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In the world of payment processing, few names are more recognizable than Stripe. Founded by brothers Patrick and John Collison in 2010, Stripe processes billions of dollars annually in online transactions.
Stripe owes their success to a technology stack that allows a variety of different kinds of internet businesses to process credit card transactions and customize their payment solution. Customers of Stripe include Amazon, Google, Facebook, Microsoft, Uber, and Shopify.
But just because tech behemoths use Stripe, that does not mean it is necessarily right for your small business. To find that out, we did our own analysis of Stripe, the features, and what customers have said about it. We hope this Stripe Review will help you as you search for the right payment processor for your business.
Stripe is a payment processor, which means it supports the electronic transfer of money from a customer’s bank (issuing bank), into a merchant’s bank (acquiring bank) as payment for goods or services bought with a credit card. But to say that is all Stripe does would be an oversimplification.
What Stripe is known for is their industry-leading developer tools, which allow customers to integrate and customize their payment processor using a variety of different programming languages. Let’s see what all that customization can do for your business.
Stripe is a third-party payment processor, meaning it processes credit card transactions from a portfolio of different companies into a single merchant account (an account used to accept credit card payments). This means that when you sign up for Stripe, you will get instant access to processing because you won’t go through the steps to open a dedicated merchant account (which requires underwriting).
Note that Stripe also provides their own payment gateway, which is another tool necessary to accept credit card payments online.
Stripe accepts most payment types, including Visa, MasterCard, American Express, Discover, and several different foreign credit card networks, along with mobile wallets like Google and Apple Pay.
In addition, Stripe processes over 100 different foreign currencies and converts them at no additional charge. Among the tools and methods Stripe provides to accept payments are:
Stripe has direct integrations with most major credit card networks, allowing it to optimize routing paths, provide granular data, and reduce transaction latency when processing a credit card purchase.
Stripe also automatically tests and runs multiple optimizations for every transaction to maximize acceptance rates. Transactions that are declined are automatically retried through different connections. Stripe also updates expired or renewed customer credit cards automatically.
For businesses located in the United States, Stripe deposits processed payments on a two-business-day rolling basis. This means funds processed on Monday should be available by Wednesday. Stripe also provides unified payments, meaning the funds will all be available regardless of the type of payment processed.
Stripe also pays out in the merchant’s preferred currency. Payout schedules differ by region.
Stripe protects customers against fraud with Radar, a machine-learning fraud system that trains on data across millions of global companies to help differentiate between fraudulent and legitimate purchases.
You can add an additional layer of protection with 3D Secure, which prompts customers to complete a verification step before completing their purchase. When charges are disputed, Stripe provides an end-to-end automated dispute handling process that works directly with the card networks.
Stripe offers 24/7 phone and live chat support to all of its customers. In addition, the Support portal offers a robust amount of documentation and guides on all the different Stripe tools.
The last thing we’ll mention is Stripe’s business operation tools. From your personalized Stripe dashboard you can set specific roles and permissions for your team and track recent processing activity. Stripe also provides two-step authentication for your account.
Although the aforementioned functions and tools are the core of the Stripe product, there are many additional features that some business owners may find useful. Let’s review them.
Stripe Connect is a payment platform for larger marketplaces, such as Lyft or Kickstarter (both of whom are actual customers). With Connect you can customize onboarding, set payout timing, and allow for complex money movement for the customers that utilize your marketplace.
Connect supports over 100 different types of currencies and process credit card payments in 25 different countries.
Stripe Atlas is a toolkit for entrepreneurs to use to set up an internet business in the United States. With Atlas you can create a domestic bank account, acquire a debit card, receive tax and legal advice, and begin processing payments via Stripe.
Atlas entrepreneurs also get special deals on services relevant to startups, such as $5,000 free credits from Amazon Web Services.
Stripe does offer built-in reporting features, but using Stripe Sigma you can create fully customizable reports with the programming language SQL. If you can write a SQL query, Sigma can provide you the data for it right in your dashboard.
Stripe Relay is an API to power mobile in-app purchases. With Relay, merchants can link their ecommerce platforms with the app and add buy buttons.
Stripe Issuing is a platform for creating, distributing, and managing physical and virtual cards. Issuing enables merchants to create prepaid cards for their employees or virtual cards that can be used with a mobile wallet. Note that this feature is still in beta.
Finally, we would be remiss if we didn’t mention all the different applications Stripe integrates with. We won’t list them all here, but they run the gamut from popular accounting, analytics, and automation tools to chat, marketing and business operations services.
Stripe charges a flat 2.9% + $0.30 for every credit card transaction and 2.7% + $0.30 for every in-person credit card transaction using a Stripe terminal. Payment using international credit cards will cost an additional 1%, while ACH transfer payments incur a 0.8% fee (capped at $5).
Other charges to be aware of include a 0.4% fee on recurring payments after your first $1 million in payments processed, and a chargeback fee of $15. Certain features also cost extra, including Sigma, which will run you a cost of $0.02 per transaction. Atlas also costs a one-time fee of $500.
Other features come built-in to the product, but cost extra to use for enterprise, such as Radar and Connect. Stripe terminals start at $49 per device. In terms of contracts, Stripe is a pay-as-you-go processor, meaning you can cancel at any time for no additional fee.
A few other things you’ll never pay with Stripe are setup, monthly, and PCI compliance fees.
Given all this information, here is what we see as the benefits of using Stripe as your payment processor:
While Stripe doesn’t offer the cheapest payment processing rates, it is more or less in line with competitors like Square. The fact that you can cancel any time for no additional fee is a win for small business owners, and Stripe really does offer a ton of functionality for the price you are paying.
Speaking of that functionality, it is worth mentioning again that, if you have a programming background, no payment processor offers you more customization than Stripe. Pretty much every tool Stripe provides can be tweaked to satisfy your business’s needs.
However, the flip side to that equation is that if you don’t know how to program, and you don’t want to hire people to do it on your behalf, you really can’t access everything Stripe has to offer. In which case, you are better off going with a different payment processor.
Another great benefit of Stripe is that it is a global payments solution. The Collison brothers are from Ireland, and while Stripe is based in the United States, they made sure their product could accept payments from anywhere in the world. This is why Stripe accepts so many different forms of currency and processes international payment methods.
Stripe Payments isn’t without their drawbacks. The main issue for most customers is that their account can be either canceled or frozen with little notice.
This is a problem that is common amongst third-party payment service providers. Although Stripe will give you instant access to payment processing, they will review your account and processing habits routinely. If they determine your activity to be too risky, they can hold your funds or cancel your account without warning.
This is a byproduct of sharing a merchant account with a portfolio of other businesses. The payment processor needs to be able to provide funds from processed payments to all its businesses. If one of the businesses in that portfolio keeps experiencing fraudulent or disputed charges, it affects everyone else. To resolve this issue, the payment processor removes the business from the account.
Although Stripe has an A+ rating from the Better Business Bureau, there are numerous negative reviews on the profile.
Most of the negative Stripe reviews pertain to the aforementioned account freezes or cancellations. Other negative Stripe reviews centered around long payout times, and unhelpful or unresponsive customer service. Many customers reported not being able to reach customer service after having their account frozen or canceled, which is certainly alarming.
However, you shouldn’t let some negative customer reviews deter you if you think Stripe could be the right payment processor for your business. Remember that customers who have a negative experience with a business are much more likely to write a review than customers who had a positive experience.
Knowing everything we know, we would recommend Stripe for mid-sized and large businesses or businesses that operate primarily online. Really, Stripe is ideal for technology businesses, which is why you see so many players in the technology space using Stripe for payments.
These types of businesses have the technical knowledge to get the most out of Stripe. Ecommerce businesses also benefit from Stripe because it offers them so many different ways to sell, whether it be online, via an app, or on a third-party platform. Plus, if you run an ecommerce business you also probably have some development skills.
Stripe doesn’t make as much sense for small businesses that also sell out of a physical location. While you can still get a simple payment solution using Stripe in this situation, you’d be barely scratching the service of all Stripe has to offer. You also won’t get a pre-built POS, and your hardware options are limited.
If you are a small brick-and-mortar business, here are some alternatives to look into:
PayPal is different from Stripe in a few ways. Although both will allow you to accept credit card payments online, when it comes to Stripe vs. PayPal, only PayPal provides you with a payment gateway, and requires you to find a merchant account on your own. This is good in the sense that you won’t experience the account freezes and cancellations that Stripe customers complain of, but bad because you will have to pay separately for your account, and go through an approval process.
If approved, you’ll be able to select between two different payment gateways: Payflow Link and Payflow Pro. Payflow Link allows customers to check out on your site using PayPal and PayPal credit through a hosted template, and costs $0.10 per transaction. Payflow Pro will allow you to offer checkout through your own website and features greater customization. It costs $99 to set up plus $25 per month, on top of the $0.10 per transaction fee.
The other popular alternative is Square. Most know Square as a POS provider, but it is actually a full-fledged payment services provider, with credit card processing rates that match Stripe’s (2.9% + $0.30). Square also offers ecommerce payment processing via Weebly that starts at $8 per month. In addition, you can integrate a checkout feature via the Square API, which is similar to Stripe’s embeddable checkout feature.
Overall, Stripe offers a lot of the same core functions with fewer bells and whistles.
Our overall impression is that Stripe Payments makes sense for tech-forward businesses. But don’t just take our word for it. Try it for yourself. Try Square and PayPal, too (none of them have cancellation fees). As with most things, it’s best practice to shop around in order to find the right fit for your business.