What Is Stripe and How Does It Work? Complete Guide

Today, starting an online business is not as complicated as many people think.

Are Stripe payments one of the best payment gateways for online entrepreneurs, especially for a dropshipping business model?

With the Internet’s help, countless tools and platforms can help you get started by setting up a storefront, tracking orders, and collecting payments. 

However, things were different in 2010. Setting up an online store or any other internet business requires a lot of work and building websites.

You also had to figure out how to integrate a legacy payment processor into the new business model. Stripe payment was born in this type of marketplace. 

What are Stripe Payments?

Stripe Payment was founded in 2010 with the primary mission of making it easier to accept payments online. At this time, credit cards were still in use, but they were too much work. 

It meant working with a legacy processor or a middleman broker who was to provide you with access to the processor. 

You had to deal with banks, the respective credit card companies, and other additional services that were poorly explained and sold by third parties. 

This explains how accepting credit cards as a form of payment was complicated and poorly defined. People got into the deal without knowing what using credit cards for payment entails. 

A Stripe online payment processing gateway is designed to fix all those problems by making the payment process as smooth as possible. 

The added services on Stripe, such as fraud protection, fixed rates regardless of the network, and an application programming interface (API), enabled the founders of this app to add card processing to their apps quickly. 

Why is Stripe Payment Important?

First, you must understand how the credit card processing industry works to know why the Stripe payment method is so important. 

Most consumers attest that credit card payments are straightforward. 

All you have to do is swipe your card or insert it into a machine, key in your number and any other required information on the form, and your payment will go through.

Other customers see credit card transactions as the end of the transaction unless something has gone wrong. However, sellers see this whole process as the beginning of the transaction. 

You must know the parties involved to fully understand how a credit card transaction works. Some distinct parties are involved in the process, though the line can get blurry at times. The main parties include the following; 

1. Customers. In this case, a customer is anyone who is trying to make a purchase using their credit card. 
2. Merchants are businesses where customers try to buy goods or services. Each merchant in the industry has a unique merchant ID. 
3. Merchant Acquirers. This is where confusion kicks in, and things start to become complicated. Typically, Stripe merchant acquirers are financial institutions and organizations that provide the tools and processors that enable card acceptance during transactions. There are two significant types of merchant acquirers: ISOs and Processors. 
4. Processors are large financial institutions that act as the backbone of all transactions. They are responsible for verifying that the entire transaction process is valid and that the customer has sufficient funds on their credit card. Then they initiate the fund transfer. Some known examples of processors include Wells Fargo and Chase Paymentech. 
5. Independent Sales Organizations (ISOs). This party acts as a reseller for the processor. They sell access to a processor and the necessary equipment for taking cards. In addition, ISOs provide technical support to merchants. Examples of ISOs include Stripe, Authorize.Net, Vantiv, and Worldpay. 
6. Card Issuers are companies that issue credit cards to consumers. However, Visa and MasterCard are banks and other financial institutions. American Express and Discover issue their own card networks. 
7. Card Networks are the logos on your credit card. Visa, Mastercard, Discover, and American Express are all examples of Card networks. Besides Discover and American Express, most card networks franchise their network to individual issuers. 

When Stripe Payments was conceived, merchant acquirers were the most difficult to deal with. This is because most were still operating in physical retail spaces. They also lacked the technology and knowledge to help online businesses. 

Many merchant acquirers still use the traditional sales process, making it cumbersome to sign up as a merchant.

Furthermore, knowing what your rates could be was also close to impossible.

It wasn’t easy to gauge the cost of the technology, the kind of service to expect, and whether the processor technology could work with the merchant’s online business implementation. 

Stripe Payment changed that by focusing more on digital card payments.

This payment type was one of the first ISOs to build a platform for online businesses and app payments.

They also adopted a technology-forward approach, making signing up and using the service much more comfortable, faster, and transparent. 

This guide provides insight into who Stripe is, how to use it, the services and benefits it offers, and which apps and services can be integrated with Stripe. 

About Stripe Company

John and Patrick Collison, Irish entrepreneurs and brothers, are the founders of Stripe. They founded the Stripe company in 2010 with initial funding from the famed startup accelerator Y Combinator.

This public service was launched in September 2011 and rapidly became a darling of Silicon Valley.

In the years that followed, Stripe’s business raised almost $800 million in funding. It reached a valuation of over $22 billion, making it one of the most valuable private companies in the world. 

This company grew rapidly, mainly because its products were digital and initially focused on developers. 

The platform was built mainly to be incorporated into custom-made and existing digital apps. This is because they provided clear and straightforward directions. 

Moreover, the invention of this platform reduced the complexity of working with a processor.

This led to increased use of the self-service option, available to all customers. These features seem ordinary today, but they were revolutionary in 2011. 

Overview of Stripe Payment Options

The Stripe platform started as a domestic, straightforward credit card processing platform in the United States.

However, over the years, Stripe Payment Options has expanded its offerings to cover most of the payment methods used worldwide. Some of the leading payment options that Stripe uses include the following;

Stripe Credit card payments

This basic Stripe Payment version allows merchants to collect traditional one-off credit card purchases online or in-store. 

Consequently, Stripe accepts and processes American Express, Discover, Visa, and Mastercard-branded cards. They also receive niche products such as JCB, UnionPay, and Diners Club.

Moreover, one thing that differentiates Stripe Payments from traditional processors is the full range of options that Stripe offers its merchants. 

They can embed an already-built payment form out of the prebuilt elements, code their own from scratch, or connect Stripe to one of the hundreds of Compatible apps.

In addition, Stripe provides an execution option for anyone, regardless of their technical ability. This is what makes Stripe Payment Unique. 

Stripe digital wallet payments

The two most prominent tech companies, Apple Pay and Google Pay, hold the largest share of the digital wallet market in the United States. This is because wallet use is still a novelty in this region. 

Mobile wallets are thriving in international markets. In China, over half a billion people used mobile wallets to complete their transactions in 2018. 

The main advantage of using Stripe Payments is that the integration with the digital market lets your business accept payments however your clients prefer to pay. 

In addition, it takes your online business to a global level. 

Moreover, Stripe’s digital wallet services support payments via Google and Apple Pay, Masterpass, Microsoft Pay, Visa Checkout, American Express Express Checkout, and others. 

Stripe international payments

Taking your business internationally is an added advantage when using Stripe Payments. 

Stripe accepts payments in more than 135 currencies and is used in most countries.

When a business accepts international cards, it adds a 1% fee to the standard charges, and converting these cards to a different currency adds another 1%. 

This brings the total fee for Stripe international transactions to 4.9 percent plus 30 cents. 

The good news is that, even though those rates may sound high, Stripe also offers options to reduce them. 

In addition, for large transactions, methods such as ACH, SEPA direct debit, Alipay, and others charge transaction fees of 0.8-2.9%.

This includes the 30-cent transaction charge. Moreover, in some countries, Stripe allows merchants to set up local subsidiary accounts to make accepting local payments easier and lower fees. 

Stripe automatic payments

Consequently, Stripe offers an automatic payment option that allows businesses that require regular recurring payments, such as subscriptions and retainers, to send invoices for exact amounts at regular intervals of your choosing. 

The good news about using the Stripe recurring revenue plan is that you don’t incur additional costs until you have exceeded $1 million in recurring revenue. 

After you have exceeded that amount, Stripe will charge an additional 0.4 percent. 

Stripe’s recurring payment plan is bundled into its general billing platform, allowing for other invoices. 

The platform has various safety and security features to prevent recurring credit card transactions from being rejected. 

How does Stripe work?

Since Stripe is an Independent Sales Organization, it does not handle the heavy lifting of processing your transactions. 

What they do is collect and forward your transactions to a financial institution that ensures the funds are cleared. 

Stripe is known as an aggregator. 

Instead of signing up as total merchants with the merchant acquirer, Stripe’s users can sign up as sub-merchants under Stripe’s merchant account. 

This is important for users because it saves them from having to set up their merchant accounts through a complicated process. 

This makes the platform easy for merchants to use: after signing up for an account and being approved, you can start collecting payments immediately without having to think about it. 

On the other hand, things are slightly complicated for Stripe. Since all charges go through Stripe’s merchant account, Stripe is highly liable for fraudulent transactions on its platform. 

This benefits the platform’s users by encouraging Stripe to build a stronger security system and prevent fraudulent activity on the site. 

Stripe is one of the most trusted names in credit card processing for online businesses, thanks to its ease of use, strong security, and customization.

In addition, other trusted platforms, such as Amazon, Shopify, DocuSign, and Peloton, use Stripe. 

Stripe Tutorial and Guide

Any proper digital-first solution will include an app on its platform. Stripe also has a robust app API that enables third-party developers to build applications that integrate well with the service. 

The advantage is that these apps make it easier to use Stripe and do more than make payments. 

You can also collect credit card payments on your mobile. Leveraging a point-of-sale (POS) app is essential for setting up a pop-up or a permanent shop.

The Stripe dashboard helps you monitor your Stripe account’s performance and ensure you have the latest information at your fingertips. 

Stripe’s vast ecosystem of partners lets you integrate with a wide range of platforms.

These platforms include accounting, payment, Point of Sale, analytics, and other services.

Leveraging Stripe’s built-in functionality for many of your payment needs is also easy. 

Stripe payment Apps

The main advantage of using the Stripe payment app is that it provides everything you need to accept and process payments, settle and reconcile your accounts, and manage your Stripe-related activities. 

Integrated Stripe payment apps differ slightly but share some features. Most of these apps allow some customization of the appearance of the checkout forms. However, none of these apps gives as much freedom as going through Stripe directly.

Moreover, these apps support all of Stripe’s payment countries, and most also accept Apple Pay where available. 

However, many merchants may consider the platform’s other features a disadvantage. Features such as requesting payments, sending invoices, and accepting ACH payments are rare and often require a specific Stripe app. 

The good news is that finding a Stripe payment app that works perfectly for all your needs is very easy.

Stripe works perfectly with Charge for Stripe, Lunatap, Moon Clerk, InstaPayments, Payvoice, Payfunnels, MYFUNDBOX, and Splunk. 

These apps accept mobile and recurring payments and offer other apps and integrations ranging from simple to complex, from bare-bones to fully featured. 

The Stripe Partners page is also handy since it includes easy filtering to help business owners find exactly what they want. 

Stripe Dashboard app

This Stripe app helps you set up, manage, and easily monitor your account’s progress. Furthermore, Stripe dashboard apps allow you to manage payments and refunds, respond to disputes from different merchants, and monitor integrations.

The Dashboard is an essential app for running analytics and viewing real-time charts that show your business’s performance. 

You also get access to information on recent activities you may need to act on, such as disputes and verifying identities. 

This is the best if you are looking for a Stripe organization app. The Stripe dashboard app organizes information into separate sections.

Each section represents a different area of the API. The Stripe dashboard is also helpful for doing specific things, such as refunding payments or canceling a subscription, without necessarily accessing the API. 

The dashboard app offers many other features, including searches and team member privileges. 

The Stripe dashboard is essential for collecting specific information, such as payments made with the customer’s email address or the last four digits of their card number. This makes working through this platform effortless. 

Team members can also access the Dashboard, but you must give them different privileges. You can do this by restricting and allowing access to some information and the actions that they can take.

For instance, you can grant the customer service team access to process refunds. This means that only those with an access code can access these services. 

Stripe POS app

The Stripe Point of Sale app and the Stripe terminal allow you to extend your online business or store into the physical world. 

The Stripe POS app is a seamless way to unify your online and offline channels, whether a pop-up store or a permanent retail location. 

Stripe Terminal works with Stripe Payments, Connect, and Billing. In addition, you can integrate Stripe into your mobile and web applications to accept in-store payments and let customers reserve online and pick up their orders in-store. 

Stripe Terminal works with Stripe’s EMV 1, 2, or 3 precertified credit card readers. This helps you save time when you get the physical retail presence up and running. 

Stripe’s credit card readers support chip cards, end-to-end encryption, and Apple Pay and Google Pay.

Payment for Stripe is the only recognized and certified third-party Stripe POS app, so it works with it, too. 

Stripe Payment lets you create charges, manage customers, send receipts, request refunds, and sell inventory in Stripe’s POS app. 

Stripe mobile apps

Stripe’s mobile app accepts payments from Android phones, iPhones, and other mobile devices and helps you manage your account. 

This gives you access to the Stripe Dashboard, subscription plans (available in iOS only), payment and customer information, transfers, and other relevant information. 

You can also initiate refunds and respond to all disputes, all possible from your iOS or Android device. However, the app is not optimized for iPads, but you can still run the iOS version on your iPad. 

The Stripe mobile apps also support daily activity summaries on both platforms. On an iOS device, you can also receive push notifications for account activity. 

In addition, Stripe’s mobile app is perfect for managing and monitoring transactions from your iOS or Android device. The disadvantage is that you cannot create charges with them, so you must use the Stripe Terminal or a third-party integration. Moreover, you can only see live-mode transactions in the Stripe mobile apps. 

Among all digital payment processors, Stripe was the first to make a name for itself. 

They remain the top players in the market, not only because of their perfect timing but also because they have consistently provided one of the easiest-to-use and most powerful payment processing platforms. 

In addition, the ability to use either integration or the app for an out-of-the-box solution or to customize your implementation to suit your needs gives Stripe a big leg up over most of its competitors, making it the best solution for businesses of all sizes. 

Stripe business options

After setting up your account and connecting to Stripe, you can proceed to what Stripe can do for your business. 

Accepting payments

Accepting payments is one of the complex processes that any business has to deal with. This is because you want your customer interface to match your website interface, making it much easier for the clients to pay with their mobile devices. 

Stripe Checkout. For a seamless experience, consider adding this payment page to your checkout flow. It accepts Apple Pay, supports 14 locales, and will soon accept Google Pay. 

Stripe Elements is a set of prebuilt user interface components that let you design a custom payment form for your website. 

Moreover, using Stripe elements helps minimize user error, increasing the number of successful payments. 

Stripe Terminal. This provides a way to accept in-person payments. You can also create custom checkouts with developer-friendly SDKs so that you are not forced to use a different system for in-person transactions.

Stripe.js, on the other hand, lets you build your checkout from the beginning using a set of APIs. Moreover, you can also use Stripe to create custom invoices and request payments from United States businesses.

Invoices can also match your Company branding, allowing you to add payment terms and accept credit cards and ACH payments. 

Stripe offers many advantages, including support for various open-source plugins that efficiently integrate payment into your store. 

This also includes Drupal, Magento, Shopware, WooCommerce, and WordPress. The setup process is straightforward. 

Payment options

By incorporating Stripes into your business, you can accept all major credit and debit cards from customers in any country.

In addition, you can customize how the charges appear on statements, use authorization features such as partial capture and unlinked refunds, offer both full and partial refunds, and conduct CVC/AVS checks. 

Customers can also store their credit and debit cards electronically using the wallets. Stripe supports Alipay, AmEx Express Checkout, Google Pay, Apple Pay, Masterpass by Mastercard, Visa Checkout, and other wallets. 

Using Stripe also lets you offer local payment methods that are popular with the source API. 

This gives you the upper hand by enabling you to process more than 135 currencies while displaying prices in the customer’s preferred locale, helping you avoid additional currency conversion costs. 

If you have any subsidiaries, you can set up a local Stripe account to maximize acceptance rates, minimize costs, and avoid foreign exchange fees for customers. 

Accounts in other countries also use the same API infrastructure and are very easy to enable. So there you go, if you were wondering about Stripe Pricing and fees when it comes to transactions.

Mobile Payments

Stripe offers a mobile SDK to accept payments, whether you have an Android or iOS app or are just using a mobile website.

There is no need to change your system’s back end, as the Android and iOS SDKs allow you to collect credit card information without exposing sensitive data to servers. 

Using the Stripe library, your Android and iOS apps can accept any supported payment method, from Alipay to iDEAL. 

You can also build a complete checkout flow using the Stripe SDK for mobile sites and customize the colors and fonts to match your website’s look. 

Payment Processing

Stripe uses a dynamic payments API that applies smart authentication logic. This helps maximize conversations while minimizing disruptions to the user experience.

The advantage of using Stripes for payment processing is that it supports the latest authentication protocols and embeds the authentication flow in the checkout to keep customers moving through the process. 

There is also a pre-authorization layer in Stripe that connects to major credit card networks. You can incorporate directly with the rest of the networks to optimize routing paths and reduce transaction dormancy. 

Fraud and dispute handling

Any company that handles fraudulent activity and disputes reasonably always succeeds. In the event of a credit card dispute, Stripe helps you manage risk and fight fraud effectively. 

This also applies if the credit card is new to your business. The credit card might have been seen on the Stripe network before. 

Stripe Radar, a machine learning system, integrates well with your payments. It helps mitigate fraud, provides transparent risk scores and real-time fraud insights, and supports trust and block lists. 

Additionally, Stripe reduces the risk of fraudulent activities and chargebacks by adding a layer of authentication that protects you from liability for fraudulent card payments. 

Moreover, dynamic 3D secure authentication applies only to high-risk transactions or payments that require regulatory approval. 

During the problem-handling process, Stripe’s automated process works directly with networks that support credit cards to help you submit the best possible evidence in your favor. 

Settling and reconciliation of accounts

Using Stripe helps you simplify and accelerate transaction reconciliation. 

Stripe’s API and Dashboard provide real-time information about charges, fees, refunds, and transfers. 

This means you can directly create financial reports using Stripe data instead of compiling multiple reports from different merchant account providers.

Consequently, Stripe also tags every deposit with a transfer report that provides details on the exact transactions and fees, simplifying your reconciliation.

Stripe includes built-in reporting features that let you create reports via the API. 

You can automatically sync your Stripe data with your respective accounting ledger or use the Stripe data to export information about refunds, payments, and fees. 

Getting Payouts

A settled transaction can be paid quickly using the Stripe Dashboard and API. 

You can also get combined payouts across all the payment methods and currencies you accept from your customers. 

You can also set up historical payments and view any upcoming payments and expected deposit dates in the Stripe Dashboard.

Managing payments

Using the Stripe Dashboard, you can easily view all charges by payment type, country, and currency. You can also export this data directly from the API. 

Stripe Stigma. This allows you to use SQL to analyze your Stripe data, create custom reports, and gain insights in Stripe’s Dashboard. 

Your data is accessible through structures that help you identify the customers least likely to issue unpaid invoices. 

Stripe Dashboard. This Dashboard helps you view and manage all the data present in Stripe, including customers, plans, and balances. 

You can also refund your customers, review possible fraudulent charges, manage disputes, and access all information, from bank transfers to HTTP request logs. 

You can also use the Dashboard mobile app to see your daily earnings, payments, and new customers. 

Using Stripe also helps you add new users, set up roles and permissions to protect the platform’s data, and monitor user account activity. 

Stripe vs merchant accounts

Many online business owners choose Stripe over a merchant account because Stripe is much easier to set up. It also provides the same information you’d find in a merchant account, like a traditional bank account, with less setup and easier management. 

For instance, if you decide to set up a merchant account through your business bank, you must provide your personal credit history, business credit history, and business model before the bank considers opening an account for you. 

In addition, merchant accounts need to be underwritten, as they do not balance users’ risk as Stripe does. Moreover, most merchant account providers consider online transactions high-risk. 

This makes it nearly impossible to find a provider to underwrite the new online business. 

However, suppose you are lucky enough to find a provider. In that case, you are likely to navigate a complex set of rates and fees, hoping that the technology will fit your online business platform. 

Stripes also focuses on digital card payments because it has already built interactions with most of the top online business platform providers. The transaction rate is flat, and because the risk is balanced across users, you can set up the account quickly and easily. 

What are the benefits of using Stripe?

When Stripe first appeared on the market, it was among the first payment processors focused on startups.

This made Stripe the easy choice, especially when you compared Stripe to legacy providers.

Since then, many competitors have entered the market. Below are some of the fantastic benefits of using Stripes.

Ease of Use

Among payment processing platforms, Stripe remains the easiest to use. It may look complex, especially if you have gone through their documentation, but the truth is that Stripe is much easier for most users to set up.

It takes less than 10 minutes to register for a Stripe account and accept payments. 

As discussed above, Stripe sets up its users as sub-merchants underneath their main merchant accounts. 

This is advantageous for users, as they do not have to go through the demanding, complex verification and activation process to access their merchant accounts.

This makes signing up for this account easier and quicker. 

A large number of integrations

There are different ways of doing business digitally. They range from online businesses, Stripe for nonprofit fundraising, Software-as-a-Service, to billing for physical services. 

This is because each business model has countless apps to aid in smooth business operations. The good news is that Stripe has built-in integrations for many of them. 

This makes collecting payments much quicker and more comfortable. 

Business owners can plug Stripe into apps they already use with less work using these integrations.

Furthermore, adding apps like JotForm allows people to start accepting payments however they want, rather than being limited to a smaller pool supported by the platform. 

Powerful customization options

Stripe offers different ways to customize the implementation for people with limited coding skills who are willing to put in more effort. 

Stripe also offers developers several ways to customize the appearance and functionality of their payment forms. 

Since Stripe was built with developers in mind, it offers more customization than many plug-and-play alternatives. 

Even though many users will never need to worry about these options, business owners who are already creating their apps or other complex products benefit hugely from Stripe’s flexibility. 

Payment Options

Compared to traditional processors, Stripe offers more payment options for a unified interface. In conventional payments, the processors and merchants’ accounts allow you to accept payment by credit or debit card, depending on your country. 

Stripe, however, allows you to accept payments from virtually anywhere in the world. 

Stripe supports almost every traditional banking instrument, including credit and debit cards, payment methods such as Chase Pay, and direct bank deposits via Automated Clearing House. 

Moreover, Stripe allows business owners to create accounts for local subsidiaries, reducing the cost of international transactions. 

They also blend in easily with emerging payment methods popular in other countries. 

Stripe also benefits business owners by giving them more flexibility in accepting payments, saving them significant money in the long run. 

Stable Costs

Stripe charges a stable or minimal processing fee for every transaction type. Another advantage is that there are no limits on the number of transactions or monthly costs when using Stripe. 

There are no levels for businesses to deal with, unlike in traditional holding company structures.

Doing more business means that you will automatically be switched to a much lower percentage per transaction. Every company wants flexible costs so that it can make great sales. 

Stripe is ideal for businesses of all sizes because it has no fixed costs. You can only pay when you accept the payment, and there is no need to worry about the amount changing. 

Advantages of Stripe

After reviewing Stripe’s benefits, we will discuss some advantages of using it compared to specific competitors. 

Advantages of Stripe over Square

Square is also a giant in the payment processing space. 

Initially, they began as a card-swiping dongle that users could attach to their phones, but they have since grown beyond that and now offer many online business options.

The contrast lies in the payment methods Square accepts. Square accepts cards and mobile wallets only. 

Square’s global reach is narrower than Stripe’s, and it lacks many customization and integration options. 

Advantages of Stripe over PayPal

Many people are familiar with PayPal, especially since it introduced online payment processors worldwide. Famous names such as Peter Thiel and Elon Musk come to mind when you hear about PayPal. 

PayPal has undergone several changes in ownership since its founding. 

This has caused the company to lose the pioneering spirit that it was initially founded on. 

For instance, PayPal requires that all transactions be redirected to their page for completion. 

This disrupts customer flow, which in turn leads to higher abandonment. 

Alternatively, if you are willing to pay a monthly subscription fee, you can use a “hosted” payment page to conduct all your transactions. 

New accounts also undergo a thorough vetting process, and PayPal plays an active role in settling disputes, much to the annoyance of many business owners. 

Advantages of Stripe over Braintree

Braintree is a payment platform owned by PayPal, even though the two companies use different business models. 

Sometimes PayPal feels like a giant, out-of-touch company, whereas Braintree is next to Stripe on the cutting edge of payment processing. 

Stripe’s main advantage over Braintree is the number of available integrations and the speed at which new integrations are added. 

In addition, Stripe has remained on the cutting edge of development despite its age. Its age also means it has had enough time to develop more plugins and partnerships. 

However, it may be a stretch to conclude that Stripe is the best payment processor or suitable for everyone. 

They are incredible, flexible, and powerful, allowing many businesses to accept payments more easily and quickly. 

This was not possible before Stripe was founded. 

Additionally, Stripe has many advantages over its competitors. This means it has more integrations, is readily available worldwide, and is much easier to set up. 

How protected are your payments with Stripe?

The main thing that customers look for with any payment option is that their details, including bank account and credit card information, are safe and secure. 

You also want to ensure you are providing a safe payment option and complying with regulations, including Payment Card Information (PCI DSS). 

Stripe assures you and your customers that using it to make payments is the right decision. This is because it is a safe way to pay. 

At Stripe, security is the primary concern. It also uses secure encryption, fraud protection, and PCI compliance controls.

This helps give reassurance that Stripe is a safe way to make payments. 

Stripe encryption

This type of encryption offers peace of mind to merchants and customers. It provides security for payment information in transit and for already stored payment information. 

On the online platform, Stripe requires HTTPS for all services that use TLS (Transport Layer Security), also known as SSL (Secure Sockets Layer). 

This means that all communication sent to and from Stripe, including the Stripe website and the Dashboard, is encrypted. 

When using Stripe.js, you can only access the encryption over TLS. Furthermore, all of Stripe’s official libraries are connected to Stripe’s servers over TLS. 

Each connection also verifies TLS certificates. This helps secure customers’ information, including sensitive payment data, while still in transit. 

Encrypted stored data

Stripe’s primary service runs on a separate machine from Stripe’s infrastructure to store, decrypt, and transmit card numbers. The primary services include an API and a Stripe website. 

Any card number stored on the platform is encrypted with AES-256 (Advanced Encryption Standard). This is the industry standard for security data. 

The key for decrypting the card numbers is kept separately, and the good thing is that none of Stripe’s internal servers can access the plain-text card numbers. 

Cards are only sent to providers already allowed by the servers through the servers’ request.

Stripe’s encryption is extended to communications. Stripe uses two PGP keys to encrypt and verify the signed message. 

After securely contacting Stripe, you can use the general PGP key. When you send sensitive data, such as credit card information, you use the data migration PGP key during your import. 

However, this is not where Stripe encryption stops. Regular audits examine the security measures, including the certificates they serve, the certificate authorities they use, and the ciphers they support. 

Stripe uses HSTS to enforce security and ensure that browsers access Stripe only over HTTPS. Moreover, Stripe is also on the HSTS preloaded list for Google Chrome and Mozilla Firefox. 

Stripe Fraud Prevention

Stripe uses a fraud protection mechanism called Radar. Machine learning detects and blocks fraudulent activity. 

This machine is already built into Stripe. Radar then channels data from millions of global companies, allowing the algorithms to learn from the machine and become better at detecting new kinds of fraud. 

In addition, Radar has been customized to apply to modern internet transactions. 

The ancient methods for preventing fraudulent transactions were never intended for online purchases. 

This is why Radar was built. It was built specifically for this reason and helped prevent unnecessary declines and lost revenue. 

Stripe fraud prevention also includes 3D Secure, which is known by different brand names, such as MasterCard Identity Check, Visa Secure, and American Express SafeKey. 

Moreover, Stripe supports 3D Secure 2.0, which introduces “frictionless authentication” and provides a safer and more secure purchasing experience than 3D Secure 1.0.

3D Secure 2.0 is the primary card authentication method used in the EU to meet the upcoming SCA (Strong Customer Authentication) requirements for PSD2. 

This is the best way for businesses to request exemptions to SCA. In addition, 3D Secure 2.0 was specifically designed for smartphone use, reducing customer back-and-forth.

However, it still provides a very safe way to validate purchases. 

Stripe PCI compliance

PCI is a complex and challenging standard. If you handle credit card data, you should be able to prove that you comply with the PCI DSS (Data Security Standard).

PCI DSS helps protect consumers by setting a baseline of protection and reducing fraudulent activities and data breaches across the entire payment system. This rule applies to any organization that accepts or processes payment cards. 

Three main things are involved in PCI DSS compliance;

• Ensuring that sensitive credit card details are collected and transmitted securely. 
• Secure data storage includes encryption, continuous monitoring, and testing of access security to card data. 
• Annual security control authorization can require forms, questionnaires, external scanning services, and third-party audits. 

Stripe has been audited by a PCI-certified auditor and is certified as a PCI Service Provider level 1. This is the highest level of certification that any business can achieve in the payment industry. 

Guide to the Stripe app and integration options

You can also include other apps and services you may already use with Stripe. 

With commonly used apps, tools, and other services, Stripe’s integration provides analytics, accounting, email, shipping, tax reporting, and more. 

You can also integrate with online stores and POS platforms through Stripe’s existing relationships. 

Connect to an open-source or self-hosted platform like WordPress or Magento and work with the developer resources to integrate Stripe’s APIs. 

A brief Stripe integration tutorial

The advantage of using Stripe is that it offers many third-party integration options.

However, you need to be a developer or hire a developer to create a custom Stripe integration. In this tutorial, the Stripe integration covers the basics of integrating Stripe with other tools.

However, if you need a more comprehensive integration tutorial, the Stripe website has a lot of helpful information and checklists that can serve as a good reference point as you go through the integration process.

You can practice some of the following tasks simultaneously to get set and run faster with your Stripe integrations. 

Set up your Stripe account.

Creating your Stripe account is the first step in the integration. On the team page, you will see a + New user button. Click on that button to give your organization access to the Dashboard. 

Your finance, engineering, customer service, and product teams will likely need access. When you give your organization access to the Dashboard, you’ll also set up your CVC and AVS checks, as well as the default description for your customers’ billing statements. 

Migrate data to Stripe.

This is the second phase of integrating your Stripe after you have set up your account. 

This is easy to achieve, especially since Stripe has a dedicated migrations team to bring over your data, including credit card numbers. They help you map your existing data fields to the corresponding Stripe fields.

Build the buyer experience.

The next stage is building the buyer experience. The engineering and user experience teams are responsible for this.

This is because they have the correct information, which will help provide insight into the process flow.

This can consist of Stripe payment forms or payment request buttons. Most Stripe integrations use Stripe Elements for this. 

Build webhooks

A webhook event is essential because it notifies your application whenever an event occurs on your account. 

For instance, you will get notifications on disputed charges and recurring billing events that are not triggered by a diet API request. 

To set up a webhook, you must build endpoints in JSON (JavaScript Object Notation), configure the webhook settings, and test and respond to webhook events. 

Customize charges with metadata and descriptors.

First, you must identify the valuable metadata for your customer service and finance teams.

Metadata is necessary because it allows you to store additional information on charges, customers, and accounts.

It can also be used in the Stripe Dashboard and for reporting with Stripe Sigma. 

Ensure your dynamic descriptors are tailored to reduce the risk of a dispute. 

Implement risk mitigation

To set up basic risk management and fraud protection, you will need Stripe Elements’ help. The Elements allow you to collect the cardholder’s name and billing address when you create a token. You can then set it up to save customer email addresses and shipping information. 

In addition, you can implement 3D Secure to add an extra layer of security. 

However, this is recommended only if your company accepts high-risk payments, such as in industries with a higher-than-average chargeback risk. 

3D Secure also requires your customers to complete additional steps during the payment process. Customers need reassurance, and if they don’t have their 3D secure information, they might not be able to complete the payment. 

Stripe Payment Integration

Stripe.js lets you create a seamless payment integration without worrying about merchant accounts or PCI compliance on your servers. 

Stripe.js is a JavaScript library that connects your web forms to Stripe’s servers, making Stripe payment integration easy. 

Furthermore, you can also create one-time payment forms, recurring payment forms, and even donation forms. Setting up and making collecting payments as painless as possible is easy. 

Stripe API integration

Stripe is a suite of payment APIs. These APIs follow a standard REST (representational state transfer) protocol, in which instructions are sent to a URL that controls the API’s behavior. 

It is like having different PO boxes for your business, each handling a different type of request: PO Box 1 for orders, PO Box 2 for returns, and PO Box 3 for general questions. 

Assuming you are a programmer, using the API is as simple as sending the correct data to the right URL or endpoint. If the data is formatted correctly as JSON, the endpoints read it and process it. 

Since it is all handled through URLs, it uses the same standards for transmission, confirmation, authentication, and responses as regular HTTP, just like the standard you use to browse the web. 

On the other hand, if you are not a developer, you can choose from the full suite of apps that will integrate with Stripe’s APIs.

However, if you need something custom for your implementation, any web developer should not have problems using Stripe’s API to help build your solution. 

Stripe POS integration

Stripe works with many POS systems, including Collect for Stripe, Big Cartel, Payment for Stripe, and Inner Fence.

These Stripe POS integration partners are essential to this model because they enable you to accept credit cards from anywhere, including with readers. 

In addition, Stripe offers Stripe Terminal, which allows you to build your own POS system. You can also create custom checkout screens and email receipts. 

Consequently, Stripe Terminal integrates with JavaScript web apps or iOS and Android apps using Stripe’s SDK and APIs. 

The Stripe Terminal card readers provide end-to-end encryption and support chip cards and contactless payments, such as Google Pay and Apple Pay. 

Top apps for Stripe Payments.

As with any other digital-first solution, Stripe offers a robust API that enables third-party developers to build apps that integrate seamlessly with the service.

These apps are essential because they make it easier to use Stripe, but they can do much more than just let you take payments. 

Moreover, you can collect credit card payments on your mobile device and use a point-of-sale (POS) app to set up a pop-up or permanent shop.

The Stripe Dashboard apps help you manage and monitor your Stripe account and ensure you have the latest information at your fingertips. 

There are vast ecosystems of partners in Stripe that allow you to incorporate with different platforms, including payments, accounting, analytics, POS, and other services.

Moreover, you can leverage Stripe’s built-in functionality for many of your payment needs. 

Stripe vs PayPal: Who should you choose? 

You have probably heard more about Stripe, the hottest new payment processor on the block. 

What is PayPal? It has a trusted brand and a long history of processing online payments. 

When do I get paid?

PayPal usually pays within one business day.

Stripe, on the other hand, has a rolling 2-day transfer in the United States and Australia and a rolling 7-day transfer in most countries.

This information is essential, especially if you need funds and reside outside the United States and Australia. 

In summary, Stripe is one of the most accessible payment processing platforms.

Most users find it much easier to set up their Stripe accounts. Registering an account takes less than 10 minutes, and you’re ready to accept payments. 

In addition, Stripe offers more payment options, which is very convenient for users. 

However, when it comes to getting paid, PayPal pays within 1 business day worldwide, whereas Stripe takes about 2 days in the US and Australia and up to 7 days in other parts of the world.

Therefore, the best payment processing platform depends on your needs and level of convenience. 

Start Shopify For Only

Try Shopify free for 3 days, no credit card is required. By entering your email, you agree to receive marketing emails from Shopify.