Stripe Closing Accounts for IPO, Is Yours on the List? - DirectPayNet
Mobile phone displaying "Account Closed" text over bank account.

Stripe Closing Accounts for IPO, Is Yours on the List?


Is your online business at risk of being shut down? Many store owners are scrambling after seeing the news that Stripe, one of the world’s largest fintech companies and currently a private company, is prepping for an IPO.

News of this has been trickling through, but the biggest and most damning is Stripe bringing on investment banks JPMorgan and Goldman Sachs to explore a direct listing, instead, as well as employee cash out alternatives. Since it started talks of an IPO last year, it has decreased its internal valuation three times.

While co-founders Patrick and John Collison are mulling over how investors and employees can sell Stripe shares, these pre-IPO talks are spurring doubts in those that matter most: the businesses that use Stripe’s financial services.

If you’re dependent on Stripe for transactions, make sure you have a backup processor—otherwise, you could be left high and dry come closing time.

Why would Stripe going public hurt my business?

The news surrounding online payments startup Stripe, headquartered in both San Francisco as well as Dublin, Ireland, going public could have a detrimental impact on your business, as the company wants to clear its portfolio of any issues before its IPO.

This could mean that their current online retail store model is no longer viable, meaning these businesses may have to close. Such an event would have far-reaching effects, from lost customers and potential early investors not wanting to join in due to the instability of business operations.

As a business in the private market, Stripe has been itching to grow its valuation through funding rounds. Over the past few years (yes, over the pandemic), the Irish-American company fundraising led to investments from companies like Fidelity, Sequoia Capital, and other venture capital/retail investors.

However, we’ve seen what happens when businesses go public, and often times it can hurt their growth. New technology might never make it to the platform, like crypto wallets or cryptocurrency payments. The company could no longer be innovative, thus losing money for everyone.

Because of this, it’s important for businesses to prepare for tougher times ahead and understand that Stripe’s move could significantly affect them.

When a company goes public, doesn’t that mean they have even more financial security?

It’s true that Stripe’s IPO could potentially mean more funds, resources, and stability for the payment processing giant.

However, companies going public are often under increased pressure to prove themselves financially—which means they can be much stricter with their policies. As a result, businesses using Stripe may have to meet even more stringent requirements, such as heavy compliance with anti-money laundering laws and other regulations.

Additionally, Stripe has the right to terminate any accounts they deem too risky or not compliant with their standards—so if you’re running an online business that falls into this category, it could be in danger of being shut down if Stripe decides to tighten its policies.

How can you tell if your account is on the list to be closed?

If you’re an online retailer operating with Stripe, it is important to stay informed of their plans in the lead-up to their public offering. Unfortunately, if your business is on the list to be closed, you won’t receive any warning; it is only after the fact that changes will take effect.

This can also mean major losses for businesses that are unable to navigate through sudden account closings, so be sure to check up on reliable news sources and keep yourself updated with Stripe’s terms and policies. Taking these precautions can save your business from potentially perilous debt in the future.

Having a backup for everything, including your checkout, merchant account, and payment processor, will help prevent your business from taking a hit.

What should I do if I’m worried about my Stripe account being shut down?

If you’re concerned that your business may be at risk of having its Stripe account closed, the best thing to do is make sure you have a backup plan in place.

Look for other payment processors and consider diversifying your payment methods so that you have more than one option for making transactions.

Additionally, it would be wise to look into other e-commerce solutions such as Shopify or BigCommerce that use multiple payment methods and providers.

By taking the necessary steps now, your business will be prepared for any changes Stripe may bring about in the future.

What are some alternative payment processors you can use instead of Stripe?

Understanding which alternative payment processors are available to you is becoming increasingly important as Stripe inches closer to its initial public offering.

There are many options available that can enhance an online store and provide customers with secure checkout. Here are some good alternatives similar to Stripe.

  • PayPal
  • Square
  • Braintree
  • Shopify Payments
  • Ayden
  • 2Checkout

These are similar options to Stripe, meaning they provide aggregate services to give you an all-in-one experience that’s compliant with local, federal, and international regulations.

But there’s a catch…

What’s the problem with using services like Stripe or PayPal?

These services are called payment aggregators. They do not provide you with a merchant account.

A merchant account is a type of bank account that allows you to accept credit and debit card payments for goods and services. That means that when you use a payment aggregator like Stripe, you need to already have a business bank account.

Using a payment aggregator means that all your transactions are processed through one service. This can be good in terms of simplicity, but it also means you are subject to the rules and regulations imposed by the aggregator.

Additionally, the fees associated with payment aggregators can be higher than those associated with merchant accounts and payment processors, and some providers may not allow certain types of transactions.

Most payment aggregators do not approve high-risk businesses, and you are a high-risk business. Roughly 90% of all online businesses are high risk. Aggregators don’t notice you until you start scaling into roughly $20k/month. That’s when your funds get frozen and your store is shut down.

For these reasons, it is important to weigh the pros and cons before deciding which payment processor or aggregator is right for your business.

The Only Thing You Need to Secure Your Business Through Stripe’s IPO Is This.

We don’t know Stripe’s IPO valuation will be or how much Stripe stock will cost, but it doesn’t matter. Less investment can lead to even more businesses being cleaned out, and more money means more control from investors about which businesses are able to use Stripe. It’s a lose-lose situation.

Stripe’s decision to close accounts before going public will have far-reaching impacts on online businesses – many of which may not survive the transition. Bloomberg reports that Stripe will go public before next year, within the next 12 months. That means you have less than one year to find an alternative.

If you’re relying on Stripe for payments, it’s important to be aware of the risks and have a plan in place in case your account is suddenly closed. No one wants to deal with the hassle of changing payment processors, but it’s better than being left high and dry with no way to accept payments at all.

That’s where DirectPayNet will help. This is the only thing you need to secure your business through and beyond Stripe’s public offering. We will set you up with a real merchant account linked to a payment processor with no fine print to screw you over.

Get in touch with our team today and tell us about your business so we can start setting you up for a successful 2023 (and beyond).

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.