How does Stripe work?

Stripe is a payment processing gateway. Yes, we’re aware it’s also the name of the pattern found on tigers. And yes, we know you find stripes painted on the road at a crosswalk. But we’re not talking about those stripes…

We’re talking about Stripe. And for businesses, that’s a much more exciting topic, because it’s all about getting paid!

As mentioned, Stripe is a payment processing gateway. You might be asking: what is a payment processing gateway? Well, if you’ve ever made a purchase online, then you have probably used one to process that purchase. 

As Investopedia explains, “A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores.” 

Put simply, payment processing gateways are used to transfer money, with perhaps the best-known example being PayPal. Stripe, however, is a new flavour of payment processing gateway, with some of their notable clients including Unicef, Kickstart, Facebook, Lyft, and Deliveroo, to name a few.

With this in mind, we’ll break down how things work with this fantastic payment processor. We’ll start by looking at the currencies Stripe offers and the fees they charge. Following this, we’ll examine how stripe reports on transactions and their refund policy. Finally, we’ll outline how transfers work with Stripe. 

Currencies

Stripe can handle 135 different currencies. As such, in most of the world, users can view prices in their home currency. This is ideal for online shopping, where customers can sometimes be put off by perceived differences in price when changing currencies.

However, if the currency a customer uses to pay differs from their home currency, the payment total will be converted to their home currency before the sale is complete.

Fees

One of the main complaints that users sometimes have with PayPal is that their fees are difficult to understand, perhaps a little murky. To remedy this, Stripe’s fees are simple and straightforward.

Stripe charges a flat rate of 2.9% and $0.30 for every individual charge, as long as you’re paying less than $1 million a year.

It’s free to charge cards from your website, and refunds are free too, unlike PayPal.

Finally, recurring billings are free, as is fraud protection, which PayPal charges $10 per month for.

For more information on fees, check this out.

Reporting on transactions

Everyone should stay on top of their online transactions. This way, you’ll be aware of your spending and can quickly detect any strange goings-on should you be the victim of fraud.

Fraud prevention 

With online fraud on the rise, Stripe offers an advanced fraud detection service called Stripe Radar. This service uses machine learning to predict the likelihood that a transaction is fraudulent. To achieve this, the AI factors in data from your business as well as any information Stripe has about the card you are using, such as purchasing habits and frequency.  

Dashboard

Stripe uses a dashboard interface where you can check on your account status and ensure any transfers have gone through smoothly. Here, you’ll be able to download .CSV files of your account activity to be used in spreadsheet apps you may have so you can track your ins and outs more closely.

Like a bank, there’s a monthly summary report that’s broken down into various aspects of your activity, including net activity and more.

Refund policy

Fees

Stripe charges a standard fee of 2.9% plus $0.30 for issuing refunds. Once the refund has been issued, Stripe’s charge for the original payment (the one that is being refunded) will be returned in full.

Refunds can be offered in whole or partial amounts depending on need, and users should receive their refunds between 5–10 days after they’ve been accepted. Easy! 

Additionally, Stripe will automatically notify you via email once a refund has been put through.

Where do refunds go?

As with PayPal, refunds can only be sent back to the original payment source. This is a standard procedure and helps to prevent fraud. Safety first!

Anything else you might want to know about Stripe’s refund process can be found right here.

Receipts on transactions

Now for the paper trail. Receipts are the first port of call when a user needs to assess a transaction. Stripe makes things simple.

Email receipts

One of Stripe’s key features is an automatic email receipt that is sent out to users when they make a transaction. This is helpful for businesses and reduces the administrative work required. Tick!

Customisable receipts 

Receipts can also be customised to show your logo. What’s more, you can select what language a customer will receive their receipt in. The receipt’s header will be coloured with your company logo (great brand reinforcement there) and filled with all the vital information that a customer would expect.

Still want more? Then check this out.

How transfers work

Stripe uses their “Checkout” payment form — an embedded tool in their platform — as the main process for transfers. It’s easy and safe to use, so there’s no need to worry for the business or the client. The Stripe mobile app also includes this feature.

Transferring money with Stripe

To complete a transfer with Stripe, users will have to input certain information, just like any other platform. Required information includes:

• Email address
• CVC/CVV Code
• The expiration date of the card being used to pay
• A billing ZIP code
• One of Stripe’s random test card numbers

As a business, you can expect a delay of 7-10 days after receiving your first payment to see the transfer payout in your account.

Your account, like all others, will have a payout schedule depending on where you live: a 2-day rolling schedule for the United States and Australia, and a 7-day rolling schedule for everywhere else in the world excluding Japan, which has its own slightly more flexible schedule. You can also choose when and how often to receive payouts. 

For more information on what to expect from your Stripe transfers, see here.

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