Is Stripe a Good Processor? The SMB Killer - DirectPayNet

Is Stripe a Good Processor? The SMB Killer

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Business owners across the world know Stripe. Either from 1st-hand experience with the payments giant or because its difficult to not recognize due to it’s market share.

In fact, Stripe is so popular that many people are blinded by the $$$ and ignore the red flags in front of them.

What is Stripe.com? An aggregator, not a processor.

Is Stripe a good processor? Depends on what you sell.

Does Stripe support its users? Customer support is abysmal.

Is Stripe safe? If you do small-scale sales, yes. Otherwise, no.

Ask the thousands of merchants who’ve lost their entire business at Stripe’s hand and you’ll hear an outcry of, “Stripe destroyed my business!”

Stripe is one of the biggest payment processors in the world.

Is Stripe a legit company? Yes. Stripe is one of the biggest “payment processors” ever. It’s used by a huge number of businesses, startups, and e-commerce sites around the world to accept credit card payments online.

Stripe was founded by Irish brothers Patrick and John Collison when they were still teenagers (they’re now 30). The company has raised billions from investors including Sequoia Capital, Visa Inc., and Peter Thiel at Founders Fund.

The company boasts that it processes billions of dollars worth of transactions every year, making it easy for companies to collect money through its platform and then convert it into their local currency via bank transfer or PayPal.

On paper, that all sounds fine and dandy. But in reality? Experience paints a much darker picture.

Stripe has agreements with banks called PSPs.

A PSP is a Payment Services Provider. It’s the party that actually accepts your customer’s card information and processes the transaction.

Stripe has agreements with PSPs in the US, the EU, and other countries/continents, making accepting payments from customers around the world easy via currency conversion (disregarding the hefty transaction fees and pricing model).

PSPs are the companies that actually take your money from customers and deposit it into your bank account.

Contrary to what you likely believe, Stripe is not a merchant account provider. It is a payment platform with international payment functionality and a PCI-compliant POS card reader/gateway.

With Stripe, you pay for convenience with flat, non-negotiable monthly fees.

The agreement between Stripe and PSPs says that they can terminate your account at any time.

Stripe has the authority to terminate your account at any time. They can also prevent credit card processing and prevent you from accessing customers’ credit card details.

You may be wondering why Stripe would ever want to terminate an account, since they make money when their customers do. But there are many reasons why Stripe might want to terminate an account. The most obvious one is if they find out that you’re doing something illegal, such as stealing credit card information.

The most relevant reason to you is this: violating their Terms of Service (ToS).

The ToS are the rules that all Stripe users must follow in order to use their service. Unfortunately, their terms exclude most online merchants from using their service especially after reaching a certain sales volume.

The last thing you want to be is on Stripe’s radar. Which is ironic considering how badly they need you, as a business, to implement their service.

Stripe uses that authority liberally, opting to hold funds, prevent payment processing, and close accounts.

Stripe has the power to freeze your account at any time. They can hold funds, prevent payment processing, and close accounts—sometimes without giving a reason. This is a major issue for business owners who rely on Stripe’s payment processing services to operate their businesses.

Stripe uses that authority liberally. A simple Google search will feed you hundreds of threads, stories, and posts about how Stripe destroyed their business and stole their money.

Businesses that use Stripe as their sole provider often lose all access to their customers’ credit card details.

Because Stripe is an intermediary, it does not hold the payment information itself. Instead, it passes along this sensitive data to payment processors and banks.

If a PSP chooses to terminate your account without notice and without legitimate reason, you could lose access to all of the credit card data associated with your business—including thousands of dollars worth of payments made by customers who have paid you in full but whose accounts have been frozen by Stripe or one of their partners.

Stripe takes no responsibility for these actions by their partners and even goes so far as to warn you not to rely on them.

Many businesses end up closing down because they can’t recover CC data and can’t process orders.

Once they lose access to customers’ credit card details, they can no longer process new orders or renew existing ones.

The reason for this is that Stripe doesn’t give you access to your own data. It keeps all of your customer information in its own database, which means you have no way of accessing it if something goes wrong.

Stripe gives you some basic tools for managing customers, but these tools are nowhere near as powerful as the ones provided by other payment processors. And most CC information isn’t stored within Stripe, it’s accessed by Stripe from their PSPs.

So when your Stripe account goes bye-bye, so does all your data.

If you have recurring billing, this is a major issue as you need to constantly collect cards to charge people.

If Stripe loses your card details, the customer won’t be able to pay and will have to cancel their subscription.

It’s not just that this creates an inconvenience for customers; it also creates frustration and ultimately damage for your business.

If someone has signed up for 6 months of service but finds they can’t pay because Stripe lost their debit card and credit card information, they are likely going to cancel immediately.

Other popular payment processors like PayPal and Square follow follow the same path as Stripe.

PayPal and Square terminate accounts just as much as Stripe does, though they don’t get as much attention because they’re not as big of players in the space.

When Stripe terminates an account, it doesn’t refund any chargeback fees or give advance notice to its users. Instead, it closes down an account without warning and takes all of your money away with it. Expect the same treatment from other 3rd-party processors.

They’re not there to protect your business; they’re just trying to make money at your expense.

If you’re asking the question, “Does Stripe do high risk?” The answer is a hard no. And this is exactly why.

A good processor is one that backs your business.

Small businesses, online businesses, and anyone else looking for a processor need to know that Stripe is not a good option.

Stripe is one of the most popular payment processors on the market today and it is easy to see why: it takes just a few minutes to open an account and the payment gateway checkout experience is familiar.

However, these benefits come at the cost of security and reliability. If you are working with sensitive information like credit card numbers then this may not be a good fit for your business model. You need a service provider with stronger API security integrations for both your own backend and your customer’s important online payment data.

Stripe is not safe for business owners. Accessing frozen funds can take up to 180 business days—unacceptable. Your funds shouldn’t be frozen in the first place (especially considering the processing fees)

It is a company that holds your money and customer data hostage while they decide whether or not they want to terminate your account.

We’re here to tell you there are better companies out there. Ones that accept any payment method you need: debit, credit (Mastercard, Visa, American Express), ACH. No matter what you sell, from dropshipping and supplements to adult content and firearms, there’s a processor that supports you.

At DPN, we connect you with those companies. Give us a call today and start working with a payment’s system that will support every transaction you receive.

About the author

As President of DirectPayNet, I make it my mission to help merchants find the best payment solutions for their online business, especially if they are categorized as high-risk merchants. I help setup localized payments modes and have tons of other tricks to increase sales! Prior to starting DirectPayNet, I was a Director at MANSEF Inc. (now known as MindGeek), where I led a team dedicated to managing merchant accounts for hundreds of product lines as well as customer service and secondary revenue sources. I am an avid traveler, conference speaker and love to attend any event that allows me to learn about technology. I am fascinated by anything related to digital currency especially Bitcoin and the Blockchain.


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