We are using Stripe Connect to handle our payments. Our sellers (kitchens) have standard accounts, which means they have full access to the Stripe dashboard (I believe these used to be referred to as ‘standalone accounts’). We are using destination charges so charges run against the platform account and are then immediately transferred to the kitchens, less any application fees (this is not entirely accurate, but good enough for this post). All well and good.
Some of the kitchens noticed they could refund a charge via their Stripe dashboard. Refunds happen for a lot of reasons–maybe the food business was inadvertently charged or they had some issues in the kitchen. So, the kitchens refunded, and the food businesses waited. And waited.
Meanwhile, when The Food Corridor ran numbers looking at revenue, we saw aberrations. There was extra money in our bank account. Now, every business wants more revenue, but they tend to like to know the source. So, we wanted to figure out where the extra revenue was coming from.
I looked into this and, after some investigation and emails with Stripe support, determined that the kitchens were refunding money to us. However, it wasn’t flowing through to to the food business from whence it came.
Here is the flow of funds when a charge happens:
food business -> platform -> kitchen
When a refund happens, if initiated by the platform:
kitchen -> platform -> food business
When a refund happens, initiated by the kitchen
kitchen -> platform
Tracking down exactly which charges were being refunded by a kitchen was tedious, but easy to do if we knew which kitchen had performed the refund. If we didn’t know that, we’d have to search through all the connected accounts for the matching charge. It was far easier to contact Stripe directly and ask them to hunt it down with some internal tools. Providing the date of the transfer, the amount and the id was helpful to Stripe support.
After we knew which kitchen had performed the refund, it was easy enough to find the charge, and then refund it to the customer, completing the loop. Here’s the flow of funds for that:
platform -> food business
If you are using Stripe Connect and are using the destination charge method, and your sellers have standalone accounts, make sure they know they can’t issue refunds from their Stripe dashboards.