Stripe, the Silicon Valley fintech darling, has become the go-to payment processor for countless startups and small businesses. With its sleek API, user-friendly dashboard, and straightforward pricing, it’s no wonder that entrepreneurs across America have flocked to Stripe to power their online businesses.

However, as your business grows and reaches the coveted 7-figure milestone, relying solely on Stripe can become a liability. In this post, we’ll explore the potential pitfalls of using Stripe as your primary payment processor and why 7-figure businesses should consider alternative solutions to ensure smooth and uninterrupted payment processing.

What is Stripe, Actually?

Stripe is a popular online payment processing and credit card processing platform for businesses. It serves as both a payment gateway and a payment processor, providing a complete ecosystem for accepting payments online. Stripe allows businesses to efficiently process customer payments via credit card (Visa, Mastercard, Discover, and American Express), debit card, bank account transfers, and various digital wallets like Apple Pay and Google Pay.

Stripe is not a merchant account, though. It is a payment aggregator or a 3rd-party payment platform. Similar solutions include PayPal and Square.

One of the key advantages of Stripe is its ease of use and setup. Its user-friendly API and customizable checkout process make it simple for existing and new businesses to integrate Stripe into their existing websites or apps, even without extensive technical knowledge. Stripe payment software seamlessly connects to the purchasing page of your shop platform, securely handling sensitive financial information and transferring funds to your account once a sale is completed.

Stripe is trusted by businesses of all sizes, from small startups to large enterprises like Amazon, Shopify, Uber, and Google. It is particularly popular among entrepreneurs, freelancers, and ecommerce business owners who value its simplicity, reliability, and versatile payment options.

It also offers Stripe Connect as the “fastest way” for platforms and marketplaces like Amazon or Shopify.

In addition to its core payment processing functionality, Stripe offers advanced features such as subscription billing, recurring payments, automatic refunds, invoicing, and fraud detection. It is also known for its developer-friendly documentation and customization options, making it a flexible solution for businesses with unique payment processing needs.

With its focus on security, Stripe is a certified Level 1 PCI Service Provider, adhering to the stringent compliance requirements set by the Payment Card Industry Security Standards Council. This ensures that sensitive customer data is handled safely and securely throughout the payment process in real time.

Stripe’s Limitations for 7-Figure Businesses

While Stripe has become a go-to payment processor for many startups and small businesses, it may not be the best fit for 7-figure businesses due to several limitations:

1. Low risk threshold and account freezes
   • Stripe has a low tolerance for risk and may flag, freeze, or cancel accounts processing over $25,000 per month.
   • This can be particularly problematic for high-volume merchants, as sudden account freezes can disrupt cash flow and business operations.
2. Poor customer support for high-volume merchants
   • Stripe is known for its lack of responsive customer support, especially for larger businesses.
   • 7-figure businesses often require dedicated account management and timely issue resolution, which Stripe may not provide.
3. Lack of a dedicated merchant account
   • Stripe is a third-party payment processor, meaning that businesses don’t have their own dedicated merchant accounts.
   • This can lead to a higher risk of account termination and less control over the payment processing experience.
4. Restricted businesses and prohibited activities
   • Stripe maintains a list of restricted and prohibited businesses, which may include some 7-figure businesses depending on their industry and products.
   • Violating these restrictions can result in account termination, even for successful businesses.
5. Limited customization and flexibility
   • While Stripe offers a range of features and integrations, it may not provide the level of customization and flexibility that some 7-figure businesses require.
   • Larger businesses may need more control over the checkout process, fraud prevention, and reporting to optimize their payment processing.

These limitations can make Stripe a risky choice for 7-figure businesses that rely heavily on stable payment processing. High-volume merchants may be better served by a dedicated merchant account with a more risk-tolerant provider that offers personalized support and greater control over the payment experience.

We can help 6- and 7-figure businesses secure payment processing.

The Risks of Relying Solely on Stripe

While Stripe has become a popular choice for many online businesses due to its ease of use and developer-friendly API, relying solely on Stripe as your payment processor can expose your business to several risks, particularly if you’re a 7-figure business:

1. Sudden account freezes and terminations
   • Stripe has been known to suddenly freeze or terminate accounts without warning, especially for businesses processing high volumes or deemed high-risk.
   • This can lead to significant disruptions in cash flow and business operations, as you may be unable to process payments or access funds.
2. Limited recourse and support
   • When issues arise, Stripe’s customer support can be lacking, particularly for larger businesses.
   • Account terminations and freezes can be difficult to resolve, leaving businesses with limited options and potentially significant financial losses.
3. Strict adherence to prohibited and restricted businesses
   • Stripe maintains a list of prohibited and restricted business models, which can change over time.
   • If your business falls into one of these categories, even unknowingly, you risk account termination and loss of access to payment processing.
4. Dependence on a single platform
   • By relying solely on Stripe, your business becomes dependent on a single platform for payment processing.
   • If Stripe experiences technical issues, changes its policies, or decides to terminate your account, your ability to process payments and maintain business continuity can be severely impacted.
5. Potential for chargebacks and fraud
   • While Stripe offers some fraud protection, businesses are ultimately responsible for chargebacks and fraudulent transactions.
   • High chargeback rates can lead to account termination, leaving businesses vulnerable to financial losses and reputational damage.

To mitigate these risks, 7-figure businesses should consider diversifying their payment processing by using Stripe in conjunction with a dedicated merchant account or other payment processors. This approach allows for greater stability, support, and flexibility in the event of issues with any single platform.

Additionally, businesses should carefully review Stripe’s terms of service and prohibited businesses list to ensure compliance and reduce the risk of account termination.

The Benefits of a Dedicated Merchant Account

For 7-figure businesses, a dedicated merchant account can provide a more stable and reliable payment processing solution compared to relying solely on Stripe. A dedicated merchant account is an account with an acquiring bank that allows businesses to process credit card transactions directly, rather than through a third-party processor like Stripe. Some of the key benefits of a dedicated merchant account include:

1. Higher risk thresholds and more stable processing
   • Dedicated merchant accounts typically have higher risk thresholds than third-party processors like Stripe.
   • This means that businesses can process higher volumes and more complex transactions without the risk of sudden account freezes or terminations.
2. Better customer support and account management
   • With a dedicated merchant account, businesses often have access to personalized customer support and account management.
   • This can be particularly valuable for 7-figure businesses that require timely issue resolution and proactive risk management.
3. More control over payment processing and payouts
   • Dedicated merchant accounts give businesses more control over their payment processing, including the ability to customize the checkout experience and manage payouts.
   • This level of control can be essential for optimizing conversions, reducing fraud, and ensuring smooth cash flow.
4. Reduced risk of account termination
   • While dedicated merchant accounts still have terms of service and prohibited activities, they are generally more flexible than third-party processors.
   • This reduces the risk of sudden account termination and allows businesses to work with their account manager to address any issues that arise.
5. Improved brand image and customer trust
   • Having a dedicated merchant account can improve a business’s brand image and customer trust, as it demonstrates a level of legitimacy and stability.
   • This can be particularly important for 7-figure businesses looking to establish long-term relationships with customers and partners.

While dedicated merchant accounts may have higher setup costs and more stringent application processes compared to Stripe, the long-term benefits of stability, support, and control make them a compelling choice for 7-figure businesses.

By partnering with a reputable payment processor and acquiring bank, businesses can ensure reliable payment processing and focus on growing their business without the risk of sudden disruptions.

How to Use Stripe Effectively as a 7-Figure Business

While a dedicated merchant account should be the primary payment processing solution for most 7-figure businesses, Stripe can still play a valuable role in a diversified payment stack. By using Stripe strategically, businesses can take advantage of its unique features and benefits while mitigating the risks associated with relying on it as a sole payment processor.

Here are some ways to effectively use Stripe as a 7-figure business:

1. Implementing Stripe as a backup or secondary processor
   • Use Stripe as a backup payment processor to ensure business continuity in case of issues with your primary merchant account.
   • Route a portion of your transactions through Stripe to diversify your payment processing and reduce the impact of any single point of failure.
2. Utilizing Stripe for low-risk transactions and subscriptions
   • Stripe’s user-friendly interface and robust subscription management tools make it well-suited for handling low-risk transactions and recurring payments.
   • Use Stripe for smaller transactions or subscriptions while reserving your dedicated merchant account for higher-value or higher-risk transactions.
3. Leveraging Stripe’s developer tools and integrations
   • Stripe’s developer-friendly API and extensive integrations can be valuable for businesses with unique payment processing needs.
   • Use Stripe to quickly prototype new payment features or integrate with third-party tools that support your business operations.
4. Implementing Stripe’s fraud prevention tools
   • Stripe’s built-in fraud prevention tools, such as Radar, can help businesses reduce the risk of fraudulent transactions and chargebacks.
   • Implement these tools in conjunction with your dedicated merchant account’s fraud prevention measures to create a more comprehensive risk management strategy.
5. Utilizing Stripe for international transactions
   • Stripe supports payment processing in over 135 currencies and multiple payment methods, making it a useful tool for businesses with a global customer base.
   • Use Stripe to process international transactions and provide a localized checkout experience for customers in different countries.

By using Stripe strategically and in combination with a dedicated merchant account, 7-figure businesses can create a robust and diversified payment processing stack that maximizes the benefits of each platform while minimizing the risks.

This approach allows businesses to take advantage of Stripe’s unique features and benefits while ensuring the stability and reliability of their primary payment processing solution.

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