Is Stripe a Merchant Account? Clear Guide

Panna Kemenes

Being able to process card payments is critical for any business. To do this, you need a merchant account or a payment processor with merchant account functionality.

Stripe is an example of a hybrid merchant account provider. It offers an end-to-end payments solution with merchant account functionality. But there are some differences between Stripe and a traditional merchant account provider.

This article goes through the differences, to help you decide which one is best for your business.

Connect Stripe and Wise:
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Is Stripe a Merchant Account?

So, is Stripe a merchant account?

Stripe acts as a merchant account. But it has a different structure to a traditional merchant account. It also has many more features on offer.

A merchant account is a type of business bank account. With a merchant account, you can accept card transactions. However, you need to connect it with a payment processor and gateway to function.

Stripe is a blend of all three of these services. It’s a merchant account, payment processor and payment gateway. It’s known as a Payment Service Provider (PSP).

This means that Stripe offers more services than a traditional merchant account. It also avoids some of the cons of a traditional merchant account.

What are the main differences between Stripe and a merchant account?

A traditional merchant account connects your customer’s issuing bank with your acquiring bank. This means that your business has a direct relationship with banking institutions.

In contrast, Stripe aggregates all of its merchants under one merchant account.

As a result, the setup process is easier for Stripe. There are less checks and verification needed to get started with Stripe. That means you can start accepting payments quicker.

Stripe’s pricing is also different compared to a standard merchant account. It’s free of monthly fees and setup fees, with a pay-as-you-go pricing model. It charges a transaction fee of 2.9% + $0.30 USD per transaction.¹

Stripe has a flat rate pricing model. Other merchant account providers also offer tiered pricing and interchange plus pricing models.

Flat rate pricing is simple. But it’s also more expensive than tiered or interchange plus pricing. That said, Stripe offers interchange plus pricing for businesses with large transaction volumes.

Another difference between Stripe and a merchant account are the services it offers. Stripe offers an end-to-end payments solution. It has merchant account functionality, a payment gateway and processing solution. It also offers in-store POS hardware.

In contrast, a merchant account doesn’t typically offer as many extra features. This wide range of extra features can make Stripe worth the higher transaction fees.

A common question for business owners is whether Stripe can replace a traditional merchant account. The answer depends on your business model and goals.

If you’re looking for end-to-end processing and quick approval, Stripe is a great option. But for complex businesses needing customization, a standard merchant account can be better.

Stripe’s Place in Payment Processing

Stripe offers an end-to-end payment solution with a user-friendly interface. It takes advantage of technological integrations to automate many of its processes.

Stripe enables you to accept payments online and in-store, in 135+ currencies.¹ It offers local payment method support as well as in-store POS terminals and hardware.

It also offers real-time reporting, subscription billing and much more. With its pay-as-you-go pricing model, businesses of all sizes can choose what they want to pay for. This means that Stripe can scale with your business.

When to Choose Stripe Over a Merchant Account

For some businesses, Stripe is a better fit compared to opening a merchant account.

If you want to prioritize speed and ease of setup, Stripe has a lot to offer. The onboarding process is simple and doesn’t take as long as with a merchant account provider. This means you can start accepting payments sooner.

Stripe is also useful if you want simplicity. Its flat rate pricing model and pay-as-you-go system makes it easy to forecast costs. It also enables you to access more features as you scale your business.

What Are the Limitations of Using Stripe Instead of a Merchant Account?

While Stripe can be a great choice, it doesn’t fit every business.

If your business is classified as high-risk, you’ll want to open a traditional merchant account. Stripe lacks the infrastructure to support the needs of high-risk businesses, meaning you’ll likely not be approved. In this case, a standard merchant account will be the better option.

If you want a lower per-transaction processing fee, Stripe also won’t be the provider to go for. Merchant account providers offer tiered and interchange plus pricing. These pricing systems charge you differently depending on the type of card used, among other factors. This can end up saving your business a lot in the long-run, especially if you process a large volume of transactions.

Stripe vs Merchant Account: Making the Right Choice for Your Business

In today's world of digital payments, expanding your payment processing capabilities is key. Choosing between a traditional merchant account versus Stripe is a crucial decision.

Some of the main areas to focus on in your decision include:

  1. Your transaction volume and complexity. If you handle a large volume of transactions as well as complex payment methods, you’re likely better off going for a standard merchant account.

  2. Fee structure. Consider if you want a flat rate, tiered or interchange plus pricing model. While Stripe’s pricing model is a simple pay-as-you-go system, it might not be optimal for certain businesses. On the other hand, if you want to pick and choose your services as you go, Stripe has a lot going for it.

  3. Customization options. Stripe offers a wide range of customization options with developer-friendly APIs. It offers hundreds of integrations and can easily be customized to suit your business’s brand. However, merchant account providers can also cater to your business’s needs, offering tailor-made solutions.


Overall, the choice between Stripe versus a traditional merchant account depends highly on your individual business.

You need to consider your transaction volume, payment complexity and preferred fee structure. Having a clear picture of what you need makes the decision process easier.

Stripe is more than just a merchant account. It offers a simple, developer-friendly end-to-end payments solution. But if you’re after scalability and have complex needs, a traditional merchant account may be the better option to go for.

Connect Wise and Stripe for Easy International Payments

Stripe supports global payments. However, it charges 1% + $0.30 USD for international cards and an extra 1% for currency conversion.¹

By connecting your Wise Business account to your Stripe account, you can avoid this 1% currency conversion fee.

Wise is a Money Services Business (MSB) provider and a smart alternative to banks. If you connect your Wise account to Stripe, you can withdraw your funds directly into the same currency balance, avoiding the need for a currency conversion. This can save you a lot if you process international transactions regularly.

With a Wise Business account, you can hold more than 40+ currencies in one account. For a one-time fee, you can also get local account details for major currencies, allowing you to pay and get paid like a local.

Receive international payments
with Wise Business



  1. Pricing & Fees | Stripe Official Site

All sources checked May 2024.

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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