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.