Stripe credit card processing is a platform for small to medium size businesses. With point-of-sale solutions, developer tools, checkout forms, machine learning and no monthly fees, Stripe has proven to be a favorite choice for many entrepreneurs and start-ups processing under 25K per month in sales.
When a customer pays for a product online, the funds are transferred to the seller’s business bank account.
Stripe comes with a simple customizable platform that allows merchants to accept all types of payments, link up with third-party services and integrations, all without having to go through standard underwriting to open a direct merchant account.
Applicants can sign up quickly and start accepting and processing credit card payments for their businesses in a very short time frame. When applying, make sure you have an acceptable low risk business type. If your business starts receiving too many chargebacks, your account can easily be terminated without warning.
Other than the above stated risk, the only things to worry about are the percentage rates, transaction fees and additional fees for various features and services outside of their basic offering.
Stripe does not charge the following fees:
- Setup fees
- Statement fees
- Payment gateway fees
- Additional refund fees
- Minimum processing fees
- Cancelation fees
- PCI-compliance fees
Stripe Credit Card Processing Fees
Stripe credit card processing is a fixed rate pricing model that is transaction-oriented. Here, users pay 30 cents as well as 2.9% on every transaction.
This rate applies not only to credit and debit payments, but also Google and Apple Pay.
Any card issued outside of the United States, requires an extra 1% or 2% transaction fee if currency conversion is needed.
Alternatively, Stripe charges 2.7% and 5 cents for in-person payments per transaction. Merchants are also expected to bear the cost of the physical card reader required to accept these in-person payments.
Stripe offers 2 options for card readers
- Verifone P400 reader
- BBPOS Chipper 2x BT
Merchants are only required to pay for the card reader once, unless they need to be replaced.
Other online payments that Stripe approves include local payment methods like wire transfers and ACH transfers (ACH direct debit and ACH credit).
Failed ACH direct debit payments attract a $4 penalty, while disputed ACH direct debit payments cost $15.
Stripe also processes physical checks sent by customers. However, this service is only available to U.S. residents.
The check must be complemented with an invoice and attracts several fees.
- $20 every month when less than 5 checks are received
- $15 for every bounced or returned check
- $5 for every check received even when different checks are used for a single invoice
How Stripe Credit Card Processing Works
When a merchant creates a small business account, Stripe’s software links a purchasing page to a merchant’s ecommerce platform.
Once a customer purchases an item and enters card information, the information is sent to Stripe.
The processing platform confirms if funds are available and processes the transaction accordingly.
When the merchant receives the funds, a confirmation of the sale will be sent to both parties—buyer and seller.
However, if the payment process is declined or rejected, perhaps due to inadequate funds in the customer’s account, the buyer will be notified immediately to use another payment alternative.
Stripe Credit Card Billing for Subscriptions
Stripe Billing is a module of the Stripe payment processing platform for merchants that use a subscription-billing model for their customers.
With this payment model, merchants start paying additional fees once they have reached a $1 million threshold.
When they have reached the $1 million mark, the merchant is charged an additional 0.5% on recurring payments alongside the standard transaction fee of 2.9% and 30 cents.
One-off invoices attract no additional fees, but merchants looking to automatically reconcile multiple invoices are charged $7.
Stripe offers an advanced billing platform (Scale) with extra features for an increased 0.8% per transaction for recurring charges alongside the general transaction fee.
Additional features of Scale’s billing system include: providing pricing estimates (including discounts and taxes) to customers before issuing an invoice or subscription.
This one-time invoice can be converted to a recurring subscription once the customer accepts the quote.
The second feature is called Stripe Connector for NetSuite. This system helps automate payment acceptance as well as cash automation and reconciliation.
The system workflow helps eliminate long hours of manually processing payments, issuing refunds and sorting out disputes.
Stripe Radar Credit Card Processing and Fraud
Stripe’s anti-fraud tools keep an eagle eye on dubious transactions and automatically block anything looking suspicious.
Stripe Radar uses checkout tools to decode buyer patterns with fraudulent tendencies.
Stripe Radar is provided with a standard Stripe account at zero charge.
Radar for Fraud Teams is more advanced and provides a deeper insight into how sophisticated criminals operate.
These advanced fraud insights include credit card address comparisons, geolocated IP addresses as well as checkout time behavior.
Radar for Fraud Teams allows merchants to choose the fraud strategies that best suit them by helping them determine their unique levels of risk tolerance.
Merchants can choose how aggressive they want to be with suspicious payments by blocking emails, card numbers and IP addresses.
Common fraud patterns like card payment testing, device fingerprinting and identity reconciliation are also used to catch repeat fraudsters.
Stripe offers advanced fraud protection tools for 2 cents per transaction on standard accounts and 7 cents for businesses on a customized pricing plan.
All anti-fraud activities are fine-tuned and accessible from a singular dashboard.
Stripe Connect is a set of pre-programmed APIs and tools that allow users to accept credit cards and process payments on a software platform. It lets them build marketplaces for sellers anywhere in the world.
Stripe Connect offers 3 types of accounts: Standard, Custom and Express.
Standard accounts are easy to integrate and require no platform fees. Standard accounts are best for SaaS platforms like Shopify which allow merchants to deal directly with customers.
Custom accounts offer complete control to users. This white label solution requires extensive coding experience and takes some time to set up. These types of accounts are well-suited for large marketplaces like Amazon.
Express accounts allow merchants to customize certain aspects of a user’s experience while leaving the onboarding, verification and management of the account to Stripe.
Stripe Sigma makes all transactional information available inside an interactive SQL environment in the dashboard. This allows merchants to create customized reports with ease using data from one-time payments, recurring payments, payouts, customers and much more.
With all this information in one place, Stripe’s credit card processing can easily figure out customers with unpaid invoices in a particular month or how much revenue has been generated in the 2nd quarter of the year.
The cost of Sigma is based on how many charges a merchant receives monthly and are pegged at 2 cents per charge. When a merchant reaches a particular threshold like 501 to 1,0000, the merchant forks out an additional $25.00 per month infrastructure fee.
This means that if a Stripe merchant incurs 1,000 charges in a month, the estimated monthly cost for the Sigma service will be $44.
Stripe Issuing allows users to generate, manage and distribute physical or virtual cards. The platform was created in 2020 and is currently only available for United States-based businesses.
Now a car company can run a promotion that allows renters to fill up their gas tank without having to use their personal credit cards.
With this platform, any U.S. business, whether a start-up business or tech conglomerate, can manufacture a virtual card from their dashboard in a matter of seconds or get their hands on a physical one in as little as 2 business days.
For physical cards, Stripe Issuing handles the production, printing as well as shipping.
Stripe Atlas is a payment processing platform for entrepreneurs looking to sell things to customers anywhere in the world. It is a user-friendly platform that removes all the stress of paperwork, multiple fees and legal complications so that a startup can hit the ground running.
Stripe Atlas entails a $500 one-time setup fee with several recurring fees for maintaining the business. These services include tax filing, tax preparation and bank account maintenance.
Over 20,000 businesses have benefited from the Atlas platform, generating over $3 billion in revenue, with Nigeria recording the fastest growth rate of 400% annually.
Setting up a Stripe Credit Card Processing Account
After registering your Stripe account, merchants are expected to link it to a business bank account.
It is only after this setup process is completed that a merchant is prepped and ready to start processing payments.
A balance is required in a Stripe account. The first payment a merchant receives shows as a pending balance and consists of the transaction amount minus Stripe fees.
A breakdown of Stripe fees can be viewed by selecting “charge” in the payment section of the dashboard.
First payouts take 7-10 days, after which payments are based on a merchant’s specific payment schedule.
Overall, businesses in the United States use a 2-day business schedule. Payment account balances are made available daily and consist of Stripe credit card processed payments made 2 days previously.
Merchants can customize their payment schedules inside their account settings. Manual payouts as well as weekly or monthly schedules are allowed.
Manual payouts means that the funds will be sent to a merchant’s bank account only if the merchant initiates the payment personally.
Stripe offers an instantaneous payment service that grants access to funds within 30 minutes, but this service is not available for new accounts.
Instant Payouts involves sending funds to a debit card where the balance can be confirmed within half an hour. A 1% Stripe transaction fee for the amount comes with this service.
Stripe Card Processing and Refunds
It is important to know that Stripe has the ability to remove money from a merchant’s account, if required.
For instance, if a merchant receives a balance of $300, but has to refund $500 worth of payments, a merchant’s Stripe account balance would have a deficit of $200.
If the merchant does not receive any extra payments to cover this balance before the next payout, Stripe takes the $200 from the merchant’s business account.
Stripe Payment Gateway and International Business
A Stripe payment gateway is an ideal choice for merchants looking to do business across borders.
Stripe payments are available for merchants to use in more than 44 countries. This number is expected to increase in coming years.
Presently, this payment service provider accommodates payments in more than 135 currencies. If the charge currency is not the same as a cardholder’s card currency, Stripe converts payment into the merchant’s currency.
Stripe’s currency conversion fee is minimal compared to having traditional financial institutions do this.
Another great feature of using Stripe Payments for the online international market is that the cost of products are displayed in whatever currency a potential customer is located.
So if a florist business is located in London, someone viewing the website from New York will view prices in dollars and not pound sterling.
While Stripe has many features and benefits for some small to midsize businesses, one size does not fit all. For merchants looking for direct relationship to a payment processor, or that have been previously shut down by stripe due to business type, SecureGlobalPay is the answer.