeling; instead, you have to use their logos on your site and pay them for the privilege of using their platform.

    They Have Bad Currency Conversion

    While both services are available internationally, they don’t offer a friendly currency conversion to consumers or to you. The rates are terrible and it often results in chargebacks. In order to exchange currencies with Stripe or Shopify Payments in a better way, you spend thousands of dollars on software integration with them. In the end, it just isn’t worth it.

    With your own high-risk merchant account, you can use a variety of ways that work in your favor to process foreign currencies.

    They Don’t Give You a Merchant Account

    There are a lot of misconceptions out there about Stripe and Shopify Payments. The most common is that Stripe and Shopify Payments are creating merchant accounts for people. That’s false. The confusion stems from the fact that Stripe and Shopify Payments have some controls that can be used to emulate a merchant account, but they’re not technically a merchant account.

    Both services allow you to sign up so quickly because you don’t have to apply for a merchant account. They simply tack you on as a sub-merchant to their own account. This is also why they are so limited in who they can offer service to, i.e., only low-risk merchants.

    Get a Payment Gateway and Shopping Cart on Your Own Terms with a Merchant Account from DirectPayNet

    Stripe and Shopify Payments, or Shop Pay, are both great payment gateways that are familiar to many users around the world (you can see it on Amazon and other bigcommerce stores). But they aren’t the right solution for all sellers.

    Get the payment gateway, shopping cart, and payment processing that fits your small business needs best by opening your own merchant account through DirectPayNet. We’ll give you better, negotiable rates and features that really speak to the needs of your business.

    There is no viable one-size-fits-all when it comes to payment processing for your business. Make the right choice and open a high-risk merchant account today.

  • Stripe Business Account Verification – Can You Bypass It?

    Stripe Business Account Verification – Can You Bypass It?

    The quick and easy answer is no, you cannot bypass verifying a Stripe business account. The longer answer is still no, but you can put it off. The better question to ask is, “why do I need to verify my Stripe account?”

    Account verification isn’t something a merchant or individual can avoid. Whether you’re fast-tracking it by using a 3rd-party provider like Stripe.com or taking the long route with merchant accounts, verification will always be part of the process. So, why do you need to verify your Stripe business account? And why don’t they enforce this during the application process? Read on to find out.

    The Stripe Account Verification Process

    The process of verifying your account or identity on Stripe is not particularly difficult, but it might come as a surprise. Stripe doesn’t require verification upon application, rather they require it as you begin to process transactions. Applying for a merchant account through non-3rd-party processors is a more upfront about required documentation.

    Why do you need to verify your Stripe business account?

    The reason why you are required to verify a business account or even your identity as an individual goes beyond Stripe. All payment processors require account and identity verification because of the acquiring banks. The bank needs to verify the status of the company representative once transactions start being processed.

    Why does Stripe wait so long to verify accounts?

    The major attraction to credit card processors like Stripe (including PayPal and Square) is how easy it is to sign up. Whether you’re an established business, a startup, or an individual seller, you can go to the Stripe website, sign up, and have your account ready within minutes.

    If the process was longer, it would seem less accessible. And that’s exactly what Stripe sells: accessibility. Does that make Stripe a better processor than others? Not at all. You trade comprehension for speed. When the time comes for the remaining process, like account authentication, merchants can be thrown off guard. And being unprepared can harm sales, as Stripe is notorious for freezing your ability to process transactions.

    Another major piece of information that Stripe leaves out (or fails to require upfront, at least) is your business type. Stripe is not a good solution for high-risk businesses like sellers of supplement, subscriptions, CBD, and more. When registering, many users are not aware of the restriction and eventually get their stores shut down because of it.

    How does verification differ between businesses and individuals?

    The requirements for businesses and individuals overlap. The most important differentiator is providing the business’ registered tax information. That includes the Employer Identification Number (EIN), proof of business, business entity type, business address, and business contact information.

    Where the two overlap is when submitting personal information. Even when you open an account as a business, the company representative (the person applying for the account) must submit their own information. That information includes the social security number (SSN), driver’s license or other photo ID, personal address, personal contact information, and even personal credit information.

    The credit of your business is directly affected by your personal credit. If your score is too low, you have no credit, or you’re applying as a startup, then Stripe is likely to close your account. Thankfully, there are merchant accounts designed for startups and persons with zero/bad credit.

    The verification is part of the Know your Customer (KYC) requirements set by the federal government to fit with anti-money laundering (AML) policies as well as ensuring a registrant is who they say they are.

    Stripe does provide you with a Verifications page on your dashboard that displays the list of documents you can use for the verification process.

    Where can these documents be uploaded?

    You can upload the required documents through your dashboard. In fact, this is the only location where you can upload these documents. This way, Stripe can better protect your sensitive business and personal information.

    What if you can’t prove ownership of your Stripe account?

    This is where the Stripe verification process gets complicated. Merchants that have researched Stripe and want to avoid the verification process are stuck between a rock and a hard place. Merchants may want to avoid the process because they know their business is high-risk but need to use a 3rd-party to gain some processing history.

    Whatever the reason may be, there’s no real way forward without consequences. At this point, Stripe will likely have paused your processing functionality. You can process for many a few days, but ultimately they will only wait a short amount of time before freezing your account. Either you need to submit verification documents or close your account and open a new one.

    A third option is to contact Stripe customer support and speak with them about resuming account activity.

    What’s the minimum documentation necessary for verification?

    You can view the full list of minimum required documentation here. As an example, below is the minimum for ecommerce companies in the US with a full service agreement:

    • Business Type
    • Merchant Category Code
    • URL
    • Terms of Service
    • External Bank Account
    • Company Name, Address, Phone Number, and Tax ID
    • Company Owners
    • Representative Name, Date of Birth, Address, Email, Phone, Tax Info, and Relationship with Company
    • Owner Name and Email

    Stripe has also recently released Stripe Identity, which makes the identification process for businesses safer. It claims to host the verification process entirely within Stripe, helping users avoid fraud and prevent account takeovers.

    With this release, it appears that Stripe understands how confusing and stressful their own verification process can be. Therefore, they’ve revamped the process to make it safer and more user-friendly.

    When is the best time to verify?

    In general, it’s best to verify your business at the very beginning. Stripe doesn’t make that entirely clear that it’s possible to perform this process upon opening your account simply by following the instructions with the Verifications page of your Stripe dashboard.

    Using Stripe vs. Merchant Accounts

    Stripe is the simplest and fastest way to setup a shopping cart and receive a working payment gateway for your site’s checkout. But depending on your business, you might be wasting time and resources using Stripe.

    When you start to scale your business, Stripe puts a watchful eye on you. Scale too fast and your account gets frozen. Once you reach around $50k or more per month in transactions, Stripe will start asking for documents that would be required if you went through a merchant account provider.

    In the end, you’ll have basically made a full merchant account application but with poor rates and a cap on your monthly sales volume. If you continue with Stripe and you want to scale further, you’ll have to open yet another Stripe account and swap to it once you reach that invisible cap (around $50k) to avoid frozen funds and account termination.

    On the other hand, merchant accounts provided by high-risk merchant account providers like DirectPayNet provide you with flexible contracts and upfront verification processes. This way, there are no surprises that hold you back as your company grows. Merchant service providers can cater to high-risk sellers, sellers with bad credit, startups, and international sellers.

    The application process might take longer, but you’ll have better rates, a personalized contract, and a payment gateway that’s just as user-friendly as Stripe’s. Whether it’s used on desktop, mobile devices, or mobile apps (Apple, Android), customer’s will also have the choice to use their preferred payment method with ease.

    Considering Stripe as your payment solutions provider?

    Stripe is a powerful payment processor used by millions around the world. They make it as easy as possible to get started with a Stripe API that can be integrated on nearly any website. We even promote using Stripe for some business owners to get transaction history and clout behind their business as a starting point. But we also want merchants to understand that opening a merchant account is a better long-term solution.

    The right merchant account for you is one that caters to your business needs. Whether you need advanced chargeback prevention tools, fraud protection services, negotiable pricing, or more, merchant accounts are your way forward. And our API keys are just as easily implemented as Stripe’s, so there’s no tradeoff.

    DirectPayNet will get you through the verification process with ease so you can open your new merchant account and start processing credit and debit card payments ASAP without halting scalability. Contact us today.

  • When Stripe Becomes a Liability – The Limits of Processing Transactions

    When Stripe Becomes a Liability – The Limits of Processing Transactions

    Stripe is easily one of the world’s go-to solutions for online payments. Customers know the payment gateway, merchant’s get a simple signup and fast activation, and both sides can benefit from Stripe’s security. But there’s a downside to using Stripe: payment processing limits.

    Depending on your industry and how much you process, you could fall victim to Stripe’s strict shutdown measures that sees online businesses close at the snap of a finger with little to no notice. Follow along for guidance around this issue, whether you want to continue using Stripe or find another service altogether.

    Clarifying the Confusion Around Stripe’s Processing Limits

    Taking a look at Stripe’s payment doc, their official minimum and maximum in USD are $0.50 and $999,999.99, respectively. But we certainly know they won’t be accepting a near-million-dollar single transaction. So what will they accept, and why does their official documentation give that exact number?

    The stated maximum is basically a technical limitation. It’s not meant to imply people are purchasing products at that price. Rather, it’s that they can purchase products at that price if the payment processor allows it. And I know what you’re thinking: “isn’t Stripe the payment processor?”

    Stripe is a payment aggregator, not a payment processor. It basically allows businesses to operate within its own MID and rearranges them as they grow, connecting them to payment processors that can handle their transaction volume. Stripe aggregates several payment processors, just like how you can use several payment processors for your business.

    Stripe doesn’t outright set a volume limit, but there is one that hovers around $25k per month. However, for some businesses that limit might be $10k and others might be $50k or $100k. If you’re a new business like a startup or someone who’s just getting started with Stripe, the limit is lower. If you’ve been using Stripe.com for a while and can back up your trustworthiness as merchant (i.e., operate at a low risk), then your transaction limit will be higher. Everyone in between is around $25k.

    To answer the question of, “Does Stripe allow merchants to process an unlimited amount per month?”, the answer is no. That’s true for monetary volume and for transaction volume or line items. Higher-ticket transactions are high risk, but a lot of low-ticket items can also be high risk.

    What Happens When You Breach the Processing Limit

    When you go over the Stripe processing limit, of which they won’t tell you until you’ve breached it, a lot of not-good processes start taking effect. You lose sales and customers, funds are withheld, and accounts are frozen or even terminated. Refunds, payouts, and processing fees are also a bane for merchants using the Stripe API.

    Businesses Affected Most by the Limit

    Some businesses are inherently labeled “high risk”. Those include startups, dropshippers, subscription sellers, supplement stores, digital download merchants, and more. With these business types, there are pros and cons about using Stripe. The pro comes down to ease-of-use—new customers can sign up and start processing almost instantly without going through the underwriting process. The con is that once you do start making money, Stripe notices you and shuts down you store because they don’t allow high-risk businesses to operate using their service. That’s the importance of $25k, because at that value Stripe will start to notice you.

    How You Know When You’ve Passed the Limit

    All merchants, whether high-risk or not, are negatively affected by the processing limitation. Once any small business passes the limit set for their sub-merchant account, the owner gets an email. That email will tell you that credit card processing (on all networks–Visa, Mastercard, etc.) is halted for the next business day (maybe 3 days).

    There is no warning that it’s about to happen, it’s a notification that it did happen. Many merchants who use Stripe or any other aggregator like PayPal and Square name this as their #1 complaint.

    What Really Happens When You Go Over Stripe’s Processing Limit

    Keep in mind that the above is for one transaction over the limit. So when Stripe reinstates your processing ability, there’s nothing stopping a customer from making a purchase which will, of course, push you further over the limit. Here, there are two paths that you can go down (both decided by Stripe).

    The first path is that your funds are held and frozen for up to 9 months. Yes, nine months. Usually, account termination follows with no notice and it’s a process in-and-of itself to get those funds back. They can instantly decide not to approve your business, even if you’ve been operating safely for months. This is because you haven’t actually been approved when you signed up in the first place, which leads into the second path.

    The second path can be viewed as either good or bad, depending on your own perspective and how badly you want to work with Stripe. Once you reach the $25k cap, Stripe can start the underwriting process if they decide to support your business.

    Something to note: Stripe has regular reviews as your business scales which they use to suspend processing until they decide to accept your business.

    Okay, going through this process sounds like a good thing because you haven’t been shut down. And on the surface, it is. If you really want to continue using Stripe and you feel it’s the best, most convenient service for you and your customers, then that’s great. Keep going. But the underwriting processing is the same as what’s required when you apply for a merchant account.

    When applying for a merchant account, you can negotiate bank account and processor rates, eventually getting terms that really benefit you. With Stripe, you just get the same flat rate and monthly fees you’ve been operating with since the beginning with no added benefits and no guarantee that they won’t shut you down in the future. Again, Stripe has regular reviews and can suspend your account as they please.

    Ticket Sizes That Get a Red Flag

    You may know by now that Stripe doesn’t like high-ticket items. Maybe you read it in one of our posts or you’ve had an encounter with Stripe that solidifies the fact. Stripe also doesn’t explicitly mention what singular price is bad for one item.

    From our own experiences with clients, and research, anything above $500 for a single product is considered high-ticket on Stripe. But that also doesn’t mean that you’ll instantly get frozen if you sell something at $500. It depends on your business, processing history, and how much you’ve scaled over the months or years on their platform.

    What is a definitely “no” is $2500. Feel free to explore pricing for products and packages, but if you see that you’re approaching $2500, then consider breaking that package up into smaller ticket items so you don’t run into trouble.

    The Best Way to Use Stripe, Considering Processing Limits

    There are two solid ways to use Stripe, whether you want to keep them as a permanent payment solution or temporary.

    Scale Slowly

    You can’t instantly do $100k per month, but you could reach that volume eventually. Stripe makes money when you sell things, so of course they want merchants to sell more so they can make more. But diving in head-first with $100k in sales is not going to fly well. It’s way too risky. Instead, scale slowly. Contact Stripe’s customer service representatives about your account and let them know your goals and how you’d like to process more without being flagged. Follow their rules and you’ll get to a point where Stripe supports you no matter how large your business gets.

    Use Stripe as a Backup

    The best real solution for merchants is to use Stripe as a backup or to gain transaction history when they’re just starting up, have bad credit, or a recent merchant account termination. Stripe is incredibly easy to start using because they don’t underwrite you until you reach a certain point. If you stay under the radar and keep transactions below the cap, then you can gather a few months of transaction history to use in your favor when applying for a merchant account. And when you do apply for a merchant account outside of Stripe, you don’t have to terminate the Stripe account. Instead, keep it and use it as a backup option just in case. It doesn’t cost you anything and can easily be switched over to if push comes to shove.

    You can configure merchant accounts to provide customers with more payment options than Stripe. You can accept credit card payments, debit card transactions, ACH payments, and other payment methods that fit you and your customers’ needs. Payment aggregators typically promote their customer-friendly card readers, but merchant account providers can also give businesses POS devices that operate in the same way. Many of Stripe’s benefits can be met by other solutions.

    Avoid the Limitations of Stripe. Get a Merchant Account That Scales with You.

    Merchant accounts are a long-term solution for any serious e-commerce business owner who’s looking to scale, slow or fast. DirectPayNet’s expert account service reps are on the line and ready to get your business up and running with API that provides a user-friendly shopping cart, payment gateway, chargeback protection, and processor whose terms you can get on board with.

    Contact us today to start doing business without hidden volume caps, transaction fees, and risk of termination.