For those not in the SaaS-business, chargebacks are VERY common, and if you're just starting with your company, this can really hurt your company.
Even PayPal is not your friend, PayPal ALWAYS favors the customer, when they create dispute, you'll be the guy loosing the money, even if the customer broke all of your TOS...
Sure, it's very attractive, suddenly you can accept all sorts of payments, but what you won't know, are the massive chargebacks -- 25 usd per chargeback.
This means, if your product costs 10 usd, you just lost 35 usd revenue.
That's payment from 3,5 customers, if 2 customers create chargebacks, that's 70 usd gone from your account.
And the best part? The payment provider will just "suspend" your account because "they invented a reason, without any warning upfront", and just steal your money.
Pretty fun?
Just do it the old fashion way:
Negotiate with your customers, and send an invoice, old fashion way, but more reliable for your company.
Hey, if you feel like donating all of your hard earned money to the payment platform, it's your choice. Good luck with that, as I gave my example.
2 charge backs will cost you 50 usd, if your product costs 10 usd, it's 70 usd gone.
Your competition, can create 1000 creditcards, buy a product from 5 usd from you, and create chargebacks, good luck.
And no, not suggesting, but ADVISING, if you want your startup to succeed, go the old fashion way, don't trust the middlemen so much with your money :-)
And you don't have to take my advice, no one is forcing you
How does one charge a customer then out of curiosity? I always thought it was impossible without some middle man. Can one send request directly to visa, master card ect.... How does one do that then?
ACH routing cost within the US is less than 2 usd (check with your bank)
The problem is with the chargebacks
If you’re a startup (just started), chargebacks will be unbearable as it is hard to acquire new customers
One customer that paid 5 usd and did a chargeback, will cost you 30 usd (your earnings from 6 clients)
Best is to ask the customer in this case if he can pay per year or just old fashion bank transfer, it sucks, but these will be customers that will be more serious to stay and to use your product
Even PayPal is not your friend, PayPal ALWAYS favors the customer, when they create dispute, you'll be the guy loosing the money, even if the customer broke all of your TOS...