
Getting Fucked by Stripe - edoceo
http://edoceo.com/blog/2015/06/getting-fucked-by-stripe
======
pc
Stripe CEO here: In general, selling anything related to illegal drugs is
strictly prohibited by our banking partners. I wish we could be more
permissive here, particularly as marijuana legalization gathers pace. That
said, it's still illegal at the federal level, and the government doesn't mess
around on this stuff.[1] Software is an interesting case; I'm going to go talk
to our compliance team to see what we can do.

In general, we try to make our prohibitions clear[2], and we try to give a
grace period (the five days referenced) in order to minimize disruption.

If anyone has suggestions for how we could do this better in a world where
stringent prohibitions exist, we're all ears. (I'm patrick@stripe.com) We
don't like imposing others' rules, but that's part of the reality in operating
in the US and on Visa's/MasterCard's/etc. networks.

[1]
[https://en.wikipedia.org/wiki/Operation_Choke_Point](https://en.wikipedia.org/wiki/Operation_Choke_Point)

[2] [https://stripe.com/us/prohibited-
businesses](https://stripe.com/us/prohibited-businesses)

~~~
waffle_ss
I find it really disturbing that the federal government can do an end-run
around the 2nd Amendment by putting the squeeze on banks and payment
processors via the DoJ / FDIC to shut down bank accounts of firearms retailers
and prevent them from processing credit cards. Regardless of how you feel
about firearms, it's still a Constitutionally-protected right.

(Noticing that "weapons and munitions" are on Stripe's prohibited businesses
list and the corresponding category in Operation Choke Point)

~~~
jacquesm
If you think that is disturbing then you should wonder how the rest of the
world feels whenever America decides that its local laws should be applied in
foreign countries.

~~~
waffle_ss
Not sure I follow the thread of logic, but I do find quite a lot of what the
US government does both at home and abroad disturbing - if not sometimes
illegal and/or immoral - and am acutely aware of how that reflects negatively
on us American citizens. That includes your example.

------
dangrossman
Storing your customer billing data with your processor can kill your cash flow
when something like this happens. You not only need a new payment processor,
you need to get every customer to put their credit card numbers in again. If
you're in a high-risk business, or simply want to be safe, check out
[https://spreedly.com](https://spreedly.com). You code once against their API
and can switch between 80+ different processors with no code changes, and take
your customers with you. I recommend them whenever I can, as I've gone through
that pain before, but never worry about it now.

~~~
moey
The issue I see with Spreedly is it would be a good thing to use from the
beginning of the project, but it's not affordable when your first starting
out.

Maybe a free package with the ability to store 20 cards? I don't want to pay
$99 a month to basically hook up to your API and test it with my first few
customers.

~~~
jusben1369
Yep. It's awesome that Dan mentions us and has a very valid use case with
Spreedly. That said the use case we primarily solve for is marketplaces and
platforms working across multiple gateways or third party API's (Expedia,
StubHub etc) simultaneously. So I can see why you'd feel $99 was too high in
your case. (Spreedly CEO)

~~~
vcarl
Do you think there's enough interest to do a "low usage" (i.e. cheaper/free)
option where you aren't hopping gateways and just want to use Spreedly as a
processor abstraction layer? I'd love to investigate this for some little side
projects that aren't tied to a processor, but $99/mo would be prohibitive.

~~~
jusben1369
Hey vcarl when we launched 2 years ago we actually had a $10 per month plan
for the first 90 - 100 days after launch specifically to address this type of
market. It didn't take. And honestly it wasn't really needed with Stripe and
Braintree now in the market. Worse we had some perception problems from larger
prospects around a service that was just $10 per month. So we moved up market
to a higher price point to service marketplaces and platforms where our story
really did resonate.

~~~
vcarl
That makes sense, thanks for elaborating!

------
morisy
FWIW, I've been running our business on Stripe for four years, and we've been
hit with all sorts of legal threats by the government, individuals, and other
companies (we're also currently suing the CIA). I couldn't recommend them more
highly, based on our own experience and talking to others in the space.

We've done full refunds, partial refunds, and had one unfortunate chargeback
with zero problems. Their customer service has always been incredibly
fantastic, and the money is in our bank two days after it gets charged. The
one issue we've had is that they given super vague answers when our users trip
their fraud detection algorithm, simply stating the "charge was declined" and
telling us to check with the user's bank, when it was actually the fact that
the user had been using the card via a Tor proxy in Nigeria. I think the
security opacity is understandable, and each time they helped us work through
the issues.

tl;dr: I'm sympathetic to the poster, but Stripe seems to do whatever they can
to get the money to you quickly, and their customer support has been great
despite running a business with customers that regularly use Tor, fake names,
etc.

------
poulsbohemian
I met these guys at an entrepreneurs meetup in Seattle about a year ago. They
were completely on the level and the very definition of brave
entrepreneurs.Their business is producing record keeping software and their
customers are licensed by the state government - they are not a grow
operation. In this state, the activities of their customers are completely
legal and it certainly isn't illegal to produce software. It's disappointing
to see them run into this challenge given all the hoops they've had to go
through to get their business to this point. Regardless of where you stand on
marijuana (I am not a partaker) they have a fascinating story working to
legitimize a once illegal market.

~~~
dragonwriter
> In this state, the activities of their customers are completely legal

No, they aren't. Federal law is applicable in every state, and activities
illegal under federal law are illegal in every state. It may not be prohibited
by state law in that state, but then neither is, probably, espionage (of,
e.g., US defense information) prohibited by the law of that state. That
doesn't make espionage legal in that state, and doesn't mean that someone
advertising software specifically designed and marketed for the purpose of
supporting such espionage wouldn't have significant legal risks.

> Regardless of where you stand on marijuana (I am not a partaker) they have a
> fascinating story working to legitimize a once illegal market.

Its not "a once illegal market" anywhere in the US. Everywhere in the US, its
a _still_ illegal market, its just the number of _separate_ authorities
prohibiting it is one fewer in some jurisdictions than it used to be in some
places.

~~~
scott_karana
Their customers are not buying anything illegal either: they're buying
software.

It's the customers of their customers that are the problem.

Would you prosecute Ford because a dealership sold a gangster a car?

~~~
sesutton
If that car was specifically design to commit bank robberies, I'm willing to
bet there would be a prosecution.

------
jacobolus
Blame Stripe’s back-end banking partners. Stripe (and similar companies) have
to err on the side of caution, because if they get shut off from processing
credit cards, they’re hosed themselves. Since as you mentioned your company
does a very small transaction volume, servicing your business or anything else
with a hint of being drug related is high risk for Stripe with essentially
zero reward.

~~~
noir_lord
If that is the case then I might as well consider dealing with the banks
directly.

Lots of stuff on here recently is making me rethink using Stripe for payments
which I would have been doing in the next month or two.

~~~
toomuchtodo
> If that is the case then I might as well consider dealing with the banks
> directly.

Which you can do, if you have enough charge volume. Are you charging $1
million/month yet? If not, you probably don't have enough volume to carry any
weight.

I keep seeing these "whine" stories on HN about "Fuck stripe! 5 days notice?!
How dare they!". 5 days is pretty reasonable for someone taking an inordinate
amount of risk on you. I can count on one hand the number of HN posters I'd
provide upfront financing for in the 5-6 figure range. If you don't like it,
find a provider more to you're liking.

You can tear Stripe from my cold, dead hands before I'd go to another
processor, 5 day notices be damned. They are leaps and bounds better than the
alternatives, and it should be recognized that they face the same hurdles as
businesses with funding risk do.

~~~
noir_lord
> Which you can do, if you have enough charge volume. Are you charging $1
> million/month yet?

No and I will never charge a million dollars a month through anything as I'm
in the UK and over here card processing doesn't require anything remotely like
that volume and we have a healthy local market for card processors if I choose
to go elsewhere.

------
austenallred
> Why were were booted from Stripe? Is it because we are in the marijuana
> industry?

yup

~~~
smhenderson
Agreed. The article is a bit rant-y so I had a hard time figuring out what his
actual issue is but the whole time I could only think, of course it's because
you're associated with the marijuana industry.

IMO it will take all fifty states, DC and the federal government legalizing
marijuana before industries like banking and insurance are comfortable with
doing business with anyone associated with the marijuana industry.

~~~
bitcrusher
Maybe you're right; But something feels a bit out of focus for me, only
because they're only 'involved' from the standpoint that they're selling
software. If their software was called 'seed' tracker and they didn't mention
Marijuana overtly, would it still be an issue?

I get that Stripe can (and should) do business with whomever they choose. This
guy's rant aside, I think the fringe business issues surrounding emerging
industries are really interesting.

Here's another example: Technically Uber has been operating in a legal grey
area for a while (not unlike this software). What if companies like Stripe
refused to do business with them because of their quasi-legal business?
AirBnB?

~~~
smhenderson
_If their software was called 'seed' tracker and they didn't mention Marijuana
overtly, would it still be an issue?_

I think so... As others have pointed out (including the Stripe CEO apparently)
the banking industry is very paranoid about the legal marijuana industry right
now. There is just too much grey area, even in states where it's legal.

[https://en.wikipedia.org/wiki/Operation_Choke_Point](https://en.wikipedia.org/wiki/Operation_Choke_Point)

As for Uber and ABB, although there has been a lot of press around them and
some setbacks for them here and there I just don't think people get nearly as
excited about them as they are about the recent relaxation of marijuana laws.
People get very hyped about marijuana (and drugs in general) being legal; it
seems like one of those issues that people are pretty passionate about,
whether for or against.

------
rubbingalcohol
I issue refunds on Stripe all the time and they haven't shut me down. Although
I'm sympathetic to the author, it really is Stripe's prerogative to do
business (or not do business) with anyone they want. It doesn't sound like
they've frozen his account or taken his funds, they just don't want him as a
customer anymore.

~~~
roflc0ptic
And it's his prerogative to complain about it. As a person selling services
it's very important that payment processors be reliable, and seeing posts like
this is very useful information. I wrote donation processing code for a super
PAC against stripe's API. If stripe doesn't like your politics (which arguably
is what is happening here), will they exercise their prerogative?

It's a right "more honored in the breach than in the observance."

------
Asparagirl
It's worth checking out their SaaS, WeedTraqr
([https://weedtraqr.com](https://weedtraqr.com)) -- "Marijuana tracability,
seed to sale, from your phone". They are located in Seattle, where marijuana
is legal, and their app is a way for dispensaries and retailers to _ensure
compliance_ with the law.

In other words, they are doing the opposite of breaking drug laws.

Also of interest is their pricing page; their price tiers give you some hint
of how much money is sitting untapped in this industry, and how generally
underserved by software solutions it is, too.

~~~
mod
> In other words, they are doing the opposite of breaking drug laws.

Unless you consider federal laws.

~~~
Asparagirl
It is not illegal, even under Federal law, to _build an app_ to help
dispensaries in Washington/Oregon/Colorado/DC manage their local regulatory
compliance. Marijuana is illegal under Federal law, but this software, as a
tangential service, is not. If it were, no one online could sell grow tents or
grow lights or high-nitrogen fertilizer etc., even though it's obvious what
market those items are intended for.

~~~
greendata
I don't think you can advertise that those grow lights or fertilizer are to be
used for specifically illegal activities. One can use grow lights for many
different plants. This company is simply poorly named and the marketing is
aimed specifically at marijuana which is unfortunately illegal on a federal
level.

------
JimmyL
From the Stripe list of prohibited businesses [1]:

 _Marijuana dispensaries and related businesses_

Some of these rules come from Stripe itself, some come from the networks they
work with.

[1] [https://stripe.com/us/prohibited-
businesses](https://stripe.com/us/prohibited-businesses)

------
merpnderp
I wonder if this is related to Operation Chokepoint, a DOJ program started in
2013 which leans heavily on payment processors and banks to cease doing
business with businesses the DOJ finds questionable?

[https://en.wikipedia.org/wiki/Operation_Choke_Point](https://en.wikipedia.org/wiki/Operation_Choke_Point)

------
sv123
Everybody knows if you want to be in the drug business and still have a good
banking relationship, you should be selling coke.

[http://www.theguardian.com/world/2011/apr/03/us-bank-
mexico-...](http://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-
gangs)

------
polysaturate
While it isn't necessarily the business of HN readers, I feel there may be a
gap on communication between Stripe and the author. Either, it is being left
out of the article, or the author just immediately threw their hands up.

~~~
edoceo
I've put the full copy of the message from Stripe in the post. It makes no
mention of weed.

------
joedavison
If they are giving you five days to switch and will pay out all of your
processed transactions in a timely manner, then how is that "getting fucked"?
It's not.

The credit card processing industry is rife with horrible companies that will
freeze your funds for months on end and shut down your account without notice
at the drop of a hat.

Stripe stands head and shoulders above the rest of the industry in this
regard. In fact, I am impressed by how generous they are being, given that
this business is obviously operating in a grey area of federal law.

------
Justin_K
I just love how this is written... it's as if the author's business is
completely dependent upon Stripe and Stripe is shutting him down. If your
business is so great, I'm sure there's hundreds of other CC processors who
will take it. At least Stripe did their due diligence early on before you
actually do have customers.

~~~
edoceo
We have scores of customers, it was very embarassing to send them a
notification about this hiccup.

We have already identified a new on-line payment gateway which has internal
underwriting and answers their phone when we call. I spoke at length to the
staff, have a follow-up meeting with underwriting so they can be sure we're
not breaking any laws.

The BigCo bank we work with doesn't mind.

------
eggbrain
There were a few articles months back talking about how marijuana shops in
Colorado were having trouble managing money, mostly because it ended up having
to be an all cash operation, and banks would not let them deposit it. Private
security companies dedicated to managing and transporting that money ended up
being created to help relieve that issue.

What the private security companies ended up finding out, however, was that
banks started preventing them from depositing _their_ money as well, if only
by association.

I think you'll find this isn't only a stripe issue -- it's going to be an
issue with many payment processors when you're dealing with federal laws that
directly conflict with state laws.

When you create businesses on the knife's edge of a burgeoning new market, you
have to prepare yourselves to get cut a few times. It's not easy to build an
industry.

~~~
cvanlaw
Several stores in Colorado have started accepting debit cards in the past
month or so - maybe this is becoming less of an issue. Source: I live in
Colorado

------
hansy
Can I request a title change, maybe to "Stripe just booted us with 5 days
notice". I'm not normally phased by the f-bomb but it's so distracting on the
HN front page.

~~~
Alupis
An even better title change would be "We just got booted from Stripe for
violating their terms and likely a few federal laws".

It's crazy to me that someone running a business in the marijuana industry
would not be aware of, and accept the risk that their business is not favored
by banking services nor the Fed. You knew you were breaking, at the very
least, Stripes ToS when you processed payments for drugs...

Regardless of your feeling about marijuana and the law... reality stands.

~~~
edoceo
We don't process any payments for any drugs. It's software for reporting data
to the State of Washington. No different than software for managing inventory
for alcohol or pharma.

~~~
Alupis
You are ignoring the fact that the laws in Washington State do not trump
Federal laws. Your entire business was built in direct opposition to Federal
Law.

You helped organize, manage, and facilitate drug trade as far as the Fed is
concerned.

Stripe is in the banking industry -- heavily regulated by the Fed. They can't
have customers knowingly violating Federal law, and potentially passing drug
money (again, as far as the Fed is concerned) through their network. It's a
huge risk to them.

You cannot blame Stripe for shutting you down.

It's irresponsible and downright ridiculous to blame Stripe for your
business's dealings and/or shortsightedness.

You weren't "Fucked" by Stripe... you "Fucked" yourself.

~~~
hussong
Why do you keep posting more or less the same comment over and over again? We
get your point, no need to repeat yourself.

------
larrik
I can't get into details, but I've had a similar situation with Stripe
abruptly refusing to provide service to a wine distributor solely due to their
industry.

------
dguaraglia
What Stripe did is in line with the industry you are in, not the amount of
refunds you might have emitted so far. I'm sure you'd get the same email if
you were running a dating site, even if you had never had to refund anyone
yet.

Does it suck? Yes. But ultimately Stripe is just trying to run their business
and a big reason why they get discounted transactions from credit card issuers
is because they keep a portfolio of clients with low refund rates.

------
tezza
Can he not switch to a Pr0n CC payment channel ??

They've had problems forever with mainstream channels.

CCBill perhaps.

~~~
jacquesm
It's VISA and MC that are the problem, _not_ Stripe, they are simply operating
under terms dictated to them by the card companies and the feds.

If you want to make money with something legally grey don't point the finger
at companies who are in a tight spot when it comes to dependencies on such
entities. Credit card processing is not an in-alienable right.

~~~
tezza
Well Visa and MC have problems with pr0n too... Hence the existence of fringe
CCBill / Epoch etc.

Visa and MC don't mind so much if some other party is taking the risk.

------
dataker
Another lesson to avoid becoming completely dependent on any product. Always
good to have a backup plan.

------
orthoganol
Ah, thank you so much for sharing this. We have just been working on a Stripe
integration in addition to PayPal, but we're going to find someone else now.
It doesn't appear worth the risk.

~~~
louden
To be fair to Stripe, this will be an issue regardless of the provider you
use. They share the same back-end partners. As long as a business appears to
be high risk, the risk of shut down by payment provider will exist.

~~~
orthoganol
Except this post has given the impression that they are being over zealous in
who they deem 'risky,' for whatever reason. If others could share similar
'over zealous' stories from other financial providers I might reconsider.

