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Can we please make a viable (federated!) amazon alternative? I have an idea!
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Correct. Someone orders something, it doesn't arrive, they dispute the charge with their CC company, their CC company and Stripe talk to one another and get the merchant's side of the story, and basically unless there is some pretty massive indication that the buyer is lying or has a consistent pattern of this or something, the buyer gets their money back. If that happens a bunch, the seller loses their Stripe account.
The system is heavily biased in favor of the buyer, which for the most part works out, because most of the fraud exists on the seller end. And on the whole the fact that 99% of people on both sides are not cockheads trying to abuse the system, is what makes it all work reasonably well.