Is Stripe Safe & Secure for Your Business? The Pros & Cons


Stripe is a widely used payment platform, servicing both large and small businesses globally. But is it the right choice for all merchants? Delve into the intricacies of Stripe to decide whether its advantages outweigh its disadvantages for your specific business needs.

What is Stripe?

Stripe is a technology-based platform that allows individuals and businesses to make and receive credit card payments over the Internet. Founded in 2010, it has quickly grown into one of the most popular PCI-compliant payment gateways in the world, used by millions of businesses of all sizes, from startups to Fortune 500 companies for their checkout needs.

At its core, Stripe provides the technical infrastructure, fraud prevention, and banking connectivity required to operate on-line payment systems. Its services are designed to support various business models, including e-commerce, subscription services, on-demand marketplaces, and crowdfunding platforms.

It’s worth noting that Stripe is not a bank or a merchant account. Instead, it acts as a third-party service that allows businesses to accept payments without having to set up a merchant account with a bank. This approach streamlines the process for new businesses to start accepting payments online, but as they grow, the limitations and risks of not having a dedicated merchant account becomes apparent.

Stripe’s API (Application Programming Interface) is designed for ease of integration and use, allowing for businesses to incorporate online payment processing capabilities into their online stores or applications smoothly. Its open-source nature ensures it can be customized to meet specific business needs, providing flexibility for different types of commercial activities via plugins and developer tools.

With its robust set of features and capabilities, Stripe aims to simplify online transactions for businesses while maintaining high levels of security and compliance standards to protect both merchants and consumers engaging in online commerce.

Find the best Stripe alternative right here!

Pros of Using Stripe

  1. Diverse Payment Options: Stripe accepts a broad array of payment methods, including credit and debit cards (Visa, Mastercard, American Express, Discover), ACH, Apple Pay, Google Pay, Bitcoin, and other digital wallets. This variety of payment types facilitates transactions from different customer segments, whether they prefer traditional or alternative payment methods.
  2. International Payments: With support for multiple currencies, Stripe simplifies international transactions, allowing businesses to cater to a global customer base effectively.
  3. User-Friendly Interface: Its user-friendly platform is intuitive for both merchants and consumers. New businesses find it particularly beneficial due to its ease of use in setup and integration.
  4. Recurring Payment Automation: The platform simplifies the handling of recurring payments, offering automatic invoicing and refund options for subscription cancellations.
  5. Extensive Documentation: Stripe provides comprehensive guides and API documentation, assisting various users, including merchants, developers, and partners, in navigating and utilizing the platform efficiently.

Cons of Using Stripe

  1. High Processing Fees: With a 2.9% + $0.30 per transaction fee, as well as potential monthly fees and several hidden fees, costs can accumulate rapidly for businesses with a high volume of transactions.
  2. Limited Merchant Acceptance: Stripe supports only specific Merchant Category Codes (MCCs). If your business doesn’t fall under these codes, you risk losing your credit card processing capabilities without warning.
  3. Account Suspensions: Known for its stringent rules, Stripe may suspend accounts that violate their terms of service or engage in business activities deemed unsupported or high-risk.
  4. Inadequate Customer Support: Users have reported sluggish and sometimes unresponsive customer support, making problem resolution a prolonged process. Responses can take several business days, payouts can take weeks, and refunds can take months!

Is Stripe Safe?

When evaluating the safety of Stripe, it’s crucial to consider the nuances that come with using this online payment platform. Based on our analysis, we opine that Stripe may not be the safest payment processor for all online businesses, primarily due to its structure and policies.

NOT a Merchant Account

Firstly, Stripe is not a true merchant account; rather, it operates as a third-party payment aggregator. This means that it pools together transactions from various businesses instead of providing each business with a unique merchant account.

While this makes the setup process faster and more straightforward, it also introduces a layer of risk. Without a dedicated merchant account, businesses may experience a lack of control and personalized support, making their transactions more susceptible to interruptions and issues.

Frozen Funds, Suspended Accounts

Furthermore, Stripe has a history of freezing or terminating accounts with little to no notice if it detects activities that violate its terms of service or if it deems a business model high-risk.

This approach can be disruptive for businesses, especially those operating in industries that Stripe might consider risky. For instance, companies involved in selling supplements, offering advice or coaching services, and those engaged in dropshipping might face challenges with account suspensions.

Monthly Volume Trigger

For businesses transacting below $20,000 per month and operating in low-risk categories, Stripe might appear safe and secure. However, as transaction volumes grow, the risks associated with account freezes and terminations increase, potentially endangering the financial flow and reputation of a business.

Given this, businesses with larger transaction volumes or those in high-risk categories should exercise caution and consider alternatives.

Should I choose Stripe?

While Stripe offers secure transactions, its safety as a payment processor is contingent upon your business’s size, transaction volume, and industry category. Each business should carefully weigh these factors, assessing whether Stripe provides not just secure but also safe and reliable payment processing for their unique situation and risk profile.

This also applies to Stripe’s direct payment solution competitors: PayPal, Square, Woocommerce, and Shopify.

For many, a dedicated merchant account with a different provider may offer a safer and more stable solution in the long run.

Stripe stole your funds? We can help!

The Best Alternative to Stripe is a Real Merchant Account

While Stripe presents a convenient option for many startups and small businesses, when your venture begins to expand, you might want to look into alternatives that offer enhanced stability, control, and support. In this context, a real merchant account stands out as the best alternative to Stripe for several reasons.

Dedicated Account

A real merchant account provides your ecommerce business with a dedicated space for transactions, unlike third-party aggregators like Stripe. This setup ensures that your funds aren’t pooled with transactions from other businesses, offering you greater control and security over your financial operations.

Enhanced Support

Merchant account providers often offer superior customer support and service compared to Stripe. Whether you’re facing technical issues or you need urgent assistance with transactions, having a dedicated support team ready to help can be crucial for smooth business operations.

Flexible Transaction Volumes

With a merchant account, businesses typically don’t have to worry about transaction volume limits imposed by the provider. This flexibility is crucial for growing businesses that might experience spikes in sales and need a processor that can handle increasing transaction volumes seamlessly.

Greater Approval Control

Merchant accounts usually have less stringent restrictions on the types of businesses they support. While Stripe might suddenly suspend services for businesses they deem high-risk, merchant account providers tend to offer a more straightforward and predictable approval process, giving business owners peace of mind.

Customizable Fees

Merchant accounts may offer more flexible and customizable fee structures, which can be tailored to your business’s specific needs and transaction patterns. This flexibility allows for more cost-effective processing solutions as your business grows.

Robust Fraud Protection

Dedicated merchant accounts often come equipped with advanced fraud protection and security features designed to safeguard both the business and its customers. These features can be a game-changer for businesses looking to protect themselves from the ever-growing threat of online fraud and cyber-attacks.

Ultimately, while Stripe can be a fantastic starting point for small businesses and low-risk merchants, a real merchant account is often the better choice for growing and high-risk businesses.

The dedicated support, customizable fees, and robust fraud protection offered by merchant accounts not only provide a secure transaction environment but also contribute to the stable and sustainable growth of your business.

If long-term stability and control over transactions are your priorities, engaging with a provider that offers a real, dedicated merchant account would be the most prudent course of action.

Is Stripe the Right Choice?

Understanding your business model, transaction volume, and risk level is crucial in determining if Stripe payment solutions is the right credit card processor for you. For startups and low-risk merchants processing under $20k monthly, the service provider could be a beneficial choice due to its ease and flat-rate pricing structure. However, as your business grows, considering a traditional merchant account provider that offers robust fraud protection, chargeback prevention, and support for your business type would be prudent.

Stripe offers several enticing features but isn’t without its downsides. Assess your business’s unique needs, consider the risks associated with using Stripe, and weigh them against its benefits before making a decision. For businesses aiming to scale or operating under a high-risk MCC, exploring alternatives that provide more control and a stronger relationship with the merchant services provider is advisable.


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.