#SimonDFFOO-connect
lament bobcat
hi! I don't really completely understand, you lost me half way through
can you rephrase it a little or give an example?
refund_application_fee deducts funds from your platform account and gives them to the connected account, when you issue a refund.
wise lake
What I know so far from application_fee is that, it is through Stripe Connect (but I don't know whether it is Standard or Express), and I want to know what will happen if the merchant (connected account) tries to refund the full amount but doesn't have any funds in his/her account? Would they receive the full amount?
lament bobcat
well let's assume it's Standard
what will happen if the merchant (connected account) tries to refund the full amount but doesn't have any funds in his/her account?
it depends. Generally the refund is created and would be pending until the account has more pay-in volume, at which point the refund can be paid and the end-customer gets the money. https://support.stripe.com/questions/pending-refunds-due-to-insufficient-funds-or-stripe-balance
if you are the one initiating the refund on their behalf, you can pass refund_application_fee to give them back the fee you took, which leaves them on the hook for less of that balance so it can help a little in making the pending refund smaller/less frequent.
wise lake
Okay, for my follow-up question, where would be that application fee amount taken from? if the status would be as pending, there would be no amount taken?
lament bobcat
it's taken from your platform
take an example
Direct Charge:
- your platform P calls the API to process a payment of $100 through merchant M (connected account) against an end-customer's card C
- you take an application fee of $5. Stripe's processing fee is $4
- you make $5, the connected account M makes $91
then there's a refund:
- your platform P calls the API to process a refund of that charge. You use
refund_application_fee - M's account is debited for $100. You refunded your $5, so , in isolation, M now has a net negative balance of -$4
- 2 hours later M does some other payment of a differnet customer for $100(same way as before). $4 from that incoming money is used to resolve the negative balance. The refund proceses and the customer C gets the $100.
- your platform nets $0 overall(you gained a fee and lost it), the connected account nets -$4 overall(they lost the Stripe processing fee on the refund).
makes sense?
I highly suggest testing all this in test mode
wise lake
I think I got it now. I will try this. Thank you very much!