What is Stripe, and how does it work?

Panna Kemenes

There are many payment processing platforms out there. As such, it can be tough to make the right call for your business needs.

Stripe is one of the options to consider, but what is Stripe?

Stripe offers a variety of payment management options. If you trade on an international scale, or you appreciate software tools, it’s worth taking a look into Stripe. The economic infrastructure it provides can help you grow your business.

If you need a way to receive and manage your money in different currencies, then try Wise Business. Wise is used by 325k+ businesses of all shapes and sizes each quarter, you can use it to receive overseas payments without high conversion fees.

Discover Wise Business 🚀

Table of contents:

What is Stripe and how does it work?

Stripe is an Irish-American financial services technology company that creates payment management software and API’s for e-commerce and online businesses. It also offers a Stripe Terminal to provide a solution for in-person sales.

Stripe's services help companies thrive in the online space. It’s one of the top payment processing platforms available.

Stripe is one of the best payment processing platforms for customization. It has powerful developer tools, and it's behind some huge businesses like Google and Zoom. You can also make the most of third-party software for analytics, accounting, and more.

So, how does Stripe work? Stripe makes it easy to trade globally and process payments. It uses the Payment Methods API to allow you to accept a variety of payment methods through one API¹.

By supporting so many different payment methods, it allows the business to capture market opportunities. Up to 16% of shoppers² will abandon their purchase is the preferred payment is not available.

Stripe also uses machine learning models to help increase revenue.

The company prides itself on having a technology-first approach to payments and finance, and delivers on this.

You will find flexible integration options and fully customizable flows in Stripe. You can use pre-built UI components, or even build an API based integration with your own UPI.

The Stripe platform currently supports 35+ countries, and 135+ currencies³

How does Stripe work

What is a Stripe account?

You can think of a Stripe account as a standard bank account. With any Stripe account, you have access to a slew of information about your business or product.

The account lets you accept payments from your customer’s bank account. After you’ve received the money, you can move it to your personal bank account or keep it in your Stripe account.

To open an account with Stripe, you’ll need to fill out the following information.

  • Your company information
  • Fulfillment details
  • A credit card statement
  • Your bank details

Once you have submitted your details, Stripe will verify your information, and after 24 hours, you can use your account.

Creating an account is free, and all you need is an email address and a password to access it.

Accepted Stripe payment types

Stripe is compatible with many payment methods, and these are the most popular:

  • ACH (US only)
  • Alipay
  • Apple Pay
  • Amex Express Checkout
  • Bancontact
  • EPS
  • Google Pay
  • Giropay
  • iDEAL
  • Klarna
  • Microsoft Pay
  • Masterpass by Mastercard
  • P24
  • SEPA Direct Debit
  • Visa Checkout
  • WeChat Pay

Bear in mind that the availability of a given payment method may vary according to your location. You can find the payment methods that you can use on the Stripe dashboard.

Is paying by Stripe safe?

Yes, making payments through Stripe is safe. The payment processor has the PCI Service Provider Level 1 certification⁴. This is the highest level of certification you can get in the payments industry.

Stripe emphasizes security, and this is obvious with the platform’s use of top security tools.

One of the tools is single sign-on (SSO), which demands a login for everyone who accesses the dashboard. Another tool works to prevent card testing - the act of fraud involving the use of stolen card information.

Stripe also encrypts sensitive data and communication. The system uses three keys to ensure the safe passage of information:

  • The general PGP key lets you chat with Stripe in a secure channel
  • The migration PGP key allows for the secure transfer of credit card details
  • With the python client library PGP key, you can mark client information as trusted

The company has Money Transmitter Licenses across the US. This means it complies with the legal regulations for businesses that manage payments.

Pros and cons of Stripe

There’s no doubt that Stripe is an excellent payment processing platform. It offers a transparent pricing model and easy international transactions.

Although the platform is widely-used, there are some downsides too.


  • It offers a comprehensive solution for e-commerce payment needs.
  • It’s great for developers and has a host of powerful tools they can use
  • There are pre-built e-commerce solutions available
  • It uses top security tools and encryption to keep your data safe
  • Stripe is available for businesses in 43 countries
  • The platform accepts payments from anywhere in the world, dealing with more than 135 currencies
  • There are a wide variety of payment methods, including Alipay, Apple Pay, and many more
  • You can use Stripe to process charges and display prices in the customers’ preferred currency


  • The processing rates are expensive
  • Unless you’re a developer, you might not make the most of the tools and software of Stripe
  • You’ll need to be familiar with navigating websites such as CMS and submenus
  • There are few in-person payment options, so Stripe isn’t the best for physical stores compared to other services
  • For international transactions, there is a fee of +1% for international cards, and +1% if you need to convert the currency

To avoid the currency conversion fee, you need to send the payment to an account in the same currency. An easy solution for this is to use Wise Business.

You can receive multiple currencies without high conversion fees. You can then move money within Wise Business or withdraw to external accounts with ease.

Stripe account fees

Stripe will charge you according to each successful card charge made online. The cost is the same for any type of card. There are also some other fees⁵:

Integrated per-transaction fee (same for all cards and digital wallets)2.9%+30¢ per successful card charge
ACH debit/credit and wire transfer0.8%, $5.00 cap
In-person card processing fee2.7% + 5¢ per successful card charge
Card reader$59 or $299 depending on the reader
Instant payouts1% of Instant Payouts volume, minimum fee of $0.50
International transactions (online and in-person)+1% for international cards, and +1% if currency conversion is needed

This payment system is free from setup fees, monthly fees, and hidden fees. This is something many customers enjoy about Stripe.

Since so many payment platforms hit you with nasty hidden fees, it’s refreshing to see them all laid out clearly. Though, the difference in fees for online payments and in-person ones can cause headaches.

For non-profit organizations with 80% payments as tax-deductible donations, there are also fee discounts.

For full detail on the fees involved, you can read this article on Stripe fees.

Stripe account fees

Alternatives to Stripe

While Stripe is a reliable option for managing payments, there are some great alternatives.


PayPal is a top-rated payment processing platform. It deals with more than 360 million customers. It's a trusted brand that has over 20 years of experience and is high up the pecking order in the e-commerce space.

The PayPal business account⁶ offers a comprehensive e-commerce package for your business needs. With it, you can create a shareable link to boost traffic to your website and add a PayPal checkout to your website.

PayPal is ubiquitous. As a result, you can accept payments from all over the world in physical stores and online. You can give your customers the flexibility to pay in the way that best suits them.


Square offers flexible payment processing methods for in-person and online payments⁷. You will find an intuitive User Interface (UI) and easy-to-use hardware for physical stores.

The Square platform gives the user access to a variety of business management tools. It allows for point-of-sale payments and much more. You can track analytics in the dashboard like end-of-day reports, these can help you make the right decisions for your business.

Avoid high conversion fees with Wise

Wise Business offers an easy solution to manage money for companies that do business globally.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account works with Stripe and other online seller platforms to help your business receive payments seamlessly.

When Stripe pays out balances in foreign currencies to your bank account or debit card, it will send the balance to the account with the same currency. However, banks often only support one currency. If your account is in a different currency, Stripe will charge a 1% conversion fee.

With the Wise Business account, you can get major account details for currencies such as GBP, EUR, and CAD, so you can avoid the conversion fee and receive payments in different currencies. You can also hold over 40 currencies all in one place, and get the mid-market rate for currency conversions.

You can find out how to connect your Wise account to Stripe in this article.

You can also withdraw using your IBAN or other account details, or convert to your own currency for a small, transparent fee.

Join millions of happy customers

Some key features of Wise Business include:
Read the guide on how to open a Wise Business account


  1. Stripe - API
  2. FuturePay - The big ticket report
  3. Stripe supported currencies
  4. Stripe security
  5. Stripe pricing
  6. PayPal business
  7. Square

All sources checked 10 March 2021

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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