Refunds - Stripe Fee Refund Calculation Method & Handling of Application Fee Refunds

[dsea...@timeperks.com]

Hello,

We have a marketplace type of application and my developer is in the process of transitioning us from Amazon FPS to Stripe Connect.

Question 1

I was testing refund scenarios today and found something I wasn't expecting.

Assumptions:

I placed an order for $10.00 and the Stripe fee was as expected $0.59

I placed an order for $5.00 and the Stripe fee was as expected $0.45   ( $5.00 * 2.9% + $0.30 = $0.445 .... using standard rounding = $0.45)

Refund Test:

On the $10.00 order I refunded $5.00 leaving a balance of $5.00.  I expected the adjusted Stripe fee to be $0.45, the same as previously calculated by the system for the $5.00 order.
Instead the adjusted Stripe fee was $0.44   ( $5.00 * 2.9% + $0.30 = $0.445)

Is the Stripe system using "Bankers" rounding (rounding to the nearest even number) for refund calculations?   Or is something else happening?


Question 2

Amazon FPS, similar to Stripe, automatically makes the proper refund adjustment to the credit card processing fee and adjusts the appropriate accounts.

Amazon FPS also automatically makes the proper refund adjustment to the "Application Fee" and adjusts the appropriate accounts.  I'm not seeing an adjustment to the Application fee in our Stripe test accounts or maybe I'm just not seeing it because of not being able to view account balance activity on the Stripe dashboard.

Does Stripe make an Applications Fee adjustment or provide the tools so my developer can code that adjustment into any refund request?

Thanks for any guidance anyone can give.

Dave

[Vladimir Andrijevik]

On 17.10.2013, at 15:44, dsea...@timeperks.com wrote:

> Does Stripe make an Applications Fee adjustment or provide the tools so my developer can code that adjustment into any refund request?

Hi Dave, per on https://stripe.com/docs/connect/collecting-fees#refunding-fees:

“We will not automatically refund the application fee, however: you must explicitly refund the application fee, or your connected user (the account that made the charge) will eat the cost of the fee.”

I don’t see a way to do this via the API, but it is also something that I would very much be interested in doing programatically (and not have to do via the Dashboard, as the Stripe docs suggest).

Cheers,
Vlad

[Vladimir Andrijevik]

On 17.10.2013, at 16:42, Vladimir Andrijevik <vladimir....@gmail.com> wrote:

> I don’t see a way to do this via the API, but it is also something that I would very much be interested in doing programatically (and not have to do via the Dashboard, as the Stripe docs suggest).

After taking a closer look, https://stripe.com/docs/api#refund_charge offers the refund_application_fee parameter, but unfortunately it is only a boolean, which does not allow for partial refunds of the application fee.

Vlad

[David Searles]

Thanks for the responses Vlad.

That is disappointing if the partial refund application fee can not be handled automatically by the Stripe system.  Especially if it is automatically handled for a full refund.  The business need is the same in both cases and perhaps this was just an oversight.

Can anyone from Stripe comment on this and let us know if there is any chance of getting this modified so the application handling fee for a partial refund is handled automatically the same way as for a full refund?

Thanks!

Dave

Vlad

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TimePerks LLC

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[dsea...@timeperks.com]

Amber or anyone else at Stripe, any thoughts on Question 1 below?   Question 2 as been answered.

Thanks,
Dave

[Amber Feng]

Hi Dave,

Since that's somewhat of an account-specific question, it may be
better for you to ping sup...@stripe.com (with the charge ID).

Amber

[David Searles]

Thanks for the quick response Amber.

I pinged sup...@stripe.com a week ago and still waiting for a response to that question.

Dave

[Amber Feng]

Hi David,

Following up on your partial application fee refunding questions, were
you planning to refund application fees proportionally to how much the
charge was refunded? Or some other custom amount?

Amber

[David Searles]

Hi Amber,

I'm going to ask my lead developer, Sur, to respond to your question since he is currently working on how to handle the partial refund.

Thanks for the followup.

Dave

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[David Searles]

Hi Amber,

While I'm waiting for my developer to respond how he is attempting to handle a partial application refund from a coding perspective, the short answer is yes, the application fee refund will be proportional to the charge refunded.   For example, if the charge refunded represents 20% of the original charge, 20% of the application fee will also need to be refunded.  A full refund would obviously be considered a 100% refund of the charge and the application fee.

Our user base for this will be restaurants.  We have them initiating the refund to a customer from our system and then we pass that to Stripe.  The restaurant user would not be willing to go to another system (Stripe) to initiate a refund, because that would involve extra steps (working with two systems - ours and Stripe). Plus we collect other information from the restaurant when they issue a refund, so it needs to be initiated within our system.

Are you thinking of doing some work on this functionality on your end?

Thanks,

Dave

On Tue, Nov 19, 2013 at 7:15 PM, Amber Feng <am...@stripe.com> wrote:

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[Sur]

hi Amber,

Yes, the partial application fee refund will be in proportion to the charge refunded.

Is there any automation from Stripe which is coming along ?  Because I've worked on refunding the fee manually but would still like to go for the route where Stripe is automatically doing that. Please keep us informed.

Thanks.

regards,
Sur

[David Searles]

Hi Amber,

I'm following up on Sur's question and your earlier question.  In the near term, will Stripe be providing any type of automated partial refund of the application fee like it does with a full refund?  We are very interested in this.

Thanks,

Dave

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[Amber Feng]

Hi David,

There is currently a programmatic way to partially refund application
fees (the /v1/application_fees endpoint). It's not documented yet
though -- it should be in the next couple of weeks or so.

Separately, we're also adding functionality that will partially refund
your application fee when partially refunding a charge.

Hope that answers your question!

Amber

[James Stewart]

Hi Amber,

I'd assume that the refunding, partial or otherwise, of the application fee is to remain configurable/optional?

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[Amber Feng]

Hi James,

Yes, definitely (sorry for not being clear about that earlier).

Amber

[David Searles]

Thanks for the response Amber and Happy Thanksgiving!

Dave

[Sur]

hi Amber,

That would be really helpful to have stripe initiating the (configurable) partial app fee refund along with the partial refund of the charge.

Any timeline when that would be available ?

We have to launch our app and this is going to be a very important part of our app to handle the partial refunds correctly... so if you can let us know by what time this functionality will be available, we can plan our approach accordingly... i.e. whether or not work on incorporating the manual/programatic approach.

Thanks very much.

regards,
Sur

[Amber Feng]

Hi Sur,

The ability to programmatically partially refund an application fee is
already available (you can list application fees by
/v1/application_fees, filter them by charges with ?charge=CHARGE_ID,
and refund them like you refund charges).

Stripe automatically partially refunding a proportional amount of the
application fee should be out in the next week or so.

Amber

[Sur]

thanks very much for the updates, Amber.

yeah, it is still a bit different than a regular charge refund because the Stripe Ruby gem is also missing the ApplicationFee object... and with the endpoints /v1/application_fees we have the programatic partial refund working.

really looking forward to the automated refunding of proportional amount.

Thanks.

regards,
Sur

[Amber Feng]

Hi Sur,

We actually added ApplicationFee to the Ruby gem yesterday:
https://github.com/stripe/stripe-ruby. It should be pushed to RubyGems
in the next couple of days, but you can use the Github version, if
you'd like.

Amber

[Sur]

hi Amber,

that's awesome. thanks for sharing the updates so closely.

I will check it out.

Thanks.

regards,
Sur

[Felix Kenton]

Hi David,

In response to question 1

As I discovered the other day, when you refund a Charge the rounding is applied again to the difference. Going through your example:

Original $10.00 charge:

Stripe fee =  $10.00 * 2.9% + $0.30 = $0.59

$5.00 refund:

Stripe fee =  -$5.00 * 2.9% = -$0.145 = -$0.15 after rounding

Total Stripe fee = $0.59 - $0.15 = $0.44

It sort of makes sense, but has the side effect that you can't rely on the $X * 2.9% + $0.30 formula when there are refunds...

Felix

[David Searles]

Thanks Felix.

Dave

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[Sur]

hi Amber,

The pager here: https://stripe.com/docs/upgrades

reads this:

2013-12-03

• Passing in refund_application_fee=true when refunding a charge now refunds the application fee proportional to the amount of the charge refunded, not the entire amount.

Could you please confirm that Stripe now refunds the proportional application fee on partially refunding a charge ?

regards,
Sur

[Amber Feng]

Hi Sur,

Yep, that's correct! (We'll be sending an official announcement
sometime this week.)

Note that you'll need to upgrade your application version in order to
get that functionality.

Amber