Stripe on Wednesday announced a pricing update that further reduces the cost for those who use its service. Going forward, the company will no longer have fees for refunded charges and successful chargebacks.

When you refund a transaction, Stripe will return the entire fee. Previously, Stripe used to charge 2.9% + $0.30. As of December 19, it will be free. Compare this to PayPal, which still has a refund fee that ads up to a percentage of the transaction plus a 30 cent flat fee.

Stripe will also no longer charge you when you succeed in a chargeback. Previously, if one of your customers disputed a payment, Stripe charged a fee of $15 and that was that. You had the option of challenging the dispute, but now if it’s successful, meaning the cardholder’s bank decides in your favor, Stripe will refund the original $15.

The changes are certainly welcome ones, as nobody likes paying fees, especially if they’re charges that look like they shouldn’t be there in the first place. Stripe’s biggest gamble here is to attack PayPal where it hurts: its bottom line.

Stripe isn’t yet big enough to wage a full out price war with PayPal, but it is big enough that it can undercut PayPal and hope that developers come on over as a result. This of course will only work once Stripe can match PayPal’s offerings across the board, but many people feel it’s already good enough and thus have made the switch.

Unfortunately for Stripe, however, PayPal is already very widely accepted, and simply offering lower prices and reduced fees is not enough. Stripe essentially has to be in it for the long-haul.

See also – Stripe adds optional two-step verification, leverages Google Authenticator on Android and iOS and Stripe kicks off international expansion with Canada, more countries on the way

Image credit: Robert Linder