Using Connect to profit share with resellers

[Alan Gervais]

Hello,

We're currently using stripe for our SaaS monthly subscriptions and we want to start working with resellers who will bring in new customers and monthly subscriptions. I've read through the Stripe Connect docs a few times, specifically https://stripe.com/docs/connect/payments-fees#creating-subscriptions, and I'm still a bit fuzzy on how we should implement this.

Here's an overview of what we'd like to achieve:

• Have resellers provide us with all their info and we'd use the Stripe API to create a managed account for them.
• Resellers will be responsible for generating new leads and doing customer signups via our software
• We will provide the reseller with a previously agreed upon percentage of the monthly subscription revenue for customer they signed up
• We want to keep all customer and subscription data on our Stripe platform account for reporting and control reasons

How can we implement this without creating plans, customers and subscriptions on the connected account?

Thanks in advance for any advice!

Alan

[Matthew Arkin]

Currently, subscriptions don't support the destination parameter (aka charging through the platform), so the way to "properly" do subscriptions would be to create the plan/customer/subscription on the managed account. If thats not possible then, you'd have to just create a charge each billing cycle to send the money to the connected account.

At a high level that would look something like this:

1. Create customer in your own platform's account. Charge them the amount of a billing cycle with an application fee, store their next billing date in your db.

2. Next billing date, charge them the amount of the next billing cycle with an application fee.

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[Alan Gervais]

Hey Matthew,

Thanks for the reply!

Our issue is we don't want our resellers (managed accounts) to be on the hook for managing the customers and subscriptions post signup nor do we want to create a "management" app for them. We just want them to find and signup customers to use our SaaS and give them a monthly percentage of the revenue generated by the customer via Stripe.

If I understand your work-around-solution correctly you're suggesting that we do away with Stripe subscriptions completely and role-our-own automated subscription process which creates Stripe API charges w/ application fees for the connected account, is that correct?

Thanks again,

Alan

[Matthew Arkin]

Yup, you'd be rolling your own subscriptions. 

The alternative is seeing if special case transfers could apply to you and just keeping subscriptions in your own account and then making transfers to the managed accounts [1]. Normally its good to email sup...@stripe.com and explain your use-case and they can confirm whether or not special-case transfers are or are not appropriate. Going off of this, there are also third party payout tools that specialize in referral type payments that may be able to support it from a regulatory / compliance perspective if special case transfers doesn't work out.

Matt Arkin

[Jason J. W. Williams]

> Currently, subscriptions don't support the destination parameter (aka
> charging through the platform), so the way to "properly" do subscriptions
> would be to create the plan/customer/subscription on the managed account. If
> thats not possible then, you'd have to just create a charge each billing
> cycle to send the money to the connected account.

That's news to me...when I asked Stripe support specifically about
Connect's ability to vary a partner commission on a subscription they
indicated that was possible:

> > > > Adam,
> > > > Related question...is it possible to vary the partner commission percentage on? For example some partners will do more volume than others and we'd like to reward them with a bigger commission pct.
> > > >
> > > > -J
> > >
> > > Hey J,
> > > Definitely -- depending on how you handle this in your platform, it could just be a matter of changing the `application_fee`[0] or simply issuing a different payout amount to your connected applications[1].
> > > If you run into anything that I might be able to help with along the way, feel free to get back in touch with me!
> > > Cheers,
> > > Adam
> >
> > Hi Adam,
> >
> > So I understand setting the application fee on a charge, but in this case we're not creating charges. We're creating subscriptions (Stripe is then creating the charges on a regular basis). Do we set the application_fee on the subscription then?
> >
> > -J
>
> Hi J,
> First, we've been quite busy and I'm just now coming across your email. I'm sorry for the delayed reply here!
> You can use the `application_fee_percent` parameter when you create the subscription to accomplish this. You can find a bit more about this in our API docs here:
> https://stripe.com/docs/api#create_subscription
> If you think of anything else I might be able to help with, please just let me know!
> Cheers,
> Adam

[Matthew Arkin]

Connect supports subscriptions with application fees but the subscription has to be created under the connected account, thus your account doesn't "own" the customer.

—
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[Alan Gervais]

Yeah, no, we don't want to write our own subscription logic at this point.

I thought about the special-case-transfer approach but I'm not sure what our overall 'reseller' transfer volume is going to eventually be (docs say must be < 10% of overall volume) and we'd also need to switch the platform account to manual transfers.

Not sure what we're going to do at this point.

Thanks,

Alan

[Alan Gervais]

So after talking to my stakeholders, it seems we're going to go with the subscriptions-on-the-connected-account approach:

https://stripe.com/docs/connect/payments-fees#creating-subscriptions

I'm just worried we're missing a major gotcha here... hopefully not.

Thanks,

Alan

[Colin Sidoti]

The "gotcha" might be pricing power.

I have a similar "reseller" relationship with Connected users.  I provide the product, they provide the sales channels.

Ideally, I want my resellers to make exactly 5% of every transaction, while the other 95% goes to me for fulfillment and fees.

This is currently impossible when charging on the Connected account, because the connected account covers the fees, and there is no guarantee that Stripe fees will be 2.9%+$0.30.  The best I can do is set my application_fee to 100% - (5% + 2.9%+$0.30), but then if volume pricing ever kicks in, my reseller is automatically getting more than 5%.

Ultimately I decided that fine-grained control over pricing is more valuable to me, and am charging through my platform.  This created lots of other headaches though, like passing chargeback fees along to the sales channel.

I've always assumed I'm in fairly unique situation.  Would this be a problem for you, also?  I'd love to hear thoughts on resolving this challenge.

Thanks,

Colin

[Alan Gervais]

We're doing only subscription-based sales, we'll negotiate the % that the reseller will receive for each successful subscription payment made during our reseller setup process and set an
application_fee_percent on each subscription the reseller sets up. The reseller will assume the Stripe fees as well.

[Ryan Rayfield]

Hey Alan,

Just wondering how this worked out. We are unable to create the subscriptions on the connected accounts due to our loss of "control" over the pricing, card statements and all so hoping strip puts the destination parameter into the subscriptions some time soon! Right now we've got a complex system of timed one off payments that go along with our own subscription plans.

let me know!

Thansk,

Ryan

[Isaak Dury]

Our major 'gotcha' was not being able to illustrate the Stripe fee back to our customers clearly... that is without doing it manually like in https://support.stripe.com/questions/can-i-charge-my-stripe-fees-to-my-customers 

Our customer charge $100 to their members

Minus our Connect Application fee which we can illustrate to them

**Minus Stripe Fee - GOTCHA - you can't automagically pull this number from Stripe - you have to manually calculate it - which is a huge nightmare when operating over various geographies and not knowing at what time the changeover to new Stripe fees occurs (like what they just did in the EU) and something we have been caught up with before with other providers and we really don't want to repeat. 

We need to show our customers the exact breakdown of the $100 - Our% - Stripe% = Money they see in their bank account. 

That has been our biggest gotcha to date.

Not sure if that helps... 

Cheers, Isaak 

[Matthew Arkin]

One thing to note is that there are tons of rules[1] and laws[2] about passing on the Stripe fees to the customer. The cleanest way to do that is to just raise your prices (effectively consider the Stripe fee like any other cost of business - you don't pass along a portion of your power bill to your customer as an added fee). A big thing is surcharges are normally allowed for credit card transactions but not debit cards.

Passing the Stripe fee to your connected account is pretty easy. If you charge directly to the connected account, the connected account becomes the merchant of record for the transaction and pays the stripe fee for the transaction, you can still charge an application fee on top of the Stripe fee. [3] In this case, the fee Stripe charged is part of the balance transaction object for the charge.

1: https://usa.visa.com/dam/VCOM/download/merchants/surcharging-faq-by-merchants.pdf

2: http://www.ncsl.org/research/financial-services-and-commerce/credit-or-debit-card-surcharges-statutes.aspx

3: https://stripe.com/docs/connect/payments-fees#charging-directly

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