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How does Stripe work?

As one of the leading payment processing gateways, we take a closer look at Stripe, including questions such as 'what is Stripe?' and 'how does Stripe work?'
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John Sherman
2017-08-07

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 that you find stripes painted on the road at a crosswalk.

But we’re not talking about those stripes…

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

Like we mentioned, Stripe is a payment processing gateway. And what is that, you may ask? Well, if you’ve ever made a purchase online then you’ll have used a payment procession gateway as a way to process the purchase. It’s used for the transfer of money and the best-known model, though certainly not the best working model, is PayPal.

Stripe, however, is a new flavor. While PayPal has enjoyed the lion’s share of the market for a long while, it’s become a tad torpid. Stripe, on the other hand, is an ever-evolving and improving machine.

Clients include Unicef, Kickstart, Facebook, Lyft, and Deliveroo to name but a few.

So here, we’ll break down how things work with this fantastic payment processor.

Currencies

Stripe can deal with 135 currencies so that in most of the world users are able to view prices in their own currency. This is ideal for online shopping, where customers can be put off by perceived differences in price when changing currencies.

But if the currency that a customer is paying in is different to their home currency, the payment amount will be converted to their home currency prior to the sale.

Fees Involved

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

There is a flat rate of 2.9% and $0.30 for every individual charge, regardless of the amount, as long as you’re paying less than a total of $1 million in a year.

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

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 keep 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.

Stripe uses a dashboard interface where you can check up on transfer activity on your account. 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, net activity, and more.

Refund policy

Stripe has a standard fee charge of 2.9% plus $0.30 of issuing refunds, but once the refund has been issued Stripe’s charge for original payment (the one now being refunded), is returned.

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. Nice and easy. Additionally, emails are automatically sent out once a refund has been put through.

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

Anything else you might want to know can be found right here.

Receipts on transactions

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

One of its features is an automatic email receipt that is sent out to users when they make a transaction. This is helpful for businesses and lessons the administration work required. Tick tick.

Receipts themselves can be customized to show your logo, and languages that a customer receives the receipt in can also be selected. The receipt’s header is colored by 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 point of process for transfers. It’s easy and safe to use, so there’s no need to worry for the business or the client. As should now be expected, the Stripe mobile app also includes this feature.

To go through with a transfer on Stripe, users will have to input certain information, pretty much the same as any other platform. Information required includes:

As a business, you can expect a delay of between 7 and 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, a 7-day rolling schedule for everywhere else in the world excluding Japan, and Japan has its own slightly more flexible schedule.

But, you can also simply choose when and how often to receive payouts. It’s a simple business!

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

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