Charge Disputes on Stripe

Our experience with chargebacks is definitely worse than those mentioned in the comments above. This may not reflect your business as our model is likely slightly different to yours. We run a membership and event management system which uses Stripe Connect for payment processing (UK + Ireland based):
https://membersportal.co

The issues I see with the chargeback system, which may/may not be the same as in the US:

1. People are paying on our system for events that might happen in 3 or 4 months time, so we have had quite a few fraudulent transfers raised by the cardholder because they have forgotten what the transaction was for
2. As we are the payment provider, our business is the legal entity that is responsible for providing the service/goods. This means we are responsible for providing all the chargeback info to Stripe, including contacting the cardholder, and the organisation running the event, to ensure everything has been provided as described.
3. The line item on the bank statement is restricted to 16 chars (I think, its around that anyway), which does not provide enough information to cardholders
4. Once a dispute is raised it is the cardholders bank that approves/rejects the decision. Our business has no appeal on this decision, and we do not see why decisions are rejected.
5. It takes us a long time (around an hour of work) to contact the org, the cardholder, collate this info and submit to Stripe.
6. The £15/$15 amount is only refunded if dispute is returned by the bank. We have had evidence from the cardholder before saying they forgot what the transaction was for, the bank rejected our evidence, and the bank keeps the £15 (or we charge that on to the organisation)

Some things I would suggest to minimise chargebacks:

• Ensure your terms & conditions are up to scratch at the time of payment
• Stripe API have a description field you can set on the bank payment line item. Ensure this is set to accurately reflect what they are buying, and that the customer is told this (e.g. in the payment success message)
• Have a faq on your homepage/linked off which states info around the charge so that if someone searches for the disputed payment description it should hopefully bring them to your site to jog their memory of what they paid for

I believe industry figures are around 1% of payments are disputed, I think we've found it around the 0.5% to 1% mark.

Hopefully some of this might help!

I wouldn't worry about it, it's not as bad as it sounds. Out of $4.5m we've had less than $500 disputed on Stripe and only lost in one case.

Sometimes people will do it by accident if they don't recognise the charge and a friendly email can have it resolved promptly.

If someone raises a dispute, you can submit evidence to Stripe – and they are very helpful.

From my own experience, the number of people who will try and rip you off is extremely low.

I think it's just the cost of doing business. You have to assume that the majority of the people are honest. There is the analogy that you open a shop and there is some shoplifting, but you won't shutdown the entire shop just because of this. You would put some measures in to reduce shoplifting.

Stripe has Radar which detects fraudulent behaviour. Also, you can refund a charge before a dispute with the bank is raised. Tell the users to talk to you before raising a dispute with the bank. Refunding a charge does have a slight transaction charge though.

I'd say that the chargeback % of total transaction volume is going to depend on the business, product, and/or service you are offering, but with marketplaces it can be very high.

I went on a tweet storm about this yesterday (https://twitter.com/Yoroomie/status/1056226000718114816) and reducing chargebacks and fraud has been one of my main focuses with Studiotime (marketplace for booking music studios).

I'm happy to share more about this, some of the product/processes put in place to reduce it, etc.

The chargeback fee of 15 usd is not something Stripe can control, it's put in place by card processors.

The number of disputes is really depends on the business model. Some services provide immediate values e.g seo key words finder and lead generation and some tool will provide values when you continuously use them e.g any analytical, sales and support products. I saw, the disputes rate is very high for immediate value business.

In my startup, we are facing lot of disputes from specific african country. They use fraud credit card for generating leads. After few weeks, disputes will be credited by original credit card owner. I am having hard time to fix this issue. By the way, I use paddle.