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5 Min. Read

How Does Stripe Work? A Beginner’s Guide

When it comes to online payment methods there are a number of options to choose from. Some of the bigger names in the payments industry, like PayPal and Square, are starting to lose traction. The biggest name in payment gateways and payment processing platforms is Stripe. You may not know much about them, though. They’re different from their competitors in a way that’s likely better for your small business.

For all of the information you need about Stripe, keep reading! We’ve got everything you need to know about the payment platform as a business owner.

Here’s What We’ll Cover:

What Is Stripe?

How Does Stripe Work?

How Does Stripe Make Their Money?

What About Brick and Mortar Stores?

Key Takeaways

What Is Stripe?

Stripe is a fintech company that was founded in 2010. Stripe calls themselves a “full-stack payment processor.” In simple terms, this means that they are a third party payment processor and payment gateway. They set themselves apart from their competitors by being able to work with 135 currencies. Because of this, large companies have adopted them to process payments. Companies like Lyft, Blue Apron, and Pinterest all use Stripe.

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How Does Stripe Work?

Stripe Payments is a payment processing platform. It allows you to transfer money from a customer’s bank account to your business’s account using a credit card or a debit card. Stripe is mostly used for eCommerce applications and online transactions.

Stripe for Online Businesses

In order to process an online transaction for your business, you need both a payment processor and a payment gateway. As mentioned prior, Stripe is both. The gateway captures the credit card or debit card information, then sends it to the processor to process the transaction. The processor will take a transaction fee, then the funds will be sent to the business’s bank account. Because Stripe can provide both the gateway and the processor it is the most convenient online payment method available.

Easy to Integrate

Many eCommerce businesses choose to use Stripe because it is easy to integrate into an existing website. In some cases, the Stripe payment tools are built into the website already. They can be turned off and on as easily as clicking a few buttons.

Stripe makes it easy to get their payment processing service up and running, too. They provide excellent customer service for business owners who need assistance. Using Stripe Checkout means that you have prebuilt fields and assets, too. That way, you don’t have to struggle to figure them out yourself.

Payment Methods Accepted by Stripe

Stripe is a great choice for small businesses and international businesses. They allow for the use of 135 different currencies, as well as a number of different payment methods. Here are all the payment methods currently able to be used on Stripe:

  • Alipay
  • Apple Pay
  • Google Pay
  • Microsoft Pay
  • American Express Checkout
  • Masterpass by Mastercard
  • Visa Checkout
  • WeChat Pay

Prohibited Businesses According to Stripe

Stripe has the right to refuse service to any business as they are privately owned. As such, there are a list of prohibited items and businesses that Stripe will not allow to use their platform. This is due to legal concerns, or security concerns, in most cases.

  • Financial services
  • IP Infringement, regulated, or illegal products and services
  • Predatory or deceptive practices
  • Drug paraphernalia
  • Multi-level marketing
  • Social media activity

These are all activities that are not allowed to utilize Stripe’s payment processing platform.

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How Does Stripe Make Their Money?

Stripe makes their money off of you the same way other payment processors do. Their business model is similar to that of their competitors. When credit card transactions are processed by their service, they charge a percentage of the sale and a transaction fee.

Currently, Stripe charges their customers 2.9% on each transaction, plus an additional $0.30. That being said, there are no monthly payments when using Stripe. They only use the pay-as-you-go method.

If you speak with Stripe, you can receive a customized quote for services, as well. This would provide a high volume or multi-product discount to your business, reducing the overall cost of the platform.

What About Brick and Mortar Stores?

Stripe also offers services to brick and mortar storefronts. Their product is called Stripe Terminal, and it allows for processing payments in person. The service comes with a pre-certified termina. It accepts American Express, Mastercard, and Visa debit and credit cards.

Key Takeaways

Stripe is becoming a giant in the payments industry. They provide services to small business owners, allowing them to do internet business and in-person business. They take a high number of physical cards, and accept payments from digital wallets. They’re a one-stop-shop in terms of online payment processing, and more recently brick and mortar payment processing.

If you need more direction on payment processing for your business, be sure to take a look at our resource hub. It’s packed with articles to help you and your business grow and succeed!


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