I started a Stripe account (even incorporated through them) for a basic graphic design and web design service business.
I process a few charges and even though I didn't get a single chargeback or dispute, Stripe decided to deactivate my account and said they would refund all the charges that were processed.
Which would have been fine with me. They said they would refund on Oct 17, but that date came and past. So I kept emailing.
Now they're saying they're holding all the funds for 120 days because of "elevated risk".
Which is insane because they have already withdrawn all the funds, meaning their risk would be zero if they refunded everyone.
I am beyond hurt and confused as I did need this money for my daughter. These decisions have real impacts on real families.
What do you do in this scenario? I have tried contacting support at Stripe but seems to be of no help.
If they hold a bunch of cash from people it is effectively theirs for that period of time. This could prevent them from needing to raise a funding round if done enough.
Some businesses are literally customer funded like these.
If you want to read more search for "negative cash operating cycle".
In the U.S., I don’t think money transmitters are allowed to do this. (They can keep the interest earned on it.)
Financing from deposits is more a crypto thing.
They are literally funding themselves out of deposits, in a small way if they keep any persons money for any period of time. If they start doing it to lots of people for months at a time then they are at least partially funding themselves from their customers.
Lots of businesses do this incidentally. A good one is businesses selling gift cards. It's not the same; but this set of conditions is not super uncommon.
No, they probably are not. It’s illegal and money transmitters are regulated.
What they are doing is collecting interest. One tends to see less scrupulous transmitters hold funds longer when rates rise. I didn’t think Stripe fell in this category, but it’s becoming difficult to say.
> good one is business selling gift cards
You’re right. (Also customer deposits.) This doesn’t apply to money transmitters, however.