Stripe Review: Should You Be Using It For Your Business?
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Stripe is potentially a very good credit card processor for online-only businesses. It's fast and easy-to-implement for someone with developer experience, and also relatively inexpensive. You would be able to build your own e-commerce environment with Stripe’s API. If you don’t have developers working for your website, Stripe allows you to partner up with one of many e-commerce platforms to build a store – keep in mind these often come at an additional cost. The major downside of Stripe is the fact that it doesn't process PayPal payments, unlike some of its competitors.
- Stripe Review
- Stripe Fees, Features & Benefits
- How Does Stripe Compare to Other Credit Card Processors?
Review: Is Stripe A Good Credit Card Processor?
Stripe offers standard pricing for handling online credit card payments. The company charges the same rates we see with companies like Square or PayPal – 2.9% + $0.30. Where you may start to see differences between these platforms is at higher volumes. Stripe begins providing volume discounts to companies making over $80,000 USD in sales each month. By contrast, with Square you need $250k in annual revenue and an average ticket size of $15 to be considered for volume discounts. If you’re operating a high-volume business, it’s worth exploring quotes directly with a few different companies to see if you can get more affordable processing elsewhere.
| Good For… | Bad For… |
|---|---|
| Online credit card processing | Firms looking to have a single processor for online and offline payment handling |
| Companies capable of leveraging the free API to build a custom e-commerce experience | Businesses that want to accept PayPal payments |
The biggest draw for many users is Stripe’s free and simple API. The company has a reputation among developers for being easy to work with. This allows small companies with some level of development resources available to build out custom experiences for their e-commerce site. The integration also doesn’t come with any additional costs baked in. Other companies, like PayPal, charge businesses an extra monthly fee for a similar service. On the flip side, we find this to be problematic for small companies that don’t have developers or the means to hire a freelance coder. Stripe can be integrated through the use of another e-commerce platform. While these can be easier for non-technical users to set up, they will cost you extra.
It’s worth mentioning that Stripe does not accept PayPal payments. Research from TSYS shows that 12% of people prefer PayPal for buying things online.
Bottom Line: Stripe is a great online-only credit card processor that charges fair processing rates and has very few added costs. The free and simple API is great for businesses whose developers can build a custom online e-commerce experience. Unfortunately, businesses without technical resources will have to pay extra for a separate e-commerce solution.
Stripe Up Fees, Features & Benefits
| Stripe Credit Card Processing | Details |
|---|---|
| Transaction Cost |
|
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Networks Accepted |
|
| Monthly Fee | None |
| Monthly Minimum | None |
| Chargeback/Disputes | $15 (refundable if issuing bank rules in your favor) |
Stripe offers a standard 2.9% + $0.30 fee for handling online credit card transactions. There are enterprise volume discounts available to businesses that have $80,000 or more in monthly sales. Stripe currently does not offer credit card processing for offline retail stores.
If your company has 501c3 nonprofit status it can also receive reduced rates. The standard nonprofit pricing structure is 2.2% + $0.30. The only exception to this are American Express payments, which are charged 3.5% per transaction. Stripe will not charge any fees to nonprofit companies on the first $15,000 in sales volume. That can save roughly $420, assuming a standard pricing structure and average payments of $50.
Stripe also provides free access to their API. Developers can use this to build a custom check out directly on your company’s website. This can be a major perk for some companies that don’t want their customers to be sent off to third-party sites to handle the processing of payments. Business owners without technical resources will have to rely on other e-commerce solutions if they don’t want to build their own check out. Some of these are free, while others can cost over $100 per month to maintain.
How Much Can Stripe Credit Card Processing Cost Your Business
To give a better idea of the cost associated with picking Stripe as your credit card processor, we ran it through a few simulations for a handful of sample business profiles. These were the results. The following are based on an average transaction size of $100. Keep in mind these do not account for high-volume transactions. Make sure to obtain your own quotes if your online business will process over $80,000 in monthly sales.
| Transaction Volume (Monthly) | Cost |
|---|---|
| 10,000 | $320 |
| 51,000 | $1,632 |
| 101,000 | $3,232 |
How Does Stripe Compare to Other Credit Card Processors?
We took a look at how Stripe compares to other credit card processing companies. We encourage business owners to always shop around and consider several options before settling on one company. When possible, obtain multiple quotes since that is the best way to get a clear understanding of how costs compare between different processors.
Stripe vs PayPal
PayPal can be a better credit card processor than Stripe for those looking for the simplest way to start accepting payments. It allows you to set up an account through which you can start accepting credit cards at the same price as Stripe, without the need for a separate e-commerce checkout solution. The only downside is that you will be sending your customers away from your website and off to PayPal’s. If you wanted something more sophisticated, like building PayPal into your website natively, you will need to use PayPal Payments Pro, which costs $30 per month. If that’s what your after, Stripe is the better alternative.
PayPal also offers card readers for businesses that want card processing at their brick and mortar locations. Stipe does not currently offer this functionality. Therefore, if it’s important for you to have a single credit card processor serving both your online and offline stores, PayPal has the clear advantage. Note that if you're after both online and offline credit card processing, Square may actually be the better answer.
PayPal Highlights
- Simpler to set-up for e-commerce, but more expensive if you want it built into your website
- 2.7% per retail transaction
- No monthly fees
- PayPal Review
Stripe vs Square
When it comes to online credit card payment processing, Stripe and Square are very comparable. They offer similar features at the same exact price. The two services may differ on the tech side of things, so have your developer see which API is easier for them to work with, if that becomes the only consideration.
Like PayPal, Square offers retail credit card processing as well. It charges 2.75% for each retail transaction, with no added monthly costs or fees. Square also offers a breadth of card readers that range from $29 to $99. If retail card processing is something that matters to you, Square has the edge.
Square Highlights
- Online and Retail Credit Card Processing Solutions
- No monthly fees
- Square Review
Stripe vs Authorize.net
Authorize.net is another online-only credit card processor that is better for business owners who are worried about fraudulent purchases. The major benefit offered by Authorize.net is the dedicated fraud detection suite and fraud support team. For business owners who are concerned their business may be susceptible to fraud, this type of service can offer some peace of mind. With that said, chargebacks through Authorize.net cost $25 each – that is $10 more than what you pay with Stripe.
Overall, Authorize.net is much more expensive than Stripe. While the per-transaction costs are the same, Authorize.net charges a lot of overhead costs. This includes a $49 setup fee and a $25 monthly gateway fee. For price conscious business owners, Stripe is the more affordable solution.
Authorize.net Highlights
- $25 monthly fee and a $49 setup fee
- Online only
- Per-transaction cost may be different if you use Authorize.net through a different merchant account
- Can accept PayPal payments, unlike Stripe
Stripe vs Braintree
Braintree, a PayPal company, accepts most credit card payments at the same price as Stripe, with no overhead monthly fees. However, Braintree adds an extra $0.15 fee per AMEX transaction. While this likely won’t be a huge deal for most businesses, it may be a expensive if much of your customer base uses American Express cards.
Because Braintree is owned by PayPal, it also allows your users to pay using PayPal. Given that some surveys show that as much as 1 in 10 online shoppers prefer PayPal payments, this may be an important consideration to mae.
Braintree Highlights
- 2.9% + $0.30 fee per transaction. An extra $0.15 per Amex transactions
- Can accept PayPal payments, unlike Stripe
- Online only
Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.