Category: STRIPE

Shopify Holding Funds? Why Your Money Is Trapped and How to Free It
Platforms like Shopify have become the go-to choice for budding entrepreneurs and seasoned business owners alike. But while setting up an online store has never been more accessible, there’s a lurking snag that catches many by surprise: frozen funds.

If you’ve ever seen your hard-earned revenue trapped in a “Shopify Payments hold”, you’re not alone. As a seasoned high-risk payment processing provider, I’ve seen countless merchants grapple with these challenges. Today, I’ll dive deep into the intricacies of Shopify payments, payment gateways, and the elusive world of chargebacks and 3rd-party payment processors.

Ready to unlock the mysteries of your Shopify balance? Let’s get started.

The Shopify Payments Landscape

The digital revolution has fueled the rapid growth of online stores, and at the heart of this transformation lies Shopify. An innovative ecommerce platform, Shopify has provided countless business owners with the tools they need to bring their visions to life.

But behind the seamless checkout processes and enticing product displays, there’s a labyrinth of payment infrastructures at play.
- Shopify as an ecommerce platform: For many, Shopify is the first stop when setting up an online store. Its user-friendly interface, combined with a plethora of features, allows even novices to establish a professional-looking store in no time. But it’s more than just an online storefront; it’s an entire ecosystem that supports the transactional journey of every product and service.
- The triad: Shopify, Shopify Payments, and Shop Pay: Here’s where things get interesting. Shopify Payments is the in-house payment processor for Shopify, providing store owners with the ease of handling transactions. It’s powered by Stripe, a giant in the payment processing world. Meanwhile, Shop Pay is the payment gateway that lets your customers smoothly complete their purchases. This triad works together, making sure funds move from a customer’s credit card or debit card to the merchant’s bank account.
The Limitations of Shopify for Most Businesses

With great power comes great responsibility, and with a platform as influential as Shopify, there are bound to be limitations.
- The high-risk dilemma: Not all ecommerce stores are created equal. Many online merchants fall under the “high-risk” category due to the nature of their products, services, or business models (think dropshipping or certain subscription services). This classification poses challenges, particularly when using Shopify Payments. Why? Because Stripe, Shopify’s backbone for payments, doesn’t entertain high-risk businesses. As a result, merchants can face unexpected payment holds or even account terminations.
- The role of Stripe in Shopify’s high-risk policy: Stripe’s policies play a pivotal role in how Shopify Payments operates. As Shopify’s banking partner, Stripe’s conservative approach towards high-risk businesses impacts who can and cannot seamlessly use Shopify Payments. Business owners must remain vigilant and informed about these policies to ensure continuous cash flow.
Shopify Payments won’t support you. We will.

The Perils of 3rd-Party Payment Processors

“Shopify holding funds” is an all too popular search term. As your online store flourishes and orders pour in, seeing your revenue held back can feel like a bucket of cold water. But why does this happen? Let’s demystify the common reasons behind Shopify payment holds.
- Chargebacks, fraud, and refunds: Ecommerce isn’t without its challenges. Chargebacks, where customers dispute credit card transactions, can be a thorn in the side of many business owners. Add to that the potential for fraudulent activity and customer refund requests, and it’s evident why Shopify Payments often holds funds. By creating a reserve pool, Shopify ensures that there are adequate funds to cover these unexpected financial challenges. It’s their way of risk management, but for many store owners, it translates to unpredictable cash flow.
- Funds held up to 180 business days: Imagine waiting for nearly half a year to access your funds! For some, this is a stark reality. In extreme cases, Shopify can hold onto your payouts, preventing them from entering your bank account for an astonishing 180 business days. While this is to safeguard against financial anomalies, for business owners, especially those running small businesses, this can significantly hamper operations.
Comparing with Other Payment Providers

Shopify isn’t the only player in the game. As ecommerce has evolved, so have payment gateways and processors. However, each comes with its unique set of challenges.
- PayPal: Almost synonymous with online transactions, PayPal is a preferred choice for many. But don’t be too quick to jump on the bandwagon. While it’s a robust payment processor and gateway, PayPal might not support certain business types, especially those labeled as high-risk. It’s always wise to delve deep into their policies before making a commitment.
- Amazon’s partnership with Shopify: The recent partnership between giants Amazon and Shopify hinted at revolutionizing the checkout experience by allowing customers to pay using their Amazon accounts. However, this seemingly perfect solution comes with its set of limitations. Not all business models will find support here, making it essential to weigh the pros and cons before integrating it into your Shopify store.
- Stripe, Square, and more are ticking time bombs: While third-party payment processors like Stripe and Square seem like convenient solutions, they’re best suited for businesses processing under $25k per month. Go beyond this threshold, and you might find yourself facing payment holds, which can cripple your cash flow. These platforms are excellent stepping stones, but for long-term, scalable solutions, they may not be the best fit.
Navigating the world of 3rd-party payment gateways can feel like walking a tightrope. They offer convenience and quick solutions but come with their set of challenges. As the ecommerce world continues to grow, understanding these nuances becomes vital for sustainable growth and financial stability.

Withheld funds will always be a risk on Shopify. We can help!

The Power of Real Merchant Accounts

In the dynamic world of ecommerce, one size doesn’t fit all. Especially for high-risk businesses, the need for a customized approach to payments is paramount. This is where real merchant accounts shine.
- Payment processing tailored to your business model: No more one-size-fits-all solutions! Real merchant accounts offer a bespoke approach, catering to the unique needs of your business. Whether you’re into dropshipping, subscription services, or any other high-risk model, these accounts are designed to understand and support your operations, ensuring a smoother transactional experience.
- Evasion of holds and payout delays: One of the primary frustrations with platforms like Shopify Payments is the unpredictable holds. With a real merchant account, the emphasis shifts from generalized risk management to understanding your specific business. This often translates to quicker payouts and fewer unexpected holds, giving you better control over your cash flow.
- Flexibility in payment methods: Different customers have different payment preferences. Some might favor credit cards, while others might lean towards digital wallets or even debit cards. Real merchant accounts give you the flexibility to offer a variety of payment methods, ensuring your customers always have their preferred payment option at checkout.
Human Touch in Support and Management

In today’s automated age, the value of genuine human interaction, especially in customer support, cannot be overstated.
- Beyond Shopify’s bot-centric support: It’s no secret that Shopify support, often reliant on bots, can feel cold and detached. While automation has its merits, when it comes to complex issues or nuanced challenges, nothing beats human touch. Real merchant accounts prioritize this, providing dedicated customer support that understands and addresses your concerns.
- The importance of real customer support in ecommerce: Mishaps, misunderstandings, and technical glitches are part and parcel of running an online store. In such times, having a real person guiding you, understanding your challenges, and offering timely solutions can be a game-changer. It’s not just about addressing issues; it’s about building trust and forming lasting relationships.
Negotiating with Real Merchant Accounts

Real merchant accounts aren’t just about seamless transactions; they offer much more, especially in terms of financial negotiations.
- Gaining leverage with transaction fees: Transaction fees can quickly add up, especially for thriving businesses. Real merchant accounts offer you the unique advantage of negotiating these fees. This can lead to significant savings in the long run, boosting your bottom line.
- Offering the payment services your customers actively want: It’s all about staying ahead of the curve. As the world of ecommerce evolves, so do payment trends. Real merchant accounts allow you to tap into emerging payment services, ensuring you always stay relevant and in tune with your customers’ preferences.
Real merchant accounts aren’t just another payment solution; they’re a strategic partner, one that understands, supports, and grows with your business. As we explore deeper into the world of payments, it’s evident that the right choice can make all the difference between success and stagnation.

Making the Right Choice for Your Business

Before jumping into any solution, be it Shopify Payments, 3rd-party payment gateways, or real merchant accounts, you need to introspect and truly understand what your business requires.
- Analyzing your business model: Different business models come with different payment challenges. For instance, dropshipping might have its set of challenges distinct from a subscription box service. Understand where you stand, the risks associated, and the volume you’re processing. This clarity can be instrumental in guiding your choice.
- Forecasting your growth: While it’s essential to address current challenges, thinking long-term is equally vital. If you envision your business scaling rapidly, surpassing that $25k per month mark, it’s best to plan ahead. Adapting your payment methods now can save significant future hassle.
Weighing the Advantages and Disadvantages

Every payment solution, whether it’s Shopify Payments, PayPal, or real merchant accounts, has its pros and cons. The trick lies in aligning these with your business priorities.
- Convenience vs. unpredictability: Platforms like Stripe and Square might be quick to set up and might seem convenient, but remember, they come with their set of limitations, especially for high-risk businesses or stores with large transaction volumes. The allure of convenience can sometimes overshadow potential future payment holds or restrictions.
- Customization vs. setup efforts: While real merchant accounts offer a plethora of advantages, they might require more effort during setup, especially when compared to off-the-shelf solutions. However, the long-term benefits often outweigh the initial investment of time and energy.
Transitioning Smoothly

If you’re contemplating switching from your current solution, it’s essential to ensure a smooth transition to maintain trust and provide continuity for your customers.
- Maintaining payment continuity: Ensure that during the transition, your customers experience zero interruptions. It’s not just about maintaining cash flow; it’s about upholding your brand’s reputation.
- Effective communication with stakeholders: This includes not only your customers but also any partners or affiliates. Inform them about any changes, the reasons behind your switch, and how it will benefit them. Transparency can go a long way in cementing trust.
As business owners, making informed choices can spell the difference between thriving in this vibrant landscape or getting bogged down by avoidable challenges. Payments, being the lifeblood of commerce, deserve careful consideration.

Whether you’re just starting or reevaluating your current setup, remember that the right choice isn’t just about today but ensuring a robust and flexible foundation for the future. Always prioritize your business needs, stay informed, and never hesitate to seek expert advice.

Every click, every transaction, and every decision counts.
October 25, 2023
Shopify Payments Methods to Maximize Checkout Conversions
Shopify is one of the world’s most popular platforms for ecommerce. With its user-friendly interface and customizable features, it’s no surprise that a multitude of Shopify merchants have become loyalists.

Central to the success of any Shopify store is the checkout experience, which hinges on the payment methods available. While Shopify Payments has become synonymous with the platform’s payment processing, it’s essential to understand that it’s not the only option.

Understanding Shopify Payments and Shop Pay

Shopify Payments and Shop Pay are the default for every Shopify store owner. But do you know what they are, how they’re different, and if they help or hurt your business?

What is Shopify Payments?

What many ecommerce store owners may not realize is that Shopify Payments is a white-label version of Stripe. This means that while you might see Shopify’s branding during the checkout process, Stripe is the underlying force powering the transactions.

it’s also vital to understand that Shopify Payments is not a true merchant account. Unlike dedicated merchant accounts where businesses have individual agreements with banks, Shopify Payments pools multiple merchants under a single umbrella.

While this simplifies the setup process for many, it also means less negotiation power when it comes to transaction fees and potential risks of account holds or terminations if there’s a sudden spike in transaction volumes or chargebacks.

Its appeal lies in its seamless integration with the platform, allowing store owners to manage payments directly within their Shopify dashboard. For many, this offers a convenient solution, eliminating the need to juggle multiple platforms or dive into complex payment gateway setups.

What is Shop Pay?

A common misconception among Shopify store owners is equating Shopify Payments with Shop Pay. While both are essential components of the Shopify payment ecosystem, they serve different functions.

Shop Pay is Shopify’s payment gateway, designed to speed up the checkout experience for customers. By saving payment information securely, it offers shoppers a faster and more convenient checkout process when they revisit any Shopify store that has Shop Pay enabled.

Think of it as a digital wallet tailored for the Shopify universe, similar to Apple Pay or Google Pay but exclusive to Shopify stores.

This distinction is crucial. While Shopify Payments handles the actual processing of credit card payments and transfers to your bank account, Shop Pay focuses on enhancing the user experience by simplifying and accelerating the checkout process.

Shopify Payments is Stripe in disguise. Don’t put your business at risk!

The Wider World of Payment Solutions

Now that you know what Shopify Payments and Shop Pay are, you might be wondering why a business owner on Shopify wouldn’t want to use them. Let’s get into it.

Why Consider Alternatives?

Customer convenience is king. Offering multiple payment methods isn’t just a nicety; it’s a necessity. A diversified range of payment options caters to varied customer preferences, ensuring that every shopper finds a checkout process tailored to their comfort.

Whether it’s credit card payments, digital wallets, or international payment solutions, widening your payment scope can significantly enhance the shopping experience, driving customer loyalty and potentially boosting sales.

Moreover, depending solely on Shopify Payments might place your online store at the mercy of their terms, pricing, and service interruptions/shutdowns. By diversifying, you’re not only providing your customers with choices but also safeguarding your business from unexpected payment processing disruptions.

Examples of Shopify Payment Methods and Processors
- Credit and Debit Cards: This category is the cornerstone of online payments. Brands like Visa, Mastercard, Discover, and American Express are universally recognized and trusted. Every payment processor, including Shopify Payments, accepts (or should accept) credit and debit cards.
- Digital Wallets: The rise of mobile commerce has catapulted digital wallets like Apple Pay and Google Pay to prominence. Offering a swift and secure checkout experience, these options allow customers to pay without entering their credit card information repeatedly, streamlining the checkout process.
- Bank Transfers: With solutions like ACH, customers can authorize direct transfers from their bank account. This method can be especially appealing for high-ticket items or B2B transactions, offering a level of trust and security.
- Online Payment Platforms: Platforms like PayPal have become synonymous with online payments, offering both merchants and customers a secure medium to transact. With its global recognition, PayPal can help put international customers at ease.
- Installment Solutions: Services like Klarna allow customers to purchase products and pay in installments. Such options can be particularly appealing for more expensive items, enabling customers to manage their finances better without delaying their purchase.
- International Payment Solutions: Catering to a global audience? The best way to secure payment processing that handles multiple currencies or functions outside of your region is through a dedicated merchant account, which will help you save on conversion fees.
Selling internationally? We can help your approval rate!

Benefits of Using Alternatives to Shopify Payments and Shop Pay

Alternative Shopify payment methods, credit card payment processors, and Shopify payment gateways benefit both merchants and consumers.

For Merchants
- Cost Savings: Many other payment providers offer competitive transaction fees and monthly fees. By exploring and negotiating with different providers, merchants might find better pricing, especially if their ecommerce business handles a high volume of sales.
- Greater Flexibility: Shopify Payments, while seamless, may not cater to every unique need of a store. By incorporating multiple payment solutions, merchants can tailor their checkout experience, offering features or payment methods especially relevant to their customer base.
- Risk Diversification: Relying solely on Shopify Payments can be a gamble. If issues arise—be it service interruptions, disputes, or unexpected account holds—merchants risk disrupting their revenue flow. Diversifying payment methods can safeguard against such pitfalls.
- Global Reach: For merchants eyeing the international market, accommodating local payment preferences is crucial. Payment services that natively accept foreign currencies like iDEAL can resonate more with global customers, enhancing trust, boosting sales, and saving you on high USD conversion rates.
- Enhanced Reporting and Analytics: Different payment processors offer varied insights into sales, refunds, and customer behavior. This data can be invaluable for merchants looking to optimize their sales strategies and understand customer preferences.
For Customers:
- Choices, Choices, Choices: The modern shopper values choice. Whether they prefer digital wallets like Apple Pay, direct bank transfers through ACH, or the familiarity of credit card payments using their trusted American Express card, offering varied payment options enhances their checkout experience.
- Trust and Security: Recognizable payment solutions, such as PayPal or direct credit card payments, can instill confidence. Shoppers are more likely to complete a purchase if they trust the payment method, especially when buying from a store for the first time.
- Seamless Checkout: No one likes a complicated checkout process. Solutions like Google Pay, saved payment information through platforms like Amazon Pay (for customers with an Amazon account), or fully custom checkout solutions can expedite the process, leading to reduced cart abandonment rates.
- Flexibility in Payments: Some customers may prefer paying in installments or split the payment between multiple credit cards. Offering such payment methods ensures customers can shop how they want, when they want.
ALWAYS have a backup payment solution. Start here

Things to Consider When Choosing a Payment Processor

Choosing the right payment processor for your Shopify store goes beyond just transaction fees. Here’s a comprehensive checklist to guide Shopify merchants through this pivotal decision:
- Pricing and Fees: This is often the starting point for most merchants. Understanding the breakdown of processing fees, monthly fees, and any other hidden costs is crucial. While Shopify Payments offers a standard rate, other third-party payment providers and merchant account providers might have varied structures, sometimes offering more competitive rates or pricing models tailored to your sales volume.
- Integration with Shopify: The smoother the integration, the better. Look for payment processors that easily sync with your Shopify store. While setting up Shopify Payments is straightforward, other processors should also offer a seamless integration, ensuring minimal disruptions to the checkout process.
- Security and Compliance: Trust is the bedrock of online commerce. Ensure your chosen payment processor adheres to PCI compliance standards, safeguarding customer payment information. Whether you’re accepting payments through credit cards, digital wallets, or direct bank transfers, security should never be compromised.
- Support and Reliability: Even the best systems can face hiccups. Having reliable customer support ensures any issues with payment processing, be it disruptions or queries about transaction fees, are resolved promptly. Read reviews, reach out to other Shopify store owners, and perhaps even test the support response time of potential payment providers.
Run a Shopify Store? Here’s What You Need to Do ASAP

While Shopify Payments and Shop Pay are integral parts of the Shopify ecosystem, they represent just a fraction of the options available to ecommerce entrepreneurs. Exploring alternatives can bring numerous advantages, from better pricing and enhanced customer experiences to global reach and improved analytics.

And if you’re ready to elevate your payment processing game, consider opening a merchant account with DirectPayNet. Tailored for ecommerce businesses, DirectPayNet offers a bespoke payment solution that understands the unique challenges and opportunities presented by the online marketplace. Not only will you enjoy competitive rates, but you’ll also benefit from a dedicated team committed to your success, every step of the way.

Take charge of your checkout experience and empower your Shopify store with the best in payment processing. Partner with DirectPayNet and ensure your ecommerce business thrives in today’s competitive landscape.

TAKE CHARGE OF YOUR CHECKOUT EXPERIENCE WITH DIRECTPAYNET
October 18, 2023
Help! Stripe closed my account, what do I do now?
Help! Stripe closed my account, what do I do now?

Few situations induce immediate stress for online businesses like receiving a notification that their Stripe account has been closed.

With the rapid pace of digital transactions, it’s crucial to resolve this issue efficiently. While some merchants have navigated these murky waters with ease, the majority find themselves lost.

Don’t worry, we’ve got you covered. Our guide will not only help you understand why Stripe might have suspended your account but also provide a roadmap for reactivating it or finding alternative solutions.

Why is my Stripe account suspended?

Your account may be suspended for any of the following reasons.

Excessive Chargebacks

If you have a high chargeback rate and/or get a lot of disputes, then your Stripe account may be at risk of being suspended.

This is one of the most common reasons for account suspension. If you have too many chargebacks, then Stripe may temporarily or permanently suspend your account until you can reduce your chargeback rate. If you get a lot of disputes, then it’s a good idea to reduce them.

Luckily, there are many ways to manage and reduce chargebacks. Just know that you will never reach 0 chargebacks. Instead, aim to keep your chargebacks under 0.9%.

Geographical Inconsistencies

If you’re accessing your Stripe account from a region that isn’t registered as your region of operation, Stripe will suspend you.

For example, if you’re in the United States but accessing your Stripe account from India, this is considered a remote operation and could get your account suspended.

If you need to access your Stripe account while traveling, then that’s okay. But Stripe needs to see that you’ve accessed the account in your home country first. If you suddenly start processing orders on day 1 from abroad, that looks suspicious.

High-Risk Business

Some businesses are considered high risk by Stripe and therefore cannot use their service. Many of the most common ecommerce industries are considered high risk, like coaching, supplements, dropshipping, travel, and, digital products.

You can discover more about high-risk businesses here. If you fall into any high-risk category, stop using on Stripe ASAP.

Voluminous Transactions

If your sales volume reaches $25k/month, Stripe.com will suspend you. This is the moment where Stripe sees your business as a liability. You’re selling too much and they need to investigate.

At this time, Stripe will start the due diligence process. When you signed up initially, you didn’t have to provide much detail about who you are and what your business does. That’s Stripes super power: approving your account in seconds with no hassle.

Now that you’re making money, Stripe needs to provide you with a real merchant account and they don’t support all businesses.

To avoid any issues during this process, Stripe will close your account with no warning.

Still have questions? We can help!

Can Stripe take money out of my bank account?

Yes. If you have an outstanding balance on Stripe, they will withdraw the amount owed from your bank account. It will appear in Stripe as a negative payout (you paying them, not them paying you).

If you’re account is closed due to excessive chargebacks and the money held in your Stripe account is less than what’s owed to pay those chargebacks (plus fees), Stripe will take that money from your connected financial institution.

Generally at this time, you don’t have much access within your Stripe account. Meaning, you likely won’t be able to remove your connected bank to avoid a debit.

Can Stripe hold your money forever?

Stripe is an online payment processor, not a bank. This means that they cannot hold onto your money forever. Instead, they hold it for 180 business days (about 6 months) and then transfer it to your account on day 181.

The 180-day period is to cover any costs that might accrue due to refunds, returns, fees, and chargebacks. Since you aren’t pulling in new money on your Stripe account, they need to ensure there are ample funds in case they’re needed.

If you’re worried about Stripe closing your account before you can access all of the funds in it, don’t worry—they can release any remaining funds to you over time instead of making you wait until after 180 days have passed.

What does Stripe consider a high-risk business?

If you’re in one of these industries, Stripe may not approve your application. However, there are other payment processors that are more lenient when it comes to working with such businesses.

Some of the most common prohibited businesses are as follows:
- CBD and paraphernalia
- Adult content
- Dietary supplements
- Alcohol
- Gambling
- Coaching and advice
- Dropshipping
- Subscription business models
- Travel
- Digital goods
- High-ticket items
Two of these entries—subscriptions and high-ticket items—aren’t a business type, but rather a pricing model. Stripe does not support these, either. So if you have a traditionally low-risk business but price your products over $1000 or offer subscriptions, you’ll be categorized as high-risk.

In a high-risk industry? That’s our expertise! Let’s chat.

How can I recover my Stripe account and get my funds back?

If you’ve been shut down by Stripe, don’t panic. There are a few things that you can do.

Write a Physical Letter

First and foremost, write a letter directly to their fraud department explaining the situation and asking for more information about why your account was closed.

You should also ask them whether there is an appeal process or timeline for reopening your account, who in their fraud department can help (or if they need more info from you), etc. This is important because it helps ensure they’ll take your request seriously—and it’s the ONLY WAY to get a response.

Emailing the Stripe support team doesn’t work, so don’t bother. And there is no phone number to call.

Your letter needs to include tracking and require a signature upon arrival.

Request 50% of Your Funds Back

In your letter and sequential communications with Stripe, request 50% of the held money back. If you don’t have a history of chargebacks (or your chargeback ratio is very low), you make all payments on time, and there are no customer support issues (e.g., outstanding customer complaints), then Stripe will be willing to meet your request.

Then, after one month, request an additional 50%.

You can continue to do this, but know that Stripe won’t give back all of your money before the 180-day mark. They do need to hold some of it until the end.

Open Another 3rd-party PSP

A PSP is a payment service provider, like Stripe. They are easy to open as there are no due diligence requirements at the start (which is why they’re good for startups and as backup accounts). So you can either open an account at:
- Stripe
- PayPal
- Square
Just temporarily. This isn’t a permanent solution, it’s just to get your business running again ASAP.

You need a way to start accepting payments and credit card processing again and this is the only way to do that within 24 hours.

Apply for a New Merchant Account

A high-risk merchant account is your only long-term solution to this problem. It takes a week or so to finalize, but once your account is open, you’re hooked up with a payment processor that supports your business.

You’ll also get access to more powerful payment gateways with APIs that can help your business with fraud prevention, chargebacks, CRM integration, and adjusting payment methods.

Only a real merchant account will support your business.

If you’re not sure where to turn next, give us a call. We can help you get your payment processing back on track.

We know that sometimes getting a real merchant account can be confusing, but Stripe is not the answer for most businesses. We’ve seen countless small businesses fall into this trap, and it always ends in heartbreak when Stripe closes their account down after just a few months of usage.

If you want to see your business succeed online then we advise against using any service that isn’t designed specifically for the industry you operate in. Contact our expert team of merchant account providers to start your business’ safer future.

OPEN A REAL MERCHANT ACCOUNT TODAY
September 15, 2023
Stripe Holding Funds for 90 Days? 3 Ways to Continue Processing Payments and Get Your Money Back
Imagine waking up to find that Stripe, which handles a significant portion of your transactions, is holding onto 30% or more of your money due for up to 90 days!

That’s the reality for many Stripe merchants; Stripe account balance trapped in the system with no way out for an extended period of time. But there’s a way to move forward with your business—and a way to get your money back.

While many businesses rely heavily on popular providers like Stripe, an over-reliance on a single processor can pose unforeseen challenges.

The risks are even more pronounced for businesses with subscription models. Subscriptions are the lifeline of recurring revenue, and any disruption to this flow can cripple your business’s cash flow, tarnish customer trust, and in worst-case scenarios, bring operations to a halt.

This doesn’t mean Stripe or any other provider is inherently problematic, but it underscores a vital principle: diversification. In the world of payment processing, it’s prudent to have options and safeguards in place. It’s about ensuring that your business remains resilient and agile, ready to adapt to any twists in the tale of e-commerce.

In this guide, we’ll give you three strategies to move your credit card processing away from an over-reliance on Stripe, ensuring you neither lose money nor precious customer data. By the end, you’ll be equipped with actionable steps to diversify your payment processing approach and bulletproof your business against potential disruptions.

1. Recognizing the Signs: When Stripe Releases Your Funds

Every business owner cherishes the moment when funds held by a payment processor are finally released. But what if that moment is a harbinger of potential future disruptions?

Picture this: You’ve been conducting business smoothly with Stripe as your primary payment processor. Suddenly, you notice funds are held up and Stripe refuses to state why. Days or even weeks go by, causing distress and potentially harming your business operations. And then, just as suddenly as it began, Stripe releases your funds. A sigh of relief, right?

While it’s natural to feel relieved and even grateful, it’s crucial to interpret this event as a friendly warning rather than a benign hiccup. Why? Because payment processors, just like any other business entity, have their own set of internal protocols, risk assessments, and evolving compliance policies.

If your funds have been held once, it’s a clear indication that some aspect of your business triggered their risk parameters. This could very well happen again, and next time, the stakes might be even higher.

What’s the takeaway here? It’s simple yet profound: don’t let one single provider hold your business ransom. While Stripe provides an array of fantastic functionality and is undoubtedly an industry leader, it’s vital for businesses, especially those dealing with large transaction volumes or operating in niche industries, to have a backup payment processor on standby. It’s not about distrusting Stripe but about practicing smart business resilience.

2. Keeping Your Backup Active: Not Just for Emergencies

Establishing a backup payment processor is a pivotal step towards ensuring business continuity. However, there’s a common misconception floating around: you only have to use your backup in emergencies. This could be a costly assumption.

Understanding the Dangers of Dormancy

Just like a plant needs regular watering, your backup processor requires periodic activity. Without this, it could become dormant or even be flagged for suspicious activity. Let’s say you’ve opted for a second processor and gone through all the initial setup, but haven’t channeled any transactions through it. Over time, this inactivity can be perceived as irregular by the processor.

Many providers have internal protocols that might freeze or shut down accounts that remain inactive for extended periods—often as short as 60 days. In essence, your backup could be rendered useless precisely when you need it the most.

Balancing the Volume: An Ounce of Prevention

To prevent this pitfall, it’s wise to channel a fraction of your transactions through your backup regularly. Aiming for 20-30% of your volume not only keeps the account active but also familiarizes you with the backup’s operations and quirks. By doing so, you’re effectively stress-testing the backup in real-time, ensuring that if a situation arises where you need to switch entirely, the transition is seamless.

Furthermore, maintaining consistent volume through the backup fortifies your relationship with the secondary processor. Just as with any business relationship, consistent engagement builds trust. In the future, this trust could prove beneficial in negotiating better rates or resolving disputes more amicably.

Practical Benefits of Spreading Volume

By splitting your volume:
- You reduce dependency on a single provider, thereby mitigating risks.
- You gain firsthand experience with the backup processor’s systems, ensuring no surprises during emergencies.
- You can compare and contrast the services, fees, and user experience of both processors, giving you a more informed position when making future decisions.
3. Transitioning Clients to a New Processor: Leveraging Stripe Tokens

When contemplating a shift away from your Stripe account or any other payment processor, one primary concern that stands out is the potential hassle for clients. Nobody wants to put their valued customers through the cumbersome process of re-entering payment information or, worse, risk losing their business due to perceived inconveniences.

Fortunately, Stripe has provisions that can smooth this transition.

Decoding Stripe Tokens

At the heart of this transition process lie “Stripe tokens.” But what exactly are they? In the simplest terms, a Stripe token is a representation of your customer’s credit card information. Rather than storing sensitive credit card data directly (which comes with a slew of security concerns), Stripe, like many payment gateways, generates a unique token for each customer.

This token serves as a reference point, allowing businesses to bill clients without ever directly accessing their details.

Migrating Tokens: The Smart Move

If you decide to shift to another payment processor, these tokens are your golden ticket. By requesting Stripe to transfer these tokens, you essentially move customer records, without ever handling the sensitive data directly.

It’s crucial to note that Stripe won’t send these tokens to you; instead, they’ll send them to your new PCI-compliant payment processor. This is in line with industry best practices ensuring customer data remains secure and isn’t vulnerable to breaches.

Steps for a Smooth Transition
1. Engage with your new processor: Before initiating the transition, engage in a dialogue with your new payment processor. Understand their protocols for accepting token migrations from Stripe.
2. Request Stripe: Contact Stripe payment processing to transfer the tokens. Ensure you provide all necessary details of your new processor.
3. Inform your clients: Transparency is key. It’s good practice to notify your clients about the shift, reassuring them that their payment details remain secure and this change is aimed at enhancing their overall experience.
The Payoff

By leveraging Stripe tokens:
- You ensure a seamless transition without asking clients to re-enter payment information.
- You maintain the trust quotient with your clients by keeping their data secure.
- You minimize business disruptions, ensuring recurring revenue streams (especially for subscription models) remain unaffected.
In essence, tokens act as bridges between your old and new payment processors, ensuring the transition is as smooth as the service you aim to provide.

BONUS TIP: The Power of Vaulting Customer Information

While we’ve discussed the advantages of leveraging tokens for transitioning between payment processors, there’s an even more potent tool at your disposal: Vaulting. This is a game-changer in the realm of payment processing, and here’s why every business owner should be familiar with it.

Understanding Vaulting: A Secure Digital Safe

Vaulting, in the context of payment processing, refers to the secure storage of customer payment details using encryption. Rather than storing raw data (like credit card numbers), a secure vault encrypts this information and produces a unique token. This token can then be used for transactions without ever revealing or handling the sensitive original data.

Why Vault? The Freedom to Move

By vaulting customer data:
1. Enhanced Security: Vaulting ensures that your customers’ sensitive data is encrypted, reducing the risk of breaches, unauthorized access, and chargebacks.
2. Flexibility: With vaulted tokens, you aren’t tethered to a single payment provider. Should the need arise to switch, you can simply use the tokens with a new processor, ensuring business continuity.
3. Customer Peace of Mind: When clients know their data is vaulted (and not just stored), it boosts their confidence in your brand, leading to higher trust and loyalty.
Choosing Your Vault: In-house vs. Third-party Solutions

Most payment gateways and processors offer built-in solutions for vaulting customer data. However, for those who truly value independence, there are third-party vaulting software solutions available. These stand-alone vaulting services ensure you’re not tied down to any one processor or gateway.

Key Takeaways
1. Plan for Tomorrow: While you might be content with your current processor, the future is unpredictable. Vaulting ensures you’re prepared for whatever lies ahead.
2. Prioritize Security: In an era where data breaches make headlines, vaulting is no longer just an option—it’s a necessity.
3. Invest in Flexibility: Whether you choose a built-in vaulting solution from a processor or a third-party tool, the freedom it offers is invaluable.
Conclusion

There’s a time and a place for merchants to use Stripe or its alternatives like Shopify, PayPal, and Square. But none of those options should be your main solution. And remember, the most important payment method to receive is credit card payments (Visa, Mastercard), which every processor accepts.

However, it’s also important to remember that the right partnerships can make all the difference. For those operating with high-risk business models like dropshipping, coaching, CBD, and startups, the challenges are even more pronounced. This is where having a specialized merchant account comes into play.

Are you in a high-risk industry and need a tailored solution? Look no further than DirectPayNet. With our deep industry knowledge, commitment to security, and unparalleled support, we offer high-risk merchant accounts designed to cater to your unique needs. With DirectPayNet, you’re not just getting a payment service solution; you’re forging a partnership that champions your business’s growth and resilience.

Don’t wait for the next withheld payout with your payment processor. Join DirectPayNet today and experience the difference of a provider that truly understands and caters to high-risk businesses.

Get in touch with our expert customer support team to get started.

PROTECT YOUR BUSINESS WITH DIRECTPAYNET TODAY
August 14, 2023
Stripe Is Too Expensive! | Stripe Fees Breakdown + Alternatives
Imagine this: You’ve just started your online store and decided to use Stripe for payment processing. Fast forward a few months, and you’re excitedly checking your earnings only to find that (1) a significant chunk of your profits has vanished into thin air, OR (2) your shop is frozen!

Stripe is no doubt one of the giants in the payment processing world. With its slick interface, a plethora of features, and the ease with which it can be integrated into almost any website, it’s no wonder that countless online merchants and e-commerce platforms opt to use Stripe payment processing as their go-to solution.

However, there’s a caveat. Stripe’s pricing model might not be as transparent or as affordable as one might think at first glance. For the uninitiated, deciphering Stripe’s fee structure can be akin to navigating a labyrinth, with unexpected costs lurking around every corner.

In this article, we’ll shine a light on the maze that is Stripe’s fee structure, and arm you with the information you need to make an informed decision for your business. We’ll break down each fee, analyze whether Stripe is really as expensive as some claim, and provide you with viable alternatives that could save you money without compromising on quality.

Stripe Fees Breakdown

Stripe has a reputation for its simplicity and ease of use, but when it comes to pricing, things can get a bit more complicated. Let’s unravel Stripe’s flat-rate pricing model and its various fees.

Flat-Rate Pricing Model

At its core, Stripe operates on a flat-rate pricing model. This means that for every online transaction, you’re charged a fixed percentage plus a fixed fee. The standard rate for online transactions is 2.9% + 30 cents per successful charge for businesses in the United States.

However, it’s worth noting that payment processing fees can vary by country, so it’s important to check Stripe’s pricing page for the most current rates applicable to your location.

Additional Service Fees

Besides the basic transaction fees, Stripe offers additional services that come with their own set of costs:
1. Stripe Radar: This is Stripe’s fraud prevention tool. While basic Radar features are included in the transaction fees, Radar for Fraud Teams, which offers more advanced capabilities, costs an additional fee per transaction.
2. Stripe Billing: If you’re using Stripe for subscription services, Stripe Billing can handle recurring billing. The cost for this service depends on your usage, with a percentage fee charged on recurring charges.
3. Stripe Connect: This is ideal for platforms that need to payout to third parties. It’s an intricate service with a variable pricing structure that depends on the features you’re using.
Hidden Costs

There are several Stripe processing fees that you might not be aware of when you start using Stripe:
1. Currency Conversion Fees: If you’re accepting international payments in a currency different from your account’s default currency, Stripe charges an additional conversion fee.
2. Chargeback Fees: In case of a disputed charge, such as when a customer doesn’t recognize a transaction, there is a fee for the chargeback process. If the dispute is resolved in your favor, the fee may be refunded.
3. Refund Processing Fees: If you refund a transaction, Stripe doesn’t return the original transaction fee. This means you lose the processing fees of the original charge.
Real-Life Impact

To paint a clearer picture, let’s consider a practical example. Imagine you are a US-based merchant with an average transaction value of $50. If you process 100 transactions in a month, your base transaction fees alone will be around $320 [(2.9% of $50 + $0.30) x 100]. If you have a couple of chargebacks, need currency conversions, or use additional services, this figure can escalate quickly.

It’s essential to be aware of these costs and factor them into your pricing strategy. Knowing how much each transaction actually costs you can help in making informed decisions regarding the payment processors you choose.

Looking for a way out of Stripe without harming your business? We can help!

Is Stripe Really Too Expensive?

Now that we’ve broken down the various fees associated with using Stripe, it’s time to address the elephant in the room: Is Stripe really too expensive for your business? The answer to this question is not a simple yes or no, as it depends on several factors including the scale of your business, your specific needs, and what you value in a payment processor.

Value and Services vs. Cost

One of the reasons why Stripe is a popular choice among online merchants is the suite of tools and features it offers. From seamless integration, a robust API, to fraud prevention with Stripe Radar, there’s a lot that comes packaged with Stripe’s service. For some businesses, these features may justify the costs, as they can contribute to smoother operations and potentially higher conversions.

However, for small businesses or those with tight margins, the costs can add up quickly and become a significant burden. In such cases, the value provided by Stripe may not justify its fees.

Nor does the abysmal Stripe support process. The company can hold your funds for 180 business days and makes it nearly impossible to get in touch with them.

Pricing Model Difference

Stripe utilizes a flat-rate pricing model, just like PayPal and Square. But this isn’t the only pricing model. It is, however, the simplest.

In fact, Stripe isn’t a payment processor at all. It’s what we call a payment aggregator.

Some credit card payment processors charge a separate fee for each payment type, which can be a good thing depending on what your customers use most frequently. For example, you may pay more on Stripe for ACH direct debit and international cards, or even something as common as American Express, than on another processor.

Look at the pricing model for the service provider you’re interested in closely and make sure that the fees you pay are acceptable or negotiable.

Customization and Negotiation

Stripe may be open to customization, but the cost is much higher than going with a negotiable alternative, like having your own merchant account. If you processor tens of thousands per month, then Stripe likely isn’t the best solution for you. In fact, it might be harmful to keep using it as your primary payment processor as Stripe likes to freeze accounts and hold funds for businesses who process too much.

Your Business Needs

In the end, whether or not Stripe is too expensive boils down to your specific business needs. If the features, integrations, and security provided by a Stripe account are critical for your business operations and customer experience, the costs may be justifiable. However, if you’re operating on slim margins and don’t require the full suite of services that Stripe offers, you might find better value in an alternative solution.

Stripe Competitors

As a business owner, it’s always smart to weigh your options. Though Stripe is a formidable player in the payment processing arena, it’s not the only game in town. Let’s take a closer look at some of Stripe’s major competitors, and see how they stack up.

It’s worth noting that all of the alternatives (as well as Stripe) accept every major credit card (Visa, Mastercard, Amex), Apple Pay, and Google Pay.

PayPal

One of the most recognized names in the online payments industry, PayPal is often the go-to alternative to Stripe.
- Fees Breakdown: PayPal’s standard transaction fees are similar to Stripe’s at 2.59% + $0.49 per transaction for sales within the US.
- Pros:
  - Highly recognized and trusted by consumers.
  - Simple setup, doesn’t require a merchant account.
  - Offers PayPal Credit to customers.
- Cons:
  - PayPal’s interface and customization options are not as developer-friendly as Stripe’s.
  - May hold funds under certain circumstances, which can affect cash flow.
Square

Square is best known for its point-of-sale (POS) systems, but it also offers a robust online payment processing solution.
- Fees Breakdown: Square’s fees for online transactions are similar to both Stripe and PayPal at 2.6% + $0.10 per transaction.
- Pros:
  - Excellent for businesses with both online and physical storefronts.
  - Feature-rich POS systems.
  - User-friendly interface.
- Cons:
  - Not as customizable or developer-friendly as Stripe.
  - Some users report issues with account stability.
Adyen

Adyen is a global payment company that allows businesses to accept payments in multiple currencies, both online and in physical stores.
- Fees Breakdown: Adyen has a different fee structure compared to Stripe. It charges a processing fee plus a payment method fee, which varies depending on the payment method used, but we can generalize at 3% + $0.12 per transaction.
- Pros:
  - Highly customizable and feature-rich for global operations.
  - Supports a wide variety of payment methods.
  - Capable of handling large payments.
- Cons:
  - More complex pricing structure which can be confusing.
  - Not as user-friendly for those without technical expertise.
Stripe versus PayPal, Square, and Adyen.

Need help choosing an alternative? Reach out to our team!

Viable Alternatives to Stripe

While the competitors we discussed earlier are similar to Stripe in many ways, there are also alternative solutions that operate on different models. For some businesses, particularly those with higher payment volumes or specific needs, these alternatives might be more cost-effective or better suited.

Merchant Accounts

One of the traditional alternatives to payment processors like Stripe is to set up a merchant account.
- What is it?: A merchant account is a type of bank account that allows businesses to accept payments via credit or debit cards. Merchant accounts often involve relationships with banks and credit card networks.
- Fees Breakdown: Merchant accounts generally have a more complex fee structure, which can include monthly fees, transaction fees, and other costs. However, they may offer lower transaction fees, especially for businesses with higher sales volumes.
- Pros:
  - Lower transaction costs for high-volume businesses.
  - Greater control over transactions (including international transactions).
  - More stability and fewer account holds.
- Cons:
  - More complicated to set up and manage.
  - May have additional monthly or annual fees.
  - Typically requires more administrative work.
Braintree

Though technically part of PayPal, Braintree operates as a distinct service catering primarily to businesses looking for a more customizable payment solution.
- Fees Breakdown: Braintree’s fees are similar to Stripe’s at 2.9% + $0.30 per transaction for US transactions.
- Pros:
  - Provides more customization options compared to PayPal.
  - Supports a wide variety of payment options.
  - Advanced features for subscription services.
- Cons:
  - Slightly more complex to set up compared to Stripe or PayPal.
  - Customer support is not always as responsive.
Worldpay

Worldpay is a global payment processing provider catering to businesses of all sizes, with a special emphasis on security and fraud protection.
- Fees Breakdown: Worldpay offers custom pricing, so fees vary. They may include transaction fees, monthly fees, and setup fees.
- Pros:
  - Highly secure and focused on fraud prevention.
  - Offers global payment solutions.
  - Customizable pricing can be advantageous for some businesses.
- Cons:
  - Pricing is less transparent.
  - Can be more complicated to set up and manage.
Comparing merchant accounts against the two largest real, accessible payment processors.

When considering an alternative to Stripe, it’s crucial to assess not just the cost but also the features, security, and the compatibility with your unique business model. While merchant accounts might offer cost benefits and customization options, they do come with added complexities.

Solutions like Braintree and Worldpay might be more suited for businesses with specific needs around customization, security, and global operations. As always, make sure to verify current fees and features before making your decision.

Ready to move away from Stripe and onto a more profitable partnership?

Deciding on the right payment processor is pivotal for your online business. While Stripe offers an array of features and simplicity, it’s essential to weigh the costs against the benefits, and consider if there might be a more fitting solution for your specific needs and scale.

For businesses operating in high-risk industries, traditional payment processors like Stripe, PayPal, or Square might not be the most favorable options due to their policies and fee structures. In such cases, a high-risk merchant account can provide the flexibility and support that high-risk businesses require.

DirectPayNet specializes in high-risk merchant accounts, offering customized solutions that are tailored to the unique challenges and requirements of high-risk industries. If your business operates in a space that’s considered high-risk, or if you’re experiencing issues with account holds, excessive fees, or a lack of specialized support, opening a high-risk merchant account with DirectPayNet could be the game-changing move for your business.

Here’s why DirectPayNet stands out:
- Expertise in High-Risk Industries: DirectPayNet has years of experience serving high-risk industries, understanding the intricacies and challenges involved.
- Customized Solutions: With DirectPayNet, your payment processing solution is tailored to your business, ensuring that it aligns with your specific needs.
- Dedicated Support: High-risk businesses often require specialized support, and DirectPayNet offers dedicated account managers to assist you through every step.
Your checkout is one of the most important—yet overlooked—aspects of your sales funnel. Don’t leave it to chance, secure the credit card processing power you need right now.

Take the next step and contact DirectPayNet to discuss how a high-risk merchant account can elevate your business to new heights.

OPEN A HIGH-RISK MERCHANT ACCOUNT TODAY
July 10, 2023