Your platform partners with Stripe for secure payments. Stripe is ultimately responsible for protecting businesses that use its services, as well as their customers. In keeping with industry standards, reviews of users’ accounts —both new and existing— are conducted to ensure businesses remain in good health as they evolve over time.

The information collected during this process is used to confirm that there is an accurate, up-to-date profile of your business, and to determine whether any additional steps are required to help you handle future disputes or refund requests.

What is credit risk and how is it generated?

In Payments, credit risk refers to the possibility of a loss resulting from a business’s inability to fulfill its customer obligations for which payments have been received. The level of risk associated with any business often comes down to the potential for incurring losses through disputes. The analysis of years’ worth of payment processing data suggests that businesses which take payments in advance of delivery of goods and services are more susceptible to disputes, and therefore create credit risk for payment processors. While a business may have every intention of delivering the goods or services, long delivery windows can leave them vulnerable to unexpected delays or disruption which could prevent them from doing so, e.g., staffing or supply chain issues.

In general, businesses must demonstrate operational and financial resilience to continue fulfilling their business obligations.

What factors or signals indicate high credit risk?

One or more of these factors could indicate high credit risk:

• Elevated dispute activity: Disputes (or chargebacks) occur for many reasons. Most often they are a result of customers not recognizing a transaction, not authorizing the transaction, or not wanting to pay for the goods or services they received. Accounts with elevated (more than 0.75%) dispute rates are considered high risk.
• Elevated refund rate: A substantial increase in refunds (for example, a 100% increase from the week or month before) could indicate that a business is having issues fulfilling orders.
• Industries with longer delivery windows: Certain industries in which goods or services are typically delivered weeks or months after payment is received, such as travel and events businesses, are considered high risk. The long delivery windows associated with these business types leave them vulnerable to unexpected delays or disruption, such as staffing or supply chain issues, that could impact their ability to fulfill orders.
• Businesses with long billing periods: Businesses that bill customers in advance for services that will be delivered over a long period of time, such as annual billing, retainers, or account credits, are vulnerable to disputes and refunds from customers who decide not to continue paying for the service .
• Sharp volume increase: Businesses that see significant increases in volume can sometimes struggle to cope with customer demand, which can lead to orders not being fulfilled. Large spikes in payment volume could also be an indication of a fraud attack.

What to expect during this process

During a review, your business model, processing history, business reputation, financial stability, and product usage, among other things, will be assessed. The review will also check that you provide clear information to your customers to reduce the risk of disputes, such as how to contact your business, your fulfillment policies (e.g., refund, cancellation, or delivery policies), and details on any free trials offered.

To help obtain a holistic view of your business, you may be asked to provide updated financial information, such as bank balance and transaction history, financial statements, and management accounts relating to your business. You may also be asked additional questions about your operations management and recent processing history.

Why these reviews are necessary

Stripe takes on a significant liability as a payment processor and is liable for the refunds and disputes that arise when our users have taken payment from their customers but are unable to fulfill their orders. Stripe is also subject to strict requirements imposed by our partners in the payments ecosystem that dictate the level of risk that we're able to support. As a result, several types of reviews are required for every business that processes with Stripe to monitor credit risk and comply with financial partners.

The information you provide, such as details about your business model, funds flow, and vendor relationships, allows for a fair assessment of your business. In addition, the insight we gain from your linked bank account gives us a current and continuous understanding of your liquidity, which can reduce the need for frequent reviews.

How you can help ensure a smooth review

There are a number of things you can do to help ensure your review is completed quickly and efficiently:

• Keep your contact information up to date to ensure that you can be reached when needed.
• Provide as much detail as possible when responding to questions, and include any relevant supporting documentation.
• Link your bank account to reduce the need for us to collect additional information directly from you, and potentially reduce the frequency of reviews on your account.

The review relies on the information that’s provided when assessing risk. Without this information, there may be an incomplete profile of your business, and therefore add friction to the review process.

What actions might be taken after a credit risk review?

The actions taken will vary depending on the level of risk attributed to your business. In most cases, once the review is complete, your business will be able to continue processing as normal.

For businesses that are determined to have an increased level of risk, a portion of each transaction may be held in reserve to help ensure funds are available to cover future refunds or disputes. In some rare instances, if a business is determined to be very high risk, if it has remained in a card network monitoring program for an extended time, or is in violation of the Stripe Services Agreement, the account may need to be closed.

Payment best practices for keeping your business in good standing

Here are some ways to manage your credit risk, prevent disputes, and generally keep your business in good health:

• If possible and where applicable, charge customers as close as possible to the date on which they will receive the product or service to reduce the delivery window.
• Pause any recurring charges if your business experiences any unexpected or ongoing disruptions in service.
• Proactively cancel and refund charges that are likely to be disputed.
• If you receive any disputes, respond to them as soon as possible.
• Take steps to protect your business against payment fraud.
• Clearly display your shipping terms, return policy, refund policy, and any money-back guarantees on your website so that your customers can easily find this information.
• Keep detailed copies of receipts, agreements, and proof of shipment. For digital goods or services, maintain access logs or documentation that ties usage back to customers.
• Provide an easy way for customers to contact you for any product or service-related issues.
• Define customer service response times and make it easy for your customers to resolve payment-related issues.
• Establish a process for communicating any delays on delivery of products or services to your customers.
• Ensure you have sufficient product in stock to cover your expected sales to avoid any issues with fulfillment.
• Provide tracking numbers to your customers.

How often do accounts get reviewed?

Each business gets continually monitored with Stripe’s automated systems. The amount or frequency of reviews conducted on any account depends on the risk signals that get picked up up from monitoring of day-to-day activity.

More frequent reviews may get conducted when a business is at risk of not fulfilling business obligations due to their operational or financial position. Reviews of this nature are a common practice in the financial services industry.

In addition to occasional credit risk reviews, reviews are also conducted when there are anomalies in processing behavior, and when your business might be adversely impacted by industry headwinds or a challenging economic environment.

Linking your bank account gives a current and continuous understanding of your liquidity, which may reduce the need for us to collect additional information directly from you, as well as the frequency of reviews on your account.

How does Stripe ensure that information is handled confidentially and securely?

Data security and confidentiality are incredibly important. The information you share is intended solely for the purpose of underwriting and will be shared only on a need-to-know basis within Stripe. For more information about how Stripe handles your data, please take a look at Stripe’s Privacy Policy.

What happens if you can't provide the requested information?

These account reviews are a required step as a condition of processing for our users. Providing this information in a timely manner helps ensure there are no unforeseen delays or unexpected risk mitigations that could impact your business.If you are unable to provide the requested documentation or information, please contact support as soon as possible. The support team will work with you to try and find alternative solutions whenever possible.