DirectPayNet

Category: STRIPE

  • Stripe vs Shopify Payments: Which One Is Best?

    Stripe vs Shopify Payments: Which One Is Best?

    Seamless payment processing is a crucial element for every online business, whether it’s a burgeoning startup or a multinational corporation. Various platforms offer different features and experiences, making the choice of a payment gateway a significant decision for businesses of all sizes.

    Among the most popular and reputable platforms in the market are Stripe and Shopify Payments.

    Stripe, a technology company providing economic infrastructure for the internet, has established itself as one of the leading payment processors, thanks to its versatile and developer-friendly services.

    On the other hand, Shopify Payments, an integral part of the widely used Shopify eCommerce platform, provides an easy-to-use and seamless transaction experience for both the business and the customer.

    But when it comes to choosing between Stripe and Shopify Payments, which one is the better fit for your business? The answer to that question depends on various factors, including your business’s size, its specific needs, and the geographical locations of your customers.

    Stay tuned as we unravel the complexities of online payment processing, making it easier for you to navigate the world of eCommerce and digital transactions.

    What is Stripe?

    Launched in 2010 by Irish entrepreneurs Patrick and John Collison, Stripe started as a software payment platform aimed at simplifying online credit card payments for businesses of all sizes. Over the years, it has evolved into a comprehensive economic infrastructure for the internet, powering billions of dollars’ worth of transactions annually.

    Stripe’s core business revolves around providing APIs (Application Programming Interfaces) that enable businesses to accept and process payments online. Its services cater to a wide array of small businesses, from small startups to large corporations, providing them with the tools they need to handle online transactions seamlessly.

    Stripe operates globally and supports over 135 different currencies, making it a viable choice for businesses with an international customer base. Its customer portfolio includes big names such as Amazon, Slack, and Lyft, but its scalable solutions make it equally suitable for smaller businesses and startups.

    What is Shopify Payments?

    Shopify Payments is the in-house payment processing gateway of Shopify, one of the world’s leading eCommerce platforms. Launched in 2013, it was designed to offer a streamlined, user-friendly payment solution for businesses using the Shopify platform.

    The major advantage of Shopify Payments lies in its seamless integration with a business’s Shopify store. When using this gateway, business owners don’t have to set up and maintain third-party payment service providers or merchant accounts, thus eliminating the potential complications and delays in receiving and accepting payments. Plus, Shopify Payments is automatically set up when you create your Shopify store, which simplifies the setup process significantly.

    With Shopify Payments, businesses can accept and manage all major forms of payment, including credit and debit cards, and some digital wallets. It also supports several alternative payment methods like Shop Pay, Apple Pay, and Google Pay, allowing businesses to cater to a wide range of customer preferences.

    Shopify Payments supports transactions in multiple currencies and is available in several countries worldwide. It includes features and functionality like automatic fraud analysis, making it a secure option for businesses and their customers alike. Furthermore, the platform provides in-depth financial reports, giving merchants valuable insights into their sales and transaction history.

    While Shopify Payments is most beneficial for businesses that operate on the Shopify platform, it’s worth noting that its use is mandatory for Shopify users in supported regions unless they opt for another payment gateway and accept the additional transaction fees.

    Stripe and Shopify aren’t the only payment options you have. Let’s talk processing.

    Shopify Payments vs Stripe: The Differences

    While both Stripe and Shopify Payments are robust and reliable online payment solutions, there are key differences between the two that can influence which one is a better fit for your business.

    1. Payment Processing

    Stripe and Shopify Payments differ in terms of their approach to payment processing. Stripe provides flexible, developer-friendly APIs that can be integrated into virtually any app or website, giving businesses the power to customize their checkout experience extensively. On the other hand, Shopify Payments is directly integrated with Shopify stores, offering a seamless and straightforward experience for Shopify users without the need for extensive customization.

    1. Available Currencies and Countries

    Stripe operates in more countries and supports a larger number of currencies compared to Shopify Payments. As of my knowledge cutoff in September 2021, Stripe supports over 135 currencies and is available for businesses in 44 countries, making it a more suitable choice for businesses with a significant international customer base. Shopify Payments, while also supporting multiple currencies, is available in fewer countries.

    1. User Experience and Interface

    Shopify Payments provides a seamless and user-friendly experience, especially for businesses already using Shopify. Everything is pre-integrated into the Shopify admin panel, making it easy to manage transactions, refunds, and payout reports. Stripe, while not difficult to use, requires a bit more technical knowledge, especially for customization. It is highly favored by developers due to its extensive APIs and comprehensive documentation.

    1. Integrations and Partnerships

    Both Stripe and Shopify Payments offer a variety of integrations. Stripe has an edge with its compatibility with a vast number of platforms, allowing businesses to incorporate it into virtually any website or app. Shopify Payments, however, is deeply integrated into the Shopify ecosystem and pairs exceptionally well with other Shopify services, such as Shopify POS and Shopify’s online store builder.

    The Pros and Cons of Stripe

    Like any platform, Stripe comes with its own set of advantages and disadvantages that can affect how well it suits a business’s needs.

    Pros of Using Stripe

    1. Extensive Customization: With its robust APIs, Stripe provides businesses with a highly customizable payment gateway. This allows developers to tailor the platform to a business’s unique needs, creating a payment experience that aligns perfectly with the brand and its customers.
    2. Global Reach: Stripe operates in many countries worldwide and supports over 135 currencies, making it a strong contender for businesses serving international markets.
    3. Wide Array of Payment Options: Stripe accepts all major credit and debit cards, and supports a variety of digital wallets and local payment methods. This flexibility can enhance the checkout experience for customers.
    4. Additional Business Services: Beyond payment processing, Stripe offers additional services like Stripe Atlas (for starting a business), Stripe Capital (for business loans), and Stripe Radar (for fraud detection), which can help businesses streamline their operations.

    Cons of Using Stripe

    1. Technical Knowledge Required: While the customizability of Stripe is a significant benefit, it can also be a drawback for businesses with limited technical resources. Implementing Stripe’s APIs and making full use of its capabilities requires a certain level of programming knowledge.
    2. Payout Time: In some regions, Stripe’s payout schedule can be longer than other payment processors, which means it can take more time to see funds deposited into your bank account.
    3. Cost Structure: While Stripe offers competitive pricing, the costs can accumulate with its pay-as-you-go model, especially for businesses that process a high volume of transactions.

    The Pros and Cons of Shopify Payments

    As with any platform, Shopify Payments has its own set of strengths and potential drawbacks. Understanding these can help determine if it’s the right fit for your business.

    Pros of Using Shopify Payments

    1. Seamless Integration with Shopify: For businesses using Shopify as their eCommerce platform, Shopify Payments offers seamless integration. There’s no need for additional setup or third-party accounts, simplifying the overall payment process.
    2. No Additional Transaction Fees: When using Shopify Payments, businesses can avoid the additional transaction fees that Shopify imposes when using other payment gateways.
    3. Multiple Payment Options: Shopify Payments accepts all major credit cards and offers customers several popular payment methods, like Shop Pay, Apple Pay, and Google Pay.
    4. Chargeback Management: Shopify Payments includes a feature to help manage chargebacks, providing merchants with a streamlined process to respond to and resolve chargeback disputes.

    Cons of Using Shopify Payments

    1. Limited Availability: As of September 2021, Shopify Payments is not available in every country. For businesses located outside of the supported countries, it isn’t an available option.
    2. Restrictions on Certain Business Types: Shopify Payments has restrictions on certain business types and products, as per their terms of service. Businesses dealing in these categories might not be able to use Shopify Payments.
    3. Potential for Account Holds: Like many payment processors, Shopify Payments reviews transactions for fraudulent activity. If a transaction or your business raises flags in their system, there can be holds or delays on funds.

    Pricing Comparison

    Comparing the pricing structures of Stripe and Shopify Payments can provide a clearer picture of which platform might be more cost-effective for your business. Here’s an overview of how each platform’s pricing breaks down.

    Stripe’s Pricing Structure

    Stripe follows a straightforward and transparent pricing model. For online transactions, Stripe charges a standard fee of 2.9% + 30¢ per successful transaction. For in-person payments using Stripe’s point of sale hardware and software, the fee is 2.7% + 5¢ per transaction.

    Stripe also offers customized pricing for businesses with large volume or unique business models. Additional services such as Stripe Radar (for fraud detection) or Stripe Atlas (for business formation) come with their own separate costs.

    Shopify Payments’ Pricing Structure

    Shopify Payments’ transaction fees vary depending on the Shopify plan that your business is on. Shopify offers several plans, including Basic Shopify, Shopify, and Advanced Shopify.

    • For the Basic Shopify plan, the online credit card rates are 2.9% + 30¢, and the in-person transaction rates are 2.7%.
    • The Shopify plan offers online rates of 2.6% + 30¢, and in-person rates are 2.5%.
    • With the Advanced Shopify plan, the online rate is 2.4% + 30¢, and the in-person rate is 2.4%.

    With Shopify Payments, you also avoid an additional transaction fee that Shopify charges when using other payment providers (ranging from 0.5% to 2%, depending on your Shopify plan).

    When choosing between Stripe and Shopify Payments, consider not just the standard card processing fees, but also the added value each platform brings. This could include ease of use, seamless integration, customization options, global reach, additional services, and the nature of your business operations. Additionally, keep in mind that pricing models may have changed since my last training data in September 2021, so always check the most recent information from the official websites.

    Security Measures

    Security is a primary concern for businesses and customers when it comes to online transactions. Both Stripe and Shopify Payments offer robust security measures to protect sensitive data.

    Stripe’s Security Measures

    Stripe takes security very seriously. The platform is designed to meet the most stringent industry security standards. It’s certified as PCI Service Provider Level 1, the highest level of certification in the payment card industry. All transactions are encrypted using Secure Socket Layer (SSL) technology and card details are never stored on a merchant’s server.

    In addition to these, Stripe provides a suite of fraud detection tools. Stripe Radar uses machine learning to detect and prevent fraudulent transactions, while allowing legitimate ones to go through. Businesses also have the option to implement two-step authentication, providing an extra layer of security.

    Shopify Payments’ Security Measures

    Shopify Payments also maintains high security standards. Like Stripe, it’s PCI Service Provider Level 1 certified, ensuring all transactions meet the industry’s strict security standards. All data is encrypted and securely stored.

    Shopify also provides its own set of fraud prevention tools. It includes a feature called Fraud Protect for Shopify Payments, which automatically identifies and protects merchants from fraudulent chargebacks. However, this feature is only available to eligible U.S. merchants.

    In terms of security, both Stripe and Shopify Payments strive to provide a safe environment for online transactions. However, each platform offers different tools to detect and manage fraudulent activity, which can play a role in deciding the best fit for your business.

    A real merchant account will save BIG on processing fees. Open one today.

    Customer Support

    Effective and accessible customer support is a crucial element to consider when choosing a payment processor. Both Stripe and Shopify Payments offer various channels for support, but their approach and availability can differ.

    Stripe’s Customer Support

    Stripe offers comprehensive support resources including a detailed Knowledge Base and documentation that answers most queries and provides extensive guidance for developers. For direct support, customers can reach out via email or chat.

    Stripe doesn’t offer phone support, which may be a downside for some businesses.

    Stripe also provides support via social media platforms like Twitter and has an active community where users can share experiences and solutions. This combination of resources ensures that businesses can find answers to their questions in multiple ways.

    Shopify Payments’ Customer Support

    Shopify Payments’ customer support is provided through Shopify’s support channels. This includes 24/7 phone and chat support, a significant advantage for businesses that need immediate assistance. They also offer email support, a Help Center, community forums, and various social media channels.

    In addition to this, Shopify provides a range of educational resources such as guides, tutorials, and webinars, ensuring users can make the most of their platform.

    When considering customer support, think about your business’s needs and preferences. If 24/7 phone support is crucial for your operations, Shopify Payments has the edge. If self-service resources and community solutions are more your style, Stripe’s extensive Knowledge Base and active community might appeal to you more.

    Stripe vs. Shopify Payments: Which One is Right for You?

    Choosing between Stripe and Shopify Payments depends largely on your business’s specific needs and the eCommerce platform you’re using. Here’s a general guide to help you decide:

    Choose Stripe If

    1. Customization is Key: Stripe’s robust APIs make it highly customizable, offering flexibility that can be vital for unique business models. If you have specific requirements for your payment process and have the technical resources to implement them, opening a Stripe account is a compelling choice.
    2. You Operate Internationally: Stripe operates in more countries and supports more currencies than Shopify Payments. If you’re looking to cater to a diverse, global customer base, Stripe may be the more fitting option.
    3. You’re Not on Shopify: If you’re using an eCommerce platform other than Shopify, or if you’re not running an eCommerce business, Stripe’s compatibility with a wide range of platforms and apps makes it a versatile choice.

    Choose Shopify Payments If

    1. You Use Shopify: If your business is already using or planning to use a Shopify account as its eCommerce platform, Shopify Payments offers seamless integration, simplifying your payment process.
    2. You Prefer an All-in-One Solution: Shopify Payments is tightly integrated with other Shopify services, providing a holistic solution for your eCommerce needs. If you’re looking for convenience and an all-in-one platform, Shopify Payments could be the right fit.
    3. You Want 24/7 Phone and Chat Support: Shopify Payments, through Shopify’s support channels, offers round-the-clock phone and chat support. If instant access to support is crucial for your business, this may be a deciding factor.

    Remember, it’s crucial to consider your business’s specific needs, target markets, technical resources, and operational requirements when deciding between Stripe and Shopify Payments. Both platforms are robust and reliable but offer different features and capabilities that may align more closely with different business models. It’s advisable to thoroughly research both platforms, take advantage of any available free trial periods, and perhaps even consult with a financial advisor or eCommerce consultant to make the best decision.

    The Best Credit Card Processing Solution Might Be Something Else Entirely…

    Whether you choose Stripe or Shopify Payments, both platforms offer robust and reliable services that can help streamline your online payment processing. The decision ultimately boils down to your specific needs and how each platform aligns with your business model.

    Don’t forget: there are other third-party providers like PayPal that might suite your needs better.

    Remember, online businesses – particularly those in high-risk industries – face unique challenges in securing and maintaining a reliable payment processing solution. High-risk businesses, such as those in the dropshipping, adult entertainment, nutraceuticals, or CBD industries, often encounter hurdles with standard payment processors.

    If your business falls into this category, or if you’re looking for a customized solution that takes into account the unique challenges of your business, opening a high-risk merchant account with DirectPayNet could be an excellent move.

    DirectPayNet specializes in providing merchant services for high-risk businesses and has years of experience navigating the complexities of high-risk payment processing. By offering a range of services tailored specifically for high-risk merchants, DirectPayNet could be your ally in securing a robust, reliable, and compliant payment solution.

    Contact DirectPayNet today and take the first step towards secure, reliable, and compliant high-risk payment processing.

    GET A BETTER PROCESSOR AND POWERFUL GATEWAY GUARANTEED TO WORK ON YOUR STORE

  • Stripe Fees Are Killing Your International Business — Solution!

    Stripe Fees Are Killing Your International Business — Solution!

    Between high rates, international credit card processing fees, and conversion fees, Stripe’s transaction fees might literally be killing your business. As an international seller, Stripe won’t allow you to set your default currency in the market you may sell in, which means you pay more for no reason.

    But there are solutions available that lead to lower fees, higher conversions, and larger payouts.

    Flat-fee processing or no-fee processing is a scam.

    First, let’s cover an option that most small business owners look at when shopping around for a cheaper credit card processor: no-fee processing. Some are called flat-fee processing, meaning they charge you a very small flat monetary rate, not a percentage.

    Every major credit card network—Visa, Mastercard, American Express, Discover—charges a fee. This is the interchange rate.

    Interchange rate differs by business type.

    Interchange-plus pricing can be viewed on any credit card company website, they’re not held secret. We encourage you to look through and find your business category (you probably fall under several categories) to see the interchange rates that apply to you.

    One way to lower interchange fees is to open a merchant account as a new business type to take advantage of the lower merchant category code (MCC) rate.

    No-fee processing means your customers pay more.

    The trick to no-fee or flat-rate processing is that you don’t have to pay the fee, but your customer does. Customers will not be happy being passed on a processing fee. They could create a chargeback, which would be bad for your small business. Conversions would lower. Your reputation would be put at stake.

    The only types of business that can utilize no-fee credit card processing are non-profits. Customers are only okay with this because it’s seen as a donation.

    Take the perspective of your customer: you go to buy a product online; the checkout screen shows you the cost with tax and shipping, and maybe a little notice about a processing fee; you make the purchase and check your bank statement to find a significantly larger charge; now you angrily cancel the order/create a chargeback/write a bad review.

    Start benefiting from interchange-plus pricing today!

    Most processors allow settlement in a major currency.

    As long as you have a bank account in that currency, processors will allow you to avoid the currency conversion fee. This includes USD, GBP, and EUR.

    This is incredibly beneficial to ecommerce businesses abroad who operate in a different market, like selling to the US market from the UK. You should speak with your processor about how to set this up, but they shouldn’t put up a fight about it. They’re already processing the other currency, so it’s actually easier for them to settle in it than to convert it.

    Stripe does NOT allow settlements in other currencies. It’s just a Stripe thing; they want to squeeze as much out of you as possible.

    Non-domestic accounts are always more expensive.

    The cheapest credit card payment processing is always local. Interchange fees are more expensive for corporate cards and foreign credit cards. Foreign, in this scenario, refers to customers in your target market using their local cards and currency.

    You can use a local payment processor (where your business is located). Rates would be cheaper, but you would have fewer conversions (5-10% less). Fewer conversions happen because banks decline foreign credit card transactions, which means your customers would have to approve the transaction and try again. You can prevent some of these declines with 3D Secure 2.

    It’s a bit double-edged because you pay lower credit card processing fees, but you don’t convert as much. Whereas if you use a foreign account, you pay higher fees but won’t lose conversions. Do the math for your business and see which one pays out better.

    A US LLC would help (if your market is the US).

    The same concept applies no matter where your market is. If you are able to open an LLC in that market, you will benefit greatly.

    The rules change depending on the region, but generally you need a resident director. Some countries require a physical address or an office, others require a person. Either way, that person doesn’t have to hold stake in your business, they just need to be appointed as an officer.

    With an LLC, you can:

    • open a local bank account
    • open a local merchant account
    • process locally with lower payment processing fees and higher conversions

    Taxes might pose an issue, but that’s something you should look over with an accountant.

    Need a processor for your new LLC? DirectPayNet is here to help!

    Non-Stripe 3rd-party payment processors might benefit you.

    If you like the idea of using a service like Stripe that keeps things simple and you can sign up in minutes, we won’t hold you back. But clearly Stripe is not the best option for your foreign business.

    Here are some alternatives:

    • PayPal
    • Ayden
    • 2Checkout
    • Checkout
    • Square

    These are similar to Stripe in many ways but with lower fees and can offer (some) international support. We highly recommend opening a real merchant account, but if you’re sticking with 3rd-party processing services then these are ones to look at. Shop around for a solution that meets your business needs, don’t just look at the lower rate.

    Most of the options only offer flat-rate pricing models and a monthly fee. So you’re aware, there is likely a high processor markup built into the rate. You’ll have more luck finding something with at least a tiered pricing structure if not interchange plus.

    Use a processor that accepts the right types of credit cards.

    When we’re looking at the US market, it’s easy to understand the types of credit cards used because they’re the major ones mentioned previously. But if you’re wanting to operate in another market, there may be other cards or payment types to accept.

    Consider ACH, wire transfers, debit cards, and other card brands that might be more popular in the market. The processing rate for these other types of transactions might cost even more if you choose an unsupportive credit card processing company.

    Pay attention to additional fees and hidden fees.

    You need to go through the fine print, as tedious as that sounds, to make sure you’re not paying unnecessary fees. Things to look out for include:

    • Cancellation fees – if an order is canceled, you shouldn’t have to pay a fee for it.
    • Compliance fees – PCI compliance is legally necessary, but most gateways have it. You don’t need to pay a fee for compliance through your processor.
    • Chargeback fees – chargebacks happen. You’re already losing the sale and probably paying the cost of shipping. You don’t need to pay more on top of that.
    • Assessment fees – these are non-negotiable, but are set well in advance. Don’t pay too much.
    • Online vs, in-person fees – in-person via point-of-sale card readers (POS system) will always be cheaper. Online payments are riskier due to them being a card-not-present transaction, meaning the risk of the purchaser not being the cardholder is higher.

    Some software can cascade declined transactions automatically.

    The biggest issue with using a domestic merchant account is the loss of conversions due to banks declining the transaction. There is a workaround: software that takes automatically tries a failed transaction with another payment processor.

    You should use a domestic account as much as possible. You can minimize not only the decrease in conversions but also the amount of effort placed on the customer to approve a transaction by automating the payment process from one processor to another. Search for software that can help you with this.

    In this case, you would use your domestic (re: better) merchant account to process transactions and fall back on Stripe for the ones that don’t go through seamlessly. That way, you can avoid Stripe’s fees most of the time, only paying when it’s necessary to make the sale. Plus, the checkout experience remains clean, with either an automatic change in the payment gateway or no change at all.

    Act now to save your business from drowning in fees!

    In conclusion, understanding the credit card interchange rate and how it applies to your business is essential for keeping processing costs low.

    The best solution is always to open a real merchant account, not a 3rd-party processing account. With a merchant account, you can take advantage of lower interchange rates and settle in multiple foreign currencies all while having more control over what you pay and when you pay.

    If you have a steady monthly transaction volume and low chargeback ratio, there’s no reason your bottom line should be suffering due to exorbitant surcharges from your current merchant services provider.

    Open a high-risk merchant account that supports your business with DirectPayNet today and reap the benefits of operating from abroad.

    OPEN A HIGH-RISK MERCHANT ACCOUNT AND SAVE ON PROCESSING FEES

  • Is Stripe Holding Money STILL? A Merchant’s Guide to Getting Your Money Back

    Is Stripe Holding Money STILL? A Merchant’s Guide to Getting Your Money Back

    Welcome, Stripe merchants! As you navigate the world of online payments, you may have encountered the frustrating experience of having your funds temporarily held by Stripe. It’s a common issue that can be both confusing and concerning for those who rely on timely access to their revenue.

    That’s why we’ve created this comprehensive guide to help you better understand Stripe’s fund holding policies, and to provide you with tips for preventing and managing holds.

    In this blog post, we’ll explore the reasons behind Stripe holding funds and offer advice on how to ensure a smoother payment experience for both you and your customers. Whether you’re a seasoned merchant or new to the world of online payments, this guide is designed to empower you with the knowledge you need to confidently manage your Stripe account.

    Understanding Stripe’s Fund Holding Policies

    What are the reasons Stripe holds funds?

    As a Stripe merchant, it’s essential to understand why Stripe may holds funds. Knowing the reasons behind these holds can help you prevent and address them more effectively. Let’s examine the most common causes:

    1. Account verification: When you first create a Stripe account, you’ll need to verify your identity and ecommerce business information. If Stripe has any concerns or needs additional information during this process, they may hold your funds temporarily until everything is confirmed and resolved.
    2. Risk assessment: Stripe continuously monitors transactions to protect both merchants and customers from fraudulent activity. If they detect unusual patterns, your chargeback ratio gets too high, or suspect potential fraud, they may place a hold on your funds while they investigate the situation further.
    3. Suspicious activity: If Stripe identifies transactions that seem suspicious or violate their terms of service, they may hold your funds as a precautionary measure. This could include unusually high sales volume, chargeback rates, or a sudden influx of disputes.

    How does Stripe’s policy compare to PayPal’s?

    It’s worth noting that Stripe isn’t the only payment services provider (PSP) that may hold funds. PayPal, for example, has similar policies in place to protect their users. While the specific triggers for holds may vary between the two companies, the overarching reasons are similar: to ensure a safe and secure environment for online transactions.

    Understanding that fund holds are not exclusive to Stripe can help put things into perspective and make them feel like less of a targeted issue while also raising your awareness that companies similar to Stripe may put you in the same position—without funds.

    How do Stripe’s policies affect merchants?

    Holds can impact cash flow, hinder your ability to fulfill orders, and strain relationships with suppliers and customers. By understanding the reasons behind Stripe’s fund holding policies, you’ll be better equipped to take proactive steps to minimize the chances of encountering a hold and ensure a smoother Stripe payment experience for all parties involved.

    In the most extreme cases, Stripe holding funds can lead to a total loss in business. I.e., you would no longer have a small business to run because you have no funds to support it nor a credit card processing company to accept transactions.

    How to Prevent and Manage Stripe Holds

    No one wants to deal with the inconvenience of having their funds held. Fortunately, there are several steps you can take to minimize the likelihood of encountering holds and to manage them effectively if they do occur. Let’s explore these strategies:

    Ensure Your Account is Fully Verified

    Make sure your Stripe account is fully verified by providing accurate and up-to-date personal and business information. This includes submitting required documents, such as tax identification numbers and business registration details. A fully verified account helps build trust with Stripe and reduces the chances of fund holds due to verification issues.

    One of the main issues merchants have with Stripe is the complete lack of an underwriting process until you start transacting over $15k/month. Stripe doesn’t give you a merchant account, it only allows you to operate within its own merchant account.

    That’s why signing up is so easy. But once your business starts to pick up speed, Stripe has to take a closer look and that, unfortunately, leads to withheld funds.

    Establish a Strong Transaction History

    A good transaction history demonstrates to Stripe that you’re a responsible and reliable merchant. To build a solid track record, focus on delivering excellent customer service, maintaining a low chargeback rate, and processing payments consistently. This positive history can make Stripe.com less likely to withhold funds in the future.

    Provide Accurate and Up-to-Date Business Information

    Ensure that your business information on Stripe is always accurate and up to date. This includes your contact information, website URL, bank statements, and a clear description of the products or services you offer. Accurate information allows Stripe to better understand your business and reduces the risk of being flagged for suspicious activity.

    Respond Promptly to Customer Disputes and Chargebacks

    If a customer dispute or chargeback arises, it’s crucial to respond promptly and professionally. Addressing these issues in a timely manner can help resolve them more quickly and minimize the potential for fund holds. Be sure to maintain clear communication with your customers and provide the necessary documentation to Stripe to support your case.

    You should also use a 3rd-party chargeback monitoring system to help if you see that chargebacks are the leading cause of frustration in your startup business. The cost of the service will cancel out in just a few days compared to the cost of paying chargeback and Stripe fees and refunds.

    Communicate with Stripe during a Hold

    If you do find yourself facing a fund hold, it’s essential to maintain open and effective communication with the Stripe support team. We have an entire post on communicating with Stripe to get your funds back. If you follow it closely, you will get your payout timely.

    Alternatives to Stripe for Business Owners

    While Stripe is a popular choice among online merchants, it’s not the only credit card payment processor available—and there are certainly safer options than Stripe.

    If you’re considering exploring alternatives to Stripe, it’s essential to evaluate the pros and cons of each option to find the one that best fits your business needs. Let’s take a look at some factors to consider and alternative payment processors to Stripe:

    Other Payment Service Options

    There are several other payment processing companies that you can consider as alternatives to Stripe, each with its unique features, pricing structures, and policies. Some popular options include:

    1. PayPal: A widely-used payment processor that supports a vast range of currencies and countries. PayPal offers a variety of payment solutions for businesses of all sizes.
    2. Square: A user-friendly payment processor that focuses on seamless integration with point-of-sale systems, e-commerce platforms, and mobile payments.
    3. Braintree: A payment gateway owned by PayPal that offers advanced payment solutions for businesses, including fraud protection and customizable checkout experiences.
    4. Merchant Account: There are many merchant service providers—DirectPayNet being one of them. What we provide is a specified account designed solely for your business model, so you will never have to deal with surprise holds, freezes, or shut downs.

    This is a good point to mention that Shopify Payments is the same payment provider as Stripe. So there is no need for you to consider this as an alternative.

    Evaluate the Pros and Cons of Alternative Payment Processors

    Before making a switch, carefully weigh the pros and cons of each payment processor. Consider factors such as:

    1. Pricing structure: Analyze the fees associated with each processor, including transaction fees, monthly fees, and any additional charges.
    2. Integration and compatibility: Determine how easily the payment processor can be integrated into your existing website, e-commerce platform, or point-of-sale system.
    3. Customer support: Assess the quality and availability of customer support, as this can be crucial when dealing with payment issues or fund holds.
    4. Payment methods: Choose a processor that supports the payment methods preferred by your customers, such as credit cards (e.g. Visa), ACH, debit cards, or direct bank account transfers.
    5. Scalability: Opt for a payment processor that can grow with your business, offering features and pricing structures that suit your needs as you expand.

    Need a payment processor that fully supports your business? There’s only one solution for you.

    Understanding the reasons behind Stripe holding funds and taking proactive measures to prevent and manage such situations are crucial for a smooth and successful payment experience. By staying informed, maintaining open communication, and following best practices, you can effectively navigate the world of online payments and create a seamless experience for both you and your customers.

    If you’ve been burned one too many times by Stripe and you need an account that will stay up and running as long as your high-risk business exists, get in touch with us. DirectPayNet provides high-risk merchant accounts to online businesses of all types, connecting them with a payment processor that truly backs their business.

  • Will Web3 Be the End of Stripe? An Unstable Future for Popular Payment Aggregators

    Will Web3 Be the End of Stripe? An Unstable Future for Popular Payment Aggregators

    As the digital economy continues to evolve, so too do the payment systems we rely on.

    Stripe, a popular online payment aggregator founded in 2010, is facing an uncertain future with the emergence of Web3 technology. Could these new advances in internet connectivity spell the end for Stripe and similar services?

    In this article, we will explore how Web3 technologies could potentially disrupt current payment processing solutions and examine what this might mean for service providers such as Stripe. We’ll also look at whether these challenges could lead to new opportunities that open up entirely different types of business models.

    With an ever-growing customer base, any sudden changes in how people pay could ultimately determine which companies survive and which succumb to the changing landscape.

    What Is Web3?

    Web3, also known as Web 3.0 or the decentralized web (or even the 3rd-generation application layer), is a term used to describe an evolving set of protocols and technologies that are increasingly replacing existing internet-based services through decentralization.

    Web3 is based on the blockchain technology used to create public distributed ledger networks such as Bitcoin (BTC) and Ethereum (ETH), empowering users to control their own data and make decisions about how it’s stored and secured. Users can now transact directly with each other by leveraging peer-to-peer networks for authentication, agreement, incentive structures, storage systems, and more. This evolution away from centralized intermediaries spares consumers from additional costs that stem from current Web 2.0 services.

    Speaking in terms of the payments industry, it’s possible that the new wave of Web3 technologies will be so disruptive they render popular payment processors and gateways obsolete.

    For example, crypto apps built on blockchain databases don’t require traditional payments companies anymore since these services do not need an intermediary in order for payment transactions to take place securely between two parties. This means end users won’t have any extra fees by using digital currencies instead of traditional fiat currencies when making purchases online through retail sites integrated with crypto wallets using smart contracts.

    As a comparison, right now paying with crypto is usually a crypto-to-fiat conversion (unless it’s crypto wallet to crypto wallet).

    But Web3 isn’t just about paying with crypto. It’s also about utilizing crypto technology, like the blockchain, with fiat currencies to make transactions faster and more secure.

    How would Web3 disrupt payment aggregators like Stripe?

    Web3 has the potential to drastically disrupt the payment gateway industry and its players. Stripe, a popular online payment platform, is at risk of becoming obsolete with this new advancement in internet connectivity on the rise.

    The evolution of Web3 could provide users direct access to financial activities not just limited to payments but also investments, remittances, and other associated banking services without involving an intermediary or a third-party provider such as Stripe. For PayPal, and similar providers for both retailers and consumers, the disruption brought by Web3 could seriously impact their market share if these service providers are unable to effectively adapt their business aspect.

    The emergence of blockchain and distributed ledger technologies may attempt to upend current industry dynamics. Merchants flock to Stripe because it’s simple, fast, and secure. But web3 provides simple, fast, and secure payment connections directly for all payment methods (debit, credit, crypto, etc.). So what would be the draw for new users to open a Stripe account?

    Stripe provides their service at a cost that’s higher than a traditional merchant account. If merchants can get an equally simple user experience and speed as Stripe without the hassle Stripe brings later on down the road, there’s no reason they would open a Stripe account.

    We’re not saying there will be a mass exodus from Stripe or similar services. Current Stripe users will likely continue using the service until they get burned.

    Been burned by Stripe? We can help!

    What are the potential opportunities for Stripe—or any payment processor—with web3?

    Web3, or the decentralized internet, has introduced new technologies and protocols that have the potential to revolutionize the payment aggregation landscape. Here is a list of potential opportunities for payment aggregators in the Web3 ecosystem:

    1. Cross-chain payment aggregation: Facilitate seamless transactions across different blockchain networks, allowing users to pay with various cryptocurrencies or tokens without the need for manual conversion.
    2. Decentralized finance (DeFi) integration: Offer payment aggregation services for DeFi platforms, such as decentralized exchanges, lending and borrowing platforms, and yield farming pools, enabling users to interact with these platforms more easily.
    3. Non-fungible token (NFT) marketplaces: Provide payment aggregation services for NFT marketplaces, simplifying the purchase and sale of NFTs by supporting various cryptocurrencies and tokens.
    4. Digital identity and reputation systems: Partner with decentralized identity solutions to streamline Know Your Customer (KYC) and Anti-Money Laundering (AML) processes, reducing the friction for users while maintaining regulatory compliance.
    5. Decentralized autonomous organizations (DAOs) support: Offer payment aggregation services to DAOs, allowing them to collect and manage funds from their members or for specific projects in a decentralized manner.
    6. Layer 2 payment channels: Leverage layer 2 scaling solutions to offer faster, cheaper payment aggregation services for various cryptocurrencies and tokens.
    7. Subscription-based services: Implement web3-native subscription management solutions that allow users to pay for recurring services using cryptocurrencies or tokens.
    8. Decentralized e-commerce platforms: Provide payment aggregation services for decentralized e-commerce platforms, enabling users to pay for goods and services with various cryptocurrencies and tokens.
    9. Gaming and virtual worlds: Offer payment aggregation services for web3-based gaming platforms and virtual worlds (e.g., the metaverse), enabling users to purchase in-game items or access premium content using various cryptocurrencies and tokens.
    10. Privacy-preserving payment solutions: Integrate privacy-enhancing technologies like zero-knowledge proofs or confidential transactions to offer secure, private payment aggregation services for users in the web3 ecosystem.

    By exploring these opportunities, payment aggregators can position themselves at the forefront of the web3 revolution, offering innovative solutions to users and businesses in the decentralized internet.

    What are some web3 Stripe alternatives?

    At the moment, web3 hasn’t arrived. Stripe works as you expect (though it’s not perfect). The fate of Stripe is the same as that of PayPal and Square: it’s up in the air for now.

    What we can say for certain is opening a Stripe account, PayPal account, or Square account is rarely a good long-term solution for your business. To enter the web3 era with full support for your business from your payment processor and acquiring bank, you should work to open a full-fledged merchant account designed for your business.

    Stripe, however, is a great short-term solution for your business. We expect that to continue to be true at the onset of web3 before other payment options emerge to take its place.

    Merchant accounts are your best solution for web3 because they allow you to work with multiple payment processors. Stripe limits you to whatever Stripe decides is best for your transactions at the time (that’s the gist of how payment aggregators work), meaning you can’t pick and choose how something gets processed. With a merchant account, you can link your acquiring bank to many payment processors: a standard web2 credit card processor for now, and as soon as a web3 fintech option arises that appeals to you, you can link to it.

    Merchant accounts also allow you to pick and choose which payment gateway you want to use, each of which comes with an SDK and API that’s customizable to your needs. We can only imagine the increased functionality of those resources with web3.

    That’s how you future-proof your business.

    The Bottom Line: Is Stripe Headed for Extinction?

    As the Web3 revolution unfolds, traditional payment processors like Stripe may face existential challenges that could ultimately lead to their extinction. With the emergence of decentralized finance, cryptocurrencies, and blockchain technology, the payment landscape is rapidly changing.

    Users are increasingly seeking decentralized alternatives that offer enhanced privacy, reduced fees, and greater financial sovereignty. In such a scenario, centralized payment processors like Stripe may struggle to keep up with the paradigm shift, as they are inherently reliant on the traditional financial infrastructure.

    The extinction of Stripe as a payment processor could be driven by several factors.

    • Firstly, the rise of decentralized payment solutions will likely enable users to transact directly with one another, bypassing the need for intermediaries like Stripe. These solutions can provide faster, more cost-effective, and censorship-resistant transactions, making them a preferred choice for many users and businesses.
    • Secondly, the growing importance of cryptocurrencies and tokenized digital assets in the global economy will necessitate the adoption of payment processors that can seamlessly handle a wide range of digital currencies, which may push traditional payment processors to the sidelines.
    • Lastly, the increasing demand for privacy-preserving technologies in the payment space will further challenge Stripe’s position, as the centralized nature of its services inherently makes it difficult to offer privacy guarantees.

    In conclusion, the arrival of Web3 could signify the beginning of the end for traditional payment processors like Stripe. As decentralized finance and blockchain technology continue to reshape the payment landscape, users and businesses are likely to gravitate toward more innovative, decentralized solutions that offer greater flexibility, privacy, and cost-effectiveness.

    While it remains to be seen how Stripe and other traditional payment processors will adapt to this rapidly changing environment, it is clear that their survival hinges on their ability to evolve, innovate, and embrace the opportunities presented by the Web3 ecosystem.

    ESCAPE STRIPE. OPEN A HIGH-RISK MERCHANT ACCOUNT TODAY!

  • How Long Stripe Can Hold Funds and How to Get Your Money Back

    How Long Stripe Can Hold Funds and How to Get Your Money Back

    Stripe is notorious for holding merchant funds, freezing accounts, and even terminating accounts. That means no money in, no money out, and no customers. In some cases, Stripe holds funds up to 180 days with weekly emails coming in stating, “Stripe is holding your funds for 90 days.”

    But wait, didn’t we just say Stripe holds funds for 180 days? Why do they claim 90 in their emails?

    Those subsequent emails aren’t reminders, they are renewals of a 90-day hold period. And disputes from customers/users can only take place within the first 180 days. Do the math and you’ll see that working with Stripe.com can be a financial nightmare.

    If you have, unfortunately, found yourself in this situation then we have some tips for you. Follow along for advice on how to get the Stripe payment provider to release withheld funds, alternatives to Stripe accounts, and how you can keep your business going even if there is a freeze on your merchant account.

    Why Stripe Holds Funds, and Freezes or Terminates Accounts without Notice

    Stripe and similar companies hold funds as a method of halting transactions from risky merchants.

    The three types of Stripe holds include:

    • a temporary hold until you perform an action
    • a fully frozen account where funds cannot go in or out and you cannot process new transactions
    • account termination where you no longer own, operate, or access your Stripe account.

    The reasons why a company like Stripe putting a hold on funds could be due to changes in account behavior. But for most e-commerce business owners, the reasons are most likely disputes, chargebacks, and high-ticket transactions.

    Stripe is not friendly toward high-risk merchants. Usually when they withhold funds from you for being high-risk, you’re company will be “MATCHed” or blacklisted. Industries affected include sellers of supplements, CBD, or vapes/e-cigarettes, and companies that work with adult content, advice, or dropshipping.

    The icing on the cake is when they do hold funds, it’s likely that your account will have a negative balance since nothing can be processed.

    If you browse their Better Business Bureau page or Ripoff Report page, you’ll see endless complaints about the company from merchants. Sudden account termination is the most common complaint, followed by abysmal customer service and zero fraud protection.

    Stripe can be a great processor for many low-risk businesses, as it is very easy to use. But for many users like you, it only hurts your cashflow.

    What Stripe’s User Agreement Says About Holds, Freezes, and Termination

    It’s very difficult for certain types of companies to be approved to use Stripe as their payment provider, but not impossible. Keep in mind that if you plan to continue working with them, there’s not much you can do about potential holds.

    According to their user agreement, Stripe is free to impose a reserve at any time for any reason. They also have the ability to change the condition of the reserve based on continued assessments. This is completely subjective, so it’s entirely up to the person or people reviewing and monitoring your account to decide whether to impose a hold, to release it, or to extend it.

    Stripe is equally free to freeze and terminate accounts at will, as stated in the user agreement.

    Stripe sucks! Let us help you escape.

    What You Can Do About Withheld Funds

    Now that Stripe’s burned you and taken your money, what do you do? There are only three things you can do to keep your business running and get your funds back.

    Open a New Merchant Account

    The first step is to open a merchant account with another payment provider. It is completely legal to hold multiple merchant accounts for the same site or service.

    In fact, you should always a backup payment processor for several reasons, including holds. Some are better for international sales so you can accept more than USD, others have better pricing when using certain card networks. Every processor has its pros and cons. It’s up to you to weigh those benefits with the costs that follow.

    Opening a new merchant account doesn’t release the withheld funds from Stripe or unfreeze an account. However, a new merchant account allows you to keep your store open for sales so you can process payments and new orders. So while your payout schedule might be heavily affected by Stripe’s hold on funds, you won’t be completely overburdened with debt and you’ll always have something in your account balance by receiving payouts from your backup processor.

    Inform Your Customers

    Once opened, you should contact the customers whose orders are frozen, tell them about the cancellation, and inform them that they the problem is fixed and they can place their order again (maybe with a discount).

    The best temporary solution to getting your business running again and salvaging damaged customer relations is opening another account with Stripe, PayPal, or Square (the top three payment aggregators.

    DON’T USE THIS AS YOUR PERMANENT MERCHANT ACCOUNT REPLACEMENT. This one is just to get those customers hurt by Stripe’s freeze/hold back into your store.

    A permanent solution that both you and your customers benefit from is high-risk merchant accounts. Services like PayPal, Stripe, and Authorize.net are convenient but not cost-effective nor safe for most online businesses. And while their payment gateways are familiar, they rarely act as a deal breaker when it comes to customers making their purchase.

    Instead, look for high-risk merchant accounts that:

    • have low fees
    • cater to your needs as a high-risk merchant (e.g., fraud prevention, chargeback prevention, etc.)
    • and allow you to customize the checkout experience.

    You’ll have a lower risk of freezes or withheld funds, though the acquiring bank might force a reserve on you—but that’s okay. Reserves may be annoying but they are in place for the protection of the bank, and you can easily negotiate the cap. Take a look at our FAQ Part 1 and 2 regarding fees, rates, and reserves for more on this.

    The best part might even be not having to plead with customers to come back and try their purchase again. You’re in the safe zone with high-risk merchant accounts.

    Negotiate the Terms for Releasing Funds

    Now that your business is back up and running more stable than before, you can focus on the funds Stripe is holding.

    The first step of this process is to contact Stripe support. Do not complain; you’re here to negotiate, and to do that you’ll need to get connected with the right person. Tell this employee who you are and ask who you should be in contact with regarding your withheld funds or account freeze.

    Remember, you agreed to the funds hold when you accepted the User Agreement.

    The agent might tell you that they’re waiting for documentation from you. This could be a bank statement or some other merchant document. Find out who to send it to and do it as soon as you can, don’t put up a fight about it. You want to appear compliant.

    The typical length of time is 90 days for withheld funds, though that can range.

    The next step is to negotiate the release of those funds which you can do before the set term mentioned. It’s all about risk management. So, if your business is in good standing and you’re taking steps towards fraud prevention, minimization of chargebacks, keeping up with documentation, and communicating with the processor, then you’ve paved the way towards early release.

    Outline what you’ve done to minimize risk and tell them you’d like to negotiate the terms for releasing funds. You may have to do this a few times, but don’t badger them about it. You need to maintain professionalism and minimize desperation.

    Speaking of desperation, if the funds being withheld are hurting your business, then you should consider taking out a loan. There are working capital loans, bridge loans, and lines of credit you can open in the meantime as a temporary solution.

    Need help negotiating? Get in touch

    How to Prevent Withheld Funds and Account Freezes

    Here’s how you can prevent Stripe from holding funds or freezing your account, whether you want to keep using their payment services or are ready to move on to something better.

    Choose the Right Processor

    There are many credit card payment processors to choose from, and the most convenient (e.g., Stripe, Square, PayPal) are not always the best for your business in terms of safety and cost.

    Pick a payment provider that caters to your merchant type. The best solution is likely to open a high-risk merchant account. In contrast to many third-party providers, you can negotiate your terms and rates. Plus, having a merchant account that’s designed for high-risk merchants won’t force you to run the risk of sudden account termination.

    On the consumer-facing side, customers will still have a choice in online payment method in the form of credit cards (Visa, MasterCard, etc.), debit cards, and ACH. You can even customize the checkout experience through APIs and plugins.

    Be Honest with Your Account

    There is some leeway when using an interchange-plus type of payment processor. Your business account can fall under multiple Merchant Category Codes (MCC), and each comes with their own risk level.

    You can pick an MCC that has less risk, but don’t try to blur the lines and make your business appear like something else entirely. Be upfront with your products and services when communicating with your payment processing agent.

    It’s also never a good idea to use multiple business models under the same merchant account number. Rates, fees, and terms differ depending on business type. If a processor sees that your sales volume or transactions don’t quite match up with your account, then funds could be withheld and your account could be frozen until after a review.

    Minimize Chargebacks and Fraud

    Any business is subject to chargebacks and fraud, but high-risk businesses tend to have a higher chargeback ratio.

    Your payment solution provider (PSP) can offer support and prevention methods regarding both to keep you in the clear. While no one can guarantee zero fraud and chargebacks, you can control it.

    There are safety measures you can implement in the checkout process like 3D Secure to help prevent fraud. For chargebacks, publish a clear return policy and refunding statement while making it easily accessible.

    Opening a High-risk Merchant Account with DirectPayNet Can Save You from Sudden Holds, Freezes, and Terminations

    Contact us today about your business and we’ll begin the process of setting up a high-risk merchant account with terms we know you can get behind. Don’t let a Stripe freeze destroy your business, get in touch with us today and we’ll get your e-commerce store back up and running in no time.

    LOWER YOUR RISK WITH A HIGH-RISK MERCHANT ACCOUNT TODAY