Should You Use Stripe for Your Online Business?

When we were creating and building our small online business in November of 2014 we had the choice to start accepting payments using PayPal or Stripe. We researched Stripe first and decided that their API and integration methods fit our business needs and were very easy to use, we were very excited to use Stripe as a small new startup!

In April of 2015, we launched YLDist.com and started using Stripe to process our payments – things were going well and we had not received one refund request during that short time using Stripe. I say it was a short time because mid-April we received this email from a Stripe support agent:

Then Stripe Gave us a Problem

Thanks for signing up with Stripe.

While we hate to give you anything less than a great experience, it does seem that your business is in violation of our Terms of Service, section B.5 (“Prohibited Businesses”). Specifically, we are unable to accept payments for multi-level or network marketing programs as mentioned here: https://stripe.com/terms#prohibited-businesses.

These regulations come from our banking partners, so we sadly have no flexibility with them. That said, we understand that there may be some work involved with moving your business away from Stripe, and we’re happy to help out with this process by giving you 14 days to switch to a new provider. After that, you won’t be able to accept new charges on your account, but we will continue making transfers to your bank account until you receive all of your funds[1].

I’m very sorry that we have to turn away your business, and we wish you the best of luck moving forward.

You might understand my confusion when reading that email from Stripe, as we’re not accepting payments for a multi-level or network marketing program. We sell fully managed and supported WordPress websites that we’ve custom created to help others showcase information about essential oils. I could understand Stripe’s position on this matter if we had a partnership with a multi-level marketing company (which we don’t).

Trying to Reason With Stripe

We tried to reply to Stripe with information about our company and why we are not processing transactions for a multi-level marketing or network marketing business:

Hello,

We are not actually associated with a MLM business. We are only selling websites, and are also in no way affiliated with any MLM or their payment systems. Can you please contact us at ###-###-####?

To be even more specific, our websites and business as YLDist.com is only selling websites for individuals. We are not making money, being referred to or being paid by any MLM (or their MLM compensation plans). We am not offering MLM services, nor do we offer a MLM program to our clients. Is this still an issue?

I need to know as soon as possible, thanks!

It was a huge blow to the way we set up our first ever small online business and the decision to use Stripe was integral to the way our system was running and accepting payments. To shut this down or to switch this to another payment processor would mean that every single client who’s signed up for our websites would have to re-submit payment information after their initial period (the one they used Stripe to pay with) was over.

Waiting for Stripe to Reply

We waited around 3 days for the reply email from Stripe, during this time we started working 24/7 to start a switch to PayPal as our payment processor. When the email did finally come back, the contents were not helpful at all.

Thank you for writing in and we’re very sorry for the delay in getting you a response. We went ahead and did a deeper review and reconsidered, but I’m afraid that our answer remains the same. Due to the type of marketing that exists on your website, your business is still too high risk for us to support. We apologize, it’s always frustrating for us to have to turn away users, and we hope you’re able to find a payments processor that more perfectly suits you and your business.

This was not helpful at all! I did wonder at the time how Stripe came to the conclusion that we had high-risk marketing on our website seeing as we’re selling WordPress websites to an online community. I suppose at this time we could look into who Stripe considers some of their best clients as shown on Stripe’s website:

  • Rackspace
  • Kickstarter
  • Shopify
  • DigitalOcean
  • Indiegogo
  • TED
  • BigCommerce

There are many more, but we want to point out these few above because all of them have something in common: They all offer services to multi-level and network marketing companies in some form or fashion. We used Rackspace ourselves for a long time to host our website servers! If we are too high-risk to use Stripe, then surely Rackspace would fit neatly into the same category as they host services for multi-level/network marketing companies.

Do We Recommend Using Stripe Now?

We recently reached out to Stripe again, wanting to know if anything’s changed. This was their reply:

Thanks for following up with us! I’m Ebony hopping in for Clayton here. I hope trust that’s alright with you.

While we appreciate your interest in Stripe, I’m afraid that we’re unable to support your business at this time. Our financial partners impose some fairly strict limitations on the type of businesses we can work with, and this includes businesses that involve multi-level marketing. Here’s a full list of businesses we’re prohibited from working with:

https://stripe.com/prohibited-businesses

I feel it is important to express that this in no way reflects on your specific business nor does it show how Stripe truly feels about supporting you. This is a case of a few irresponsible merchants in the business causing our financial partners to take a harder stance and ruining it for everyone.

We hate turning businesses away, but I sincerely believe that you will be better served by acquiring a processor who can fully embrace your business, and I wish you every success in growing your business going forward. I’m sorry that we can’t support you along the way.

Not only is this a canned-reply (note: “I hope trust that’s alright with you.”), it’s also made very clear that Stripe isn’t interested in looking into assisting or helping those small online businesses who are seeking better guidance to using Stripe.

It turns out that it’s not even rare to see this type of behavior from Stripe. UltimateMemberKinsta, Shopify Users, Developers, Normal Business People (just a few examples from the thousands of articles found using a simple Google search) all have similar or even worse cases with Stripe, yet they all have something in common: Stripe support is terrible at actually supporting these small businesses!

It just doesn’t make sense: YLDist.com offers website services and managed hosting to an online community and Stripe processes the payments of many companies selling online websites, ideas or hosting space (just like us) – yet Stripe can’t process the payments of our small online business because they believe that we are selling something multi-level/network marketing – which we are not.

After much time we finally got switched over to PayPal processing and have had no problems since – we even boast a 0.4% refund/dispute rate.

If you’ve ever used another companies API to integrate your payment processing, you’ll understand why 14 days is not enough time to build a fully functional payment processing gateway into your website.

We unfortunately don’t recommend using Stripe for any of your payment processing simply because in the blink of an eye your entire business can be taken offline without much of a notice.

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