How Does Stripe Work?

Once the customer submits a payment, Stripe encrypts the data and sends it to the acquiring bank, which will process the payment. Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity. The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Let us know how well the content on this page solved your problem today.

It integrates with a lot of software including Drupal, PrestaShop, Magento, Shopware, WooCommerce and WordPress. Note, you cannot use Stripe as a virtual terminal solution to key-in payments like you would need to accept orders over the phone. However, it’s important to note that Stripe is not compatible with high-risk businesses, including remote tech support, firearms, and gambling.

As an Interchange Plus provider, merchant fees are transparent, listed out on easy-to-read summaries so that business owners can better manage their revenues. Explore our in-depth 2024 Stripe review to learn about this popular payment processing solution’s features, pricing, pros and cons. You will need to add a bank account to your Stripe dashboard to receive payouts. The speed of your first payout depends on where you are located. It usually takes seven to 14 days after the first successful payment to receive your first payout. About half of Stripe’s customers are based in the US, though it serves businesses worldwide.

The standard payout timing for businesses in the United States and Australia that are not in high-risk industries is 2 business days. Payouts of your available account balance are made daily, but they contain the payments you have processed in the last 2 business days. Because so much sensitive information is being transferred across these networks, credit card processors are PCI-compliant https://www.tradebot.online/ and use advanced encryption methods to secure transactions. If you’re an e-commerce business, it will be hard to beat Stripe for its integrations and ability to take a multitude of currencies. Square and Stripe have been going head-to-head since Stripe came on the market in 2011. They have similar pricing structures, though Square can be higher with certain transactions.

Best Credit Card Processing Companies In 2024

What makes Square better is the standard next-day funding for all accounts. Even with those issues, Stripe is known as an online merchant services powerhouse. While it does offer the Stripe Terminal for in-person sales, the solution is not as robust as competitors. Business owners can take advantage of advanced reporting tools that allow for customized reports. They include itemized reports for revenue, refunds, fees and receivables, to name a few.

1. Stripe is well known for its online payment processing services.
2. Although Stripe is hosting the payment processing, the process appears seamless for the customer, and they do not need to be redirected from the merchant’s website or app.
3. As an Interchange Plus provider, merchant fees are transparent, listed out on easy-to-read summaries so that business owners can better manage their revenues.
4. Square and Stripe have been going head-to-head since Stripe came on the market in 2011.
5. A point of purchase (POP) is the location where the customer makes a purchase, like in a store or online.

You can choose to enable credit or debit card payments, mobile wallet payments such as Apple Pay, ACH bank payments, and/or buy now, pay later financing options like Affirm. For businesses, it’s quick to enroll and start accepting payments. Stripe payments can be added to any website, app, or platform for a seamless checkout experience. Both are third-party processors that offer flat-rate payment processing with no monthly fee. But where Stripe is focused on eCommerce and global-scale solutions, Square is more focused on domestic, in-person transactions and hardware. Overall, Square will often be a better starting point for new small businesses, whereas Stripe may be more effective as the company grows and sells to more remote markets.

Stripe also uses TLS (SSL) encryption (indicated by the “HTTPS” at the beginning of a website address. All of these features come with no extra charge. While Stripe’s standard payout is two business days, qualified merchants eager to get cash in the bank can take advantage of the Instant Payouts option. This will allow access to capital in as little as 30 minutes after the transaction. Instant Payouts do cost an additional 1% of the payout amount with a minimum fee of 50 cents per transaction.

Is Stripe a bank?

Payment Depot is known for its membership fee with low per-transaction costs. This is a benefit for those with a high volume of transactions. Stripe is a powerful service for the right company, but it’s not perfect. Sign up to receive more well-researched small business articles and topics in your inbox, personalized for you. You can read more on the differences in our Stripe vs. PayPal and Stripe vs. Braintree features. The upside is Stripe is very customizable and well-documented for programmers.

All feedback, positive or negative, helps us to improve the way we help small businesses. Check out our complete guide to Stripe fees for more insight into how the Stripe pricing system works. However, because Stripe is an aggregate processor it is not very risk tolerant, which is why Stripe is selective on the types of businesses it will work with. This is also why Stripe reserves the right to freeze or suspend your account at any time. The vendors that appear on this list were chosen by subject matter experts on the basis of product quality, wide usage and availability, and positive reputation. By providing feedback on how we can improve, you can earn gift cards and get early access to new features.

How to Get Started With Stripe

Stripe also has a pretty big restricted list for industries that it doesn’t serve. This list includes many financial and professional services such as money and legal services. It doesn’t work with intellectual property companies or counterfeit goods companies. Gambling companies also make the list, as do adult content sites.

This is the case with virtually all payment service providers (PSPs). Instead, their accounts are aggregated together into one large merchant account. To better understand what this means, read our feature on what payment service providers do. Stripe’s product suite and features focus on eCommerce transactions first and foremost. It allows you to transfer money from a customer’s bank account into your business’s account by way of a credit card, debit card, or alternative payment method transaction.

How Do Stripe Payments Work?

When you sign up for Stripe, you do not receive a dedicated merchant account. Instead, Stripe aggregates payments for all Stripe customers under one merchant account. It’s not the cheapest option, and you can’t just use it as a gateway. You get a lot of services for your money, but it’s possible, perhaps even likely, that you won’t need or use all of them.

Stripe Radar

A payment service provider does most of the same things a merchant account does, to the point where the typical user may not notice the difference at all. Stripe offers a wide variety of payment processing solutions including online payment processing, prebuilt checkout pages, payment links, billing and subscription management, and invoicing. Stripe landed on our list of Best Credit Card Processing Companies because it’s versatile for online businesses looking to get merchant services attached to a shopping cart quickly. Its solutions are robust enough to handle recurring transactions and subscription services, giving it an edge over competitors. When you have set up payment links or integrated Stripe in your website or platform, customers can now submit payments.