Shopify and Stripe: Account Troubleshooting and Legal Advice

shopify and stripe
Let’s take a few minutes to review the Shopify and Stripe alliance. We’ll:

  1. Go over some background info about both companies;
  2. Examine a few issues, like the prohibited businesses list; and
  3. End with some solutions for commonly reported merchant challenges.

Shopify and Stripe At A Glance

Shopify’s Origin Story

Several years ago, some Canadian snowboarding enthusiasts hopped on the startup train. Their goal? To sell equipment online. But our intrepid entrepreneurs didn’t want a generic online store:

They wanted to stand out; they wanted unique!

To achieve said goal, instead of using a standard payment gateway, the group developed a custom solution.

Quickly, they realized that selling snowboarding stuff was great and all, but releasing their skookum e-commerce platform might be even better.

Thus, with goal in mind, the group regularly convened at a coffee shop. And one day, the phoenix that is Shopify rose from a puff of java-infused, brain fumes.

So, who uses Shopify? People who want a highly customizable solution for their online stores. What do professional critics think of Shopify? CNET described the platform as “clean, simple, and easy-to-use.”

Shopify and Stripe Alliance

Who is Stripe?

HQ’d in Ireland, John and Patrick Collison founded the company in 2010. Simply put, Stripe is payment gateway processor for individuals and businesses without private merchant accounts . It’s similar to PayPal.

Stripe is Shopify’s preferred checkout system.

Common Shopify-Stripe Issues

Here’s the frustrating truth: in the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

In the world of online payment processors, chaos is the default setting. Problem-free payment processors fall into the same category as unicorns. A kajillion factors can affect a single transaction; problems are inevitable.

Caveats in place — here’s a list of common user complaints about the Shopify and Stripe framework:

  1. No Phone Number: Stripe famously doesn’t have a telephone support number (confirmed at the time of writing) — which is a sore point for many people. In defense, Stripe says e-mail support systems are way better than call centers — and, to be fair, many of their customers agree, citing Stripe’s ticketing system as superior to most.
  2. Chargeback Issues: Is Stripe a chargeback circus? Some people think so. Online response representatives for the company disagree, arguing that chargebacks are an unfortunate part of today’s marketplace, but promising to work closely with vendors to resolve chargeback disputes.
  3. Uncaptured Transactions: Some businesses reported an increase in “uncaptured” or failed transactions that coincided with a move to Stripe. Remedying this problem, however, often just involves a few setting adjustments (see tips section below for possible solutions).
  4. Money Transfer / Frozen Payment Issues: Like any payment gateway, the STRIPE-to-bank-account transfer process can take a tad longer than one would like. Again, this is true for nearly every available option. Hiccups, unfortunately, occur.
  5. Credit Card Blacklist: Stripe takes the “credit card blacklist” seriously. If you inadvertently land on the dreaded directory, Stripe may suspend your account till it’s sorted. Don’t think you belong on the list? Enlist a professional fixer to clean up the matter on your behalf.
  6. Blame Game: Some users accuse Stripe and Shopify of playing blame-hot-potato when it comes to various “authorize only” malfunctions.

Prohibited Business Issues

Products sometimes land on the “prohibited businesses list.” In this section, we’ll review some legal basics and discuss potential solutions.

What Is The Prohibited Business List?

The Prohibited businesses list is exactly what it sounds like — a list of businesses that either Shopify or Stripe bans from being sold through their respective platforms. Foodstuffs, supplements, make-up, formulas, cookware and potential weapons are routinely added to the blacklist.

So, what happens if your product lands on the list? In extreme cases, your online store may simply stop working. At that point, enlist a lawyer to negotiate a reinstatement. An attorney can best explain the necessary steps — based on the specifics of your situation — to get the product compliant — and off the list — ASAP.

The Product Blacklist Constantly Changes

The trickiest thing about the Prohibited Businesses List is its instability; it changes, without notice, on the whims of credit card companies.

Products Most Likely To Land On The Prohibited Businesses List

  • Vitamins
  • Herbs
  • Supplements
  • Weapons and Potential Weapons (including knives and certain fishing gear)

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Please don’t read this wrong, not every supplement is doomed to a blacklisted retirement. Just be aware that supplement sales come with an additional set of regulations and considerations.

Increased Number of Chargebacks After Switching To Stripe

A number of people report an increase in charbacks after switching to Stripe.

Is the criticism fair?

Well, it’s a gray area.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

With Stripe, the default privacy setting is “wide open;” users must activate protections. A lot of folks don’t notice the default setting, launch their stores with unsecured payment accounts, and ultimately get burned with fraudulent charges.

The takeaway: Manually set security preferences when prepping your Stripe account to avoid a flood of chargebacks.

Clicking “I Agree” Means Absolving Shopify Of Fraud Responsibility

Here’s an excerpt Stripe’s Shopify user agreement:

“You are responsible for verifying the identity of users and of the eligibility of a presented payment card used to purchase your products and services, and Shopify does not guarantee or assume liability for transactions authorize and completed which may later be reversed or charged back. You are solely responsible for all reversed or charged back transactions, regardless of the reversal or chargeback. Shopify may add or remove one or more types of cards as a supported payment card at any time without prior notice to you.”

The agreement also states:

“You acknowledge that you provide this personal information regarding you and yours customers at your own risk.”

So, what DOES all this legal mumbo jumbo mean? In a phrase: Shopify isn’t responsible for bad transactions, nor any personal data problems (hacks) that may arise. Sound sketchy? Perhaps. But nearly all — if not all — payment processors protect themselves in this manner because it’s the right business decision.

Connect With An Online Sales Lawyer

Kelly Warner helps online entrepreneurs. An Internet law firm, we partner with startups, established companies and individuals on issues related to online reputation, e-commerce, marketing, privacy and intellectual property. We’ also assist people with issues related to Shopify and Stripe. To learn more about our practice, head here. Ready to talk? Get in touch today.

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