Stripe is a relatively new credit card processor that offers good pricing and features.
Credit card processing allows you to accept debit card and credit card payments at your business, creating another payment method for your customers. Some credit card processors support online payments as well. Stripe, our pick for the best online payment processor, offers a range features and competitive rates, as well as very few added fees.
To learn more about Stripe and other leading credit card processing companies, check out our best picks page for a buyer's guide and comprehensive reviews.
What is Stripe payment processing?
Stripe is a versatile payment processor that integrates with hundreds of e-commerce platforms, shopping carts and other third-party applications that many businesses rely on every day. It offers competitive rates and a pay-as-you-go option, so you won't have any long-term contractual obligation with the company.
Stripe is an online-focused company; it primarily works with e-commerce, mobile commerce and subscription as a service businesses. Although Stripe is an online payment processor, it can be used to collect payments in person. Using Stripe, you can bill customers on a recurring basis, set up a marketplace where you can host third-party merchants or just accept one-time payments at the point of sale.
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How does Stripe work?
Stripe offers its payment processing services on a pay-as-you-go basis, meaning you can close your account at any time without fear of incurring cancellation fees. To start working with Stripe, you must sign a service agreement, which you can review on the company's website. Reading this document will give you better insight into how accepting payments with Stripe works.
Stripe doesn't set up its customers with their own merchant accounts; instead, it sets you up as submerchant on its own master merchant account. This provides a faster setup time than many other payment processors, doesn't require a credit check and simplifies the process of PCI compliance. It also eliminates the need for PCI compliance fees. However, if you fail to comply with the terms outlined in Stripe's service agreement, the company could freeze your funds or suddenly cancel your account.
To avoid suspensions of funds or account terminations, it's important to make sure that
- Your business is not on the list of prohibited businesses Stripe does not provide services to.
- You use Stripe's services as they are intended, as outlined in the service agreement.
- You comply with network rules and maintain best practices for card data security, in line with PCI compliance standards.
If you run afoul of any of these rules, Stripe reserves the right to hold your funds in a reserve account, especially if it suspects there is a risk of loss or fraud. Stripe can also use a reserve account if you have excessive chargebacks.
Stripe offers more than 100 features, including premade payment solutions and custom-built solutions. Stripe regularly updates its platform, and posts a changelog on its website that explains new features and improvements to its regular services. For a full list of the features Stripe offers, see our review.
Stripe pricing and fees
Stripe offers flat-rate pricing and charges few fees, making its pricing simpler than many other credit card processors. There's also no additional cost for access to Stripe's integrations, checkout form or developer tools.
Accepting online payments with Stripe comes with two different rates. The first, for domestic and credit card payments, is 2.9% plus 30 cents per transaction. This rate covers all brands of credit card, as well as digital wallets. The second, for ACH debit transfers, is 0.8% with a $5 cap. You can also accept ACH credit and wire transfers with Stripe.
When accepting payments at the point of sale, Stripe offers a 2.7% rate plus 5 cents per transaction. This rate applies to all brands of credit card.
Overall, there are relatively fewer fees with Stripe than with other credit card processors, but Stripe charges a few fees for particular circumstances, including the following:
- A 1% fee on the transaction rate when you accept international cards. Stripe charges an additional 1% if currency conversion is needed.
- If a charge is disputed by a customer, Stripe charges a $15 chargeback fee. However, if the dispute is settled in your favor, Stripe refunds the chargeback fee. Most processors do not refund chargeback fees.
- When you issue a refund, you will not be refunded the original transaction fee.
- When you select optional services with Stripe that come with added fees. These include Stripe Billing, Stripe Connect, Radar for Fraud Teams, Stripe Sigma and Stripe Atlas. You can learn more about these products, their pricing and how they might improve your business's payment processing on the company's website.
Stripe forgoes some of the most common fees in the credit card processing industry, including application fees, setup fees, and monthly fees for statements and customer service. Moreover, there is no payment gateway setup fee or monthly maintenance fee with Stripe, nor is there a PCI compliance fee or an early termination/account closure fee.
Stripe grants volume discounts to businesses that process more than $100,000 in debit card and credit card payments each month. Custom pricing is available for businesses that engage in microtransactions or have high-value sales tickets. Finally, nonprofits might qualify for special pricing and should contact Stripe's sales team to secure a quote.
How do I receive payments on Stripe?
After signing up with Stripe, you can begin accepting credit card and debit card payments. To transfer the cash from the initial transactions to your bank account, you must first wait seven to 10 days. After this initial period, the balance will transfer to your bank account on a rolling basis of either every two days or every seven days.
Most businesses that work with Stripe are on a two-day schedule, but the company deems you a high-risk business, you must use the seven-day schedule. Some payment processors, such as Square and PayPal, offer next-day deposits and instant transfers for an additional fee, so if you are tight on cash and need access to your funds, consider working with one of these processors instead.
Are Stripe payments secure?
All Stripe payments encrypt card numbers using AES-256 encryption. The decryption keys are stored on separate devices, reducing the likelihood they'll fall into the wrong hands. It also uses tokenization technology, so none of the payment data captured is stored on your servers. Stripe Radar also providers a fraud-prevention tool for every account to flag suspicious transactions.
Stripe is a PCI Service Provider Level 1, which is the highest certification available. However, you must still comply with PCI data security standards and complete a self-assessment questionnaire each year. There are no PCI compliance fees associated with Stripe.
Does Stripe charge for refunds?
Stripe doesn't charge a fee when you issue refunds, but it doesn't return the processing fee from the original transaction to you.
Speaking of refunds, Stripe is one of the few payment processors out there that will refund you the chargeback fee when a dispute is resolved in your favor. Chargeback fees are $15, but once a dispute is settled in your favor, Stripe will reimburse you the entirety of the fee.
Does Stripe accept international payments?
Stripe accepts international payments, but they are subject to an added fee. International payments are subject to an additional 1% on top of Stripe's standard rates, as well as an additional 1% markup if currency conversion is required to complete the transaction.
How long does Stripe take to deposit?
Initially, Stripe takes seven to 10 days to deposit your processing funds in your bank account. After that initial seven to 10 days, funds can be deposited on a recurring basis of either every two days or seven days. Most businesses are on a two-day schedule, but high-risk businesses receive the seven-day schedule. There is no instant transfer or same-day deposit option available with Stripe, unlike with some other online payment processors.
Is Stripe safer than PayPal?
Whether Stripe is safer than PayPal is difficult to say. Security is critical in payment processing and is a central part of each platform's services. Both are PCI compliant and use additional security protocols, such as end-to-end encryption and tokenization, to keep card data secure both in storage and in transit. Stripe offers additional anti-fraud protection through Stripe Radar, which is included on standard accounts at no extra cost, but PayPal offers anti-fraud protection as well.
If you're looking for a straightforward yet versatile online payment processor, Stripe is a strong option that offers all the features you need and competitive rates, reducing the additional fees you might incur with other processors. It makes accepting payments online or in person easy, giving your business a reliable way to take debit cards, credit cards and digital wallets wherever the point of sale may be.