Stripe PayTo

Agreements: what the customer actually approves

Stripe calls the PayTo agreement a mandate, and every PayTo payment needs one. Stripe’s description is that a mandate specifies the amount, cadence and purpose of the payments it covers. You set those terms in payment_method_options[payto][mandate_options] when you create the payment or the setup.

For a one-off payment, Stripe fills most of the terms in for you and you cannot change them. The amount is the payment’s amount, amount_type is fixed, payment_schedule is adhoc and payments_per_period is 1.

For recurring payments you choose. amount_type can be fixed, so every charge must equal the amount, or maximum, the default, so a charge can be anything up to it. payment_schedule defaults to adhoc, and you can change it to a regular cadence. payments_per_period caps how many charges fall in each period. start_date and end_date bound the agreement, and purpose describes the payment by category, which Stripe infers from your merchant category code unless you override it.

The amount is worth setting deliberately. Stripe’s own advice is to limit the amount on your mandates, because several banks reject mandates without one. ANZ, CBA, Westpac and Macquarie all reject agreements over 25,000 AUD and agreements with no maximum, and Westpac declines ad hoc payments over 1,000 AUD for high-risk merchants.

Pausing, changing and cancelling an agreement

Customers can see their PayTo agreements in their banking app, and that app offers to pause, modify or cancel them. Stripe supports only one of those three. Stripe’s caution is direct: it does not support modification or pausing of PayTo mandates by customers, and if a customer attempts to pause or modify a mandate, Stripe cancels it and sends you a mandate.updated event.

So a customer who taps Pause on a monthly agreement has, as far as your Stripe account is concerned, cancelled it. The next scheduled charge has nothing to collect against. The fix is a new agreement, which means asking the customer to approve again.

You can cancel from your side too. Detaching the PaymentMethod cancels the mandate, and customers can revoke one through their banking app or by contacting their bank. If you bill on a subscription, mandate.updated is the event to watch, because it is the first sign that next month’s revenue will not arrive by PayTo.

Refunds and disputes

A PayTo payment can be refunded in full or in part, through the Dashboard or the Refunds API, for up to 2 years after the original payment, and several partial refunds can add up to the original amount. Stripe says customers typically receive a refund within minutes, though some banks take several days.

One refund rule catches people out. When the original payment was made with a PayID, the billing name on the payment method must match the name on the customer’s bank account, and Stripe warns that a mismatch can cause the refund to fail.

Disputes work the way they do for bank debits, not cards. When a PayTo dispute is created, Stripe deducts the disputed amount and the dispute fee from your balance at once and sends charge.dispute.created and charge.dispute.closed. Every PayTo dispute is final. You cannot submit evidence or appeal, and if you settle it with the customer directly, they make a new payment.

What it costs

Stripe’s Australian pricing page lists PayTo at 1% + A$0.30 per payment, capped at A$3.50, plus A$25.00 for each disputed payment and A$0.50 for each refund.

The cap takes over at A$320, because 1% of A$320 plus A$0.30 is exactly A$3.50. A A$1,500 invoice costs A$3.50 to collect, and a A$49 subscription costs A$0.79.

The dispute fee is ten times the A$2.50 Stripe charges for a BECS Direct Debit dispute, and the refund fee is a cost BECS does not carry. Both are fees with no sale behind them, so a ledger that tracks only sales and processing fees drifts from the Stripe balance each time one is charged.