How Does Stripe Work? (Explained)

Simply speaking, Stripe offers businesses complete payment processing solutions. For example, a business may want to accept face-to-face or online payments.

Businesses also need to track expenses, make and accept invoices, and analyze their business financials. Stripe comes with multi-faceted solutions covering mostly all of the financial solutions a business may need.

Domestic businesses usually are concerned with accepting card payments and POS solutions. Large businesses going international need a wider variety of products and online payment processing solutions. Stripe offers a Payment Gateway, payment processing, and automated clearing house (ACH) services.

Let’s briefly take a look at what range of Products and services Stripe offers.

  • Stripe Payments: That’s Stripe’s most widely used product by businesses globally. It integrates with a secure checkout or as a dedicated payment gateway option for the business commerce website. In addition, it comes with comprehensive features packed with accepting and processing online payments, card processing, cash vouchers, invoicing, financial reports, fraud and risk management, and payout options, to name a few.
  • Stripe Billing: It offers invoicing and subscription handling for businesses. With its global payout integration and customization features, customers can collect invoices and subscriptions at any rate.
  • Stripe Connect: It is a sophisticated program developed particularly for businesses working as a SAAS model. Consultancy businesses, marketplaces, and software offering companies find it a valuable match with Connect. In addition, business customers can make and accept payments with a single platform.
  • Stripe Payout: Many businesses must regularly make frequent payments to their regular clients. Stripe Payout offers an integrated platform to make global payments instantly. Online platforms, marketplaces, freelancing platforms, etc., can utilize the best features of Stripe Payout.
  • Stripe Issuing: another flagship program of Stripe for businesses interested in memberships and reward programs. It offers to create virtual and physical business cards for businesses. These business cards can have features of debit and credit cards as defined by the business.
  • Stripe Terminal:  It offers Point of Sale payment solutions for businesses. It enables businesses to integrate both face-to-face and online payments under a single platform. However, businesses need to use the Terminal app with Stripe’s other apps, such as connector Payment.
  • Stripe Corporate Cards and Capital: Stripe offers business financing solutions through its flagship corporate cards and capital programs. Corporate cards are issued based on company payment history and come with a rewarding 1.5% cashback offer. Corporate cards are used to make business expenses and other transactions, much like a VISA card.

Stripe has recently launched its business financing solution offering the “capital” program. The program lends money to businesses and charges a percentage of sales as a recovery method rather than fixed monthly installments.

Stripe offers the bulk of payment methods for businesses around the world too. Transaction costs, payment rejections, international conversions, and customer base all play important roles in deciding on the right payment processor.

Some of the key payment processing methods offered by Stripe include:

  • ACH Credit Transfers
  • ACH Debits
  • Alipay
  • Apple Pay
  • Bacs Direct Pay
  • Cards
  • EPS
  • FPX
  • Google Pay
  • Microsoft Pay
  • OXXO
  • WeChat Pay

Customization with Stripe API:

A hallmark of Stripe payment processing solutions has remained their open-source code development programs. Their APIs and software solutions developed by professional coders come with fully customizable options.

Businesses can integrate the built-in apps directly to get things going in minutes or use the APIs source codes to customize the e-commerce sites.

As an alternative, Stripe also offers large enterprises customized offers greater flexibility. For small businesses and existing e-commerce platforms, their plug n-play apps should suffice all payment solutions.

Stripe’s Global Presence:

Stripe has expanded its network of direct offices to 14 international places. It offers direct services to over 40 countries currently. Their rival competitor, such as PayPal has a global presence in over 200 countries.

Albeit limited global presence, Stripe’s partnering with recognized card processors, VISA, MasterCard, American Express, etc., makes them eligible to reach out globally.

Stripe’s indirect global customer reach is on par with its competitors, if not above them. In addition, its unique partner program with industry leaders like Amazon, Google pay, Shopify, Visa, MasterCard, etc., enables it to reach out to potentially every online customer globally.

In a recent investment call series, the CEO Patrick Collison did hint about their expansion program to other countries.

Stripe enjoys fan loyalty through its partner program extensively. For Example, over one million Stripe users come through Shopify.

The company has realized that dependency on other platforms may pose a risk in the future. Since then, they have announced some plans to expand their direct global presence. As part of it, they recently acquired Paystack to move into the African market.