Stripe was founded in 2010 in a bid to overhaul the online payment industry. Previously, if you wanted to accept payments online, you needed a payment gateway to process the card payments, and a merchant account to accept the money. Stripe however is an all-encompassing payment system that merges these functions together into one seamless service.
Millions of companies in over 120 countries use Stripe to start, run, and scale their business, including a long list of very well-known clients and partners – Amazon, Google, and Microsoft to name but a few. But the question is, how much does Stripe cost and how does it stack up against its competitors? Let’s take a further look at how it all works and whether you should be using it for your business.
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Stripe’s background and growth
A couple of years after launch, in 2012, Stripe launched Stripe Connect, which allows businesses to create platforms such as marketplaces where Stripe acts as the middleman for payment processing between buyers and sellers.
Anti-fraud tools branded “Radar” that block fraudulent transactions were released in 2018 as well as an expansion of services to include a billing product for online businesses.
As of 2019, Stripe’s valuation was estimated at just over £18 billion and most recently in May 2020, Stripe expanded its services into 5 new markets in Europe: the Czech Republic, Romania, Bulgaria, Cyprus, and Malta. Clearly, it’s showing no signs of slowing down anytime soon.
But how much does it cost?
Stripe UK pricing & fees
As Stripe provides both the payment gateway and merchant account component, they are able to offer one single charge which covers everything, as shown below:
Stripe Costs: 1.4% + 20p for European cards
Stripe Charges: 2.9% + 20p for non-European cards
There are no monthly charges.
Stripe users in the UK are able to accept Visa, Mastercard and American Express debit and credit cards from customers in every country in 135 currencies. Stripe also supports a number of different payment methods, depending on the country of your Stripe account. A list of supported payment methods by country can be found here.
So how do these fees compare to other integrated payment options?
PayPal was the first integrated payment option, launching back in 1998, and has since established itself as the name in easy online payments. Similarly to Stripe, PayPal also merges both the payment gateway and merchant account components, as well as charging one simple fee. But PayPal isn’t Stripe’s only competitor. Square was launched around about the same time as Stripe and has been trading as a Public Company on the New York Stock Exchange since November 2015.
But which is cheaper? Let’s look at a breakdown below:
|Transaction Fees||1.4% + 20p||1.9% + 20p||1.75% = chip & pin/contactless2.5% = online, invoiced or keyed-in-payments|
|Example £10 Transaction||£0.34||£0.39||£0.18|
|Example £100 Transaction||£1.60||£2.10||£1.75|
Stripe might be just winning the battle of the integrated options in terms of fees, offering a significant saving over PayPal, and a slight saving over Square for transactions over £100. However, if you’re looking to do in-person transactions, Square could be the way to go.
To really establish itself as a market leader for online merchants, Stripe needs to maintain a competitive edge when compared with the traditional option of separate payment gateways and merchant accounts. So, let’s delve into this further below.
How do Stripe charges compare to other payment options?
Now, we’ll look at how Stripe compares to an example combination of payment gateway and merchant account to see which offers the best cost savings.
So which are the main fees to look out for?
Payment Gateway Fee
A charge levied by your payment gateway provider, usually charged as a monthly fee for a certain number of transactions. For example, £19.90 for 350 transactions, which works out at 5.6p per transaction.
Merchant Account Fee
Your merchant account provider will charge a percentage of the transaction value. This fee is usually broken down by payment type. For example, 0.8%–1.0% for debit card payments and 0.3–0.4% for debit card payments.
Many providers will advertise blended pricing (a combination of the above fees) but you should always ask for separate fees to get the best deal.
Let’s see which option comes out on top by doing a quick comparison below:
|Payment Gateway Fee||Included||5.6p per transation*|
|Merchant Account Fee||Included||0.3% for debit, 0.9% for credit**|
|Total Transaction Fee||1.4% + 20p||0.3-0.9% + 5.6p|
|Example £100 Debit Transaction||£1.60||£0.36|
|Example £100 Credit Transaction||£1.60||£0.96|
*Based on a monthly charge of £19.90 for 350 transactions.
** Based on average merchant account fees.
Clearly, the combo approach completely annihilates Stripe’s costs, coming in at a colossal 77 percent saving!
The Big Question: Should you be using Stripe for your business?
Well, that depends.
If you’re looking at Trust Pilot Reviews, Stripe scores an average 3.4 out of 5 with mixed reviews on customer service levels. There are also reports of Stripe either suspending or cancelling accounts with zero warning due to a breach of something deeply buried within the Ts & Cs. So, be careful and make sure to read the small print thoroughly. If you’re looking for peace of mind and a more responsive company, you might be better off with PayPal as long as you don’t mind paying a little more.
However, let’s not rule Stripe out just yet. It’s a great alternative to PayPal and there are clear benefits such as multiple payment options, excellent data security, and easy integration with a variety of different accounting apps. Not only that but it’s one of the only payment services specifically built for developers and that makes it a really attractive option if you’re doing weird, wonderful, and complex things on your website.
The Bottom Line: Stripe is a great online-only credit card processor for businesses with developers who can build a custom online e-commerce experience. Unfortunately, if you’re not doing anything particularly complex, the convenience of an integrated option like Stripe is difficult to justify in terms of stripes charges in comparison to the combo approach.