#motorphotor
mystic vessel
neon jewel
hello! what charge type are you using? e.g. destination charges or destination charges with obo?
zinc stirrup
Ooo I’m not sure. I don’t believe I am, I have applied an application_fee. I have read about destination charges but have not implemented anything like that. Is that a necessary step I have skipped?
It was my understanding that destination charges charged to the main platform and then directed to a connected account rather than allowing the customer to take payments directly
neon jewel
generally, if you're using custom accounts and you want the connected account to be the Merchant of Record (MoR) then you would want to use destination charges with on_behalf_of
zinc stirrup
Ok, I’ll do some research and come back, thank for the direction. Disregard my questions for now.
neon jewel
this would probably be something you can go through too with regards to your original question : https://stripe.com/docs/connect/statement-descriptors
https://stripe.com/docs/connect/charges - in case you haven't seen this wrt charge types
zinc stirrup
I skimmed that real quick but could you school me on what ‘wrt’ stands for?
zinc stirrup
Oh right duh sorry 😂
Ok, I have reviewed that in the past, direct charges are more our style I think. Our app is for tattoo artists taking payments from their clients. So the clients wouldn’t be paying us first, they would be paying the artist’s first.
neon jewel
we strongly discourage direct charges for custom accounts, there could be multiple issues with that. For your use case, destination charges with on_behalf_of will serve the same purpose
are you certain you want to implement custom accounts? It's quite a heavy lift in terms of implementation. You have to implement your own Dashboard for custom accounts as well as manage all verifications, etc
If you want to use direct charges, you should use standard accounts
zinc stirrup
Ya, we want to keep the users in our app and not have to rely on Stripe’s dashboard.
neon jewel
alright, then i still strongly recommend that you go with destination charges with on_behalf_of - the statement descriptor on the customer's bank statement will still be that of your connected account if you use on_behalf_of, and the funds will be transferred to the connected account automatically : https://stripe.com/docs/connect/destination-charges
zinc stirrup
Ok, last part, in testing I had ‘EXAMPLE’ rejected as a statement descriptor, understandably. Is there a list of keywords to avoid or just use common sense?
neon jewel
hrm, i would say pretty much common sense - the requirements are mentioned here : https://stripe.com/docs/account/statement-descriptors#requirements
zinc stirrup
Ok thank you for your help, that’s what I needed for today 👍🏼
neon jewel
feel free to reach out again if you need help!
zinc stirrup
Ok so after some more research it wouldn’t make sense to have destination charges, ours users would need the ability to issue their own refunds rather than needing to involve the platform. However I’ve coded the flow to be very specific.
The only portion of our app that needs the ability to refund is for appt deposits and that has been implemented via invoicing and the deposits have been capped so if a user does do something sketchy we can cover that cost.
Our app does not allow our users to take payments of just any amount. There first has to be a client attached to an appointment, upon arrival the client is required to complete certain identity verifications and sign consent for the tattoo procedure. Only after all of that is the tattoo artist allowed to take a payment of an amount that has been quoted to and verified by the customer. So while the ability to refund a payment is possible within the app, it will likely be a very rare occurrence.
I just don’t want to run into any problems with Stripe. I understand the strong recommendation to use destination charges. Is that because Stripe has run into irresponsible application builds and fraud?
neon jewel
with custom accounts, you're going to need to code a Dashboard for the custom accounts to issue their own refunds anyway - there's theoretically no real difference.
are you and your connected accounts based in the US?
zinc stirrup
Perfect that’s all I needed to hear to put my racing mind at ease. Yes correct
neon jewel
with regards to problems - you're probably going to have to check in with Stripe Support on this - I vaguely remember there were some concerns/issues with regards to tax with custom accounts and direct charges but i'm not really familiar with it so I can't advise here
some other concerns
Platforms have to cover for negative balances of their Express/Custom accounts.
Refunds for Direct Charges come from the connected account’s balance and Stripe fees (which are paid by the connected account for Direct Charges) are not returned, making it more likely for a connected account to have a negative balance. Platforms are responsible for the negative balances of their Express/Custom accounts, so whenever there’s a negative balance we have to hold a reserve from the Platform’s available balance.
These charges aren’t compatible with Radar
A Platform’s Radar rules only apply to their own charges, not charges directly created on their connected accounts. This is a problem because Direct Charges are subject to the connected account’s rules but Express/Custom accounts cannot actually set their own Radar rules.
Platforms can’t easily get any metrics (like decline and conversion rates) that represent payments across all their connected accounts.
Because this information is distributed across many accounts, it takes more work to gather all the data. Metrics are much easier to calculate and track when the Platform can access the information in one centralized place.
the bit about refunds - what i was trying to convey was that i don't see any difference between direct charges and destination charges with obo - to the end customer and probably the connected account user, it all appears to be from the connected account anyway, in which case you can still go with destination charges with obo
zinc stirrup
Ok I think I’m tracking now. Also, theoretically a user could create a fake customer, initiate a charge, transfer the money out, then issue a refund and we’d be on the hook for the refund.
neon jewel
that could happen regardless of whether you're using direct charges or destination charges
neon jewel
when you're using custom accounts, the platform a.k.a you are liable for any negative balances on the connected accounts
zinc stirrup
I can’t thank y’all enough for making this discord available, it’s invaluable. I’ll be back later with more stuff I’m sure. I’m going to build a destination charge flow and see how it feels before I continue in either direction.
neon jewel
since you're in the US and your connected accounts are all in the US, it's probably not a huge problem since you can simply Transfer funds to the connected account (assuming auto debits fail). It's just that there's a greater possibility of the connected accounts going into the negative