We launched Chargeback Protection ( https://stripe.com/radar/chargeback-protection … ) earlier today. I'm super excited about this because I would probably have been a user back when I was running my SaaS business. Story time:
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Like most people running a business on the Internet for the first time, I didn't even know what a chargeback was when I started. (Chargebacks are an event caused by a feature of the credit card system: you can call your bank up about any transaction and say "I didn't do that!")
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Unlike a lot of small software entrepreneurs, I broadly get why chargebacks exist: they help customers get comfortable with giving their credit card details to businesses that they otherwise would not trust with the keys to the kingdom, because they know the bank has their back.
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But here's why small software entrepreneurs don't like them, in one of many possible vignettes. Over Christmas break in 2011/2012 I suddenly had an amount of money approximately equal to my rent payment get pulled from my bank account.
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So I spent some time investigating and it turned out a customer, who I thought was a long-established and happy customer, had filed chargebacks against us. For all of their usage. For six months.
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This is not a happy CS case to work over vacation, but I got in touch with them, and their CEO was mystified. So he called their external bookkeeper, and we found that a *relatively common* mistake had happened.
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The external bookkeeper didn't recognize our business name on the credit card statement, felt that that suggested we were defrauding the business, and immediately filed the chargebacks. We rectified this understanding over a three way call.
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I then got the CEO to give me an acknowledgement in writing that they were happy customers, asked the bookkeeper to call their bank and drop the chargeback, and got together a multi-page letter to the bank explaining the situation.
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Savvy founders already know the punchline: "You lost the disputes, didn't you?" Yep, of course with that setup I lost the disputes.
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Replying to @patio11
Maybe a silly question, but can you just re-bill them for the total amount and skip the dispute process once you and the customer are on board?
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Not a silly question. After a customer kicks it off, the dispute process runs at the speed of their bank's processes and the card network rules. In this example, they couldn't stop it even though they wanted to. There are ways to bill them after dust settles; not sure I did.
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