How does stripe work

How Does Stripe Work? 

Stripe Payments is a payment processing platform. It allows you to transfer money from a customer’s bank account into your business’s account by way of a credit or debit card transaction. That’s a pretty simplified explanation, but we’ll get more into the nitty-gritty details later.

While Stripe can be used for all kinds of transactions, chances are you’re considering it because you’re looking for an eCommerce solution. Keep reading for a comprehensive overview of how Stripe works in an online retail setting.

Stripe Payments Tools For Online Businesses

To process online transactions you need both a payment gateway and payment processor. The gateway securely captures and transmits the customer’s credit card payment information to the processor, which then actually processes the transaction. Funds from the customer’s bank are then temporarily routed to a merchant account (in this case of a third party processor like Stripe, it’s an aggregated account — more on that later), where credit card-related fees are deducted from the sum. The payment is then routed to the merchant’s bank account. It’s actually a lot more complicated than that if you want to dive down the rabbit hole, but for our purposes, this works as a general overview.

Stripe combines gateway functionality and payment processing, making it a convenient (if not necessarily the cheapest) way to handle eCommerce. Now let’s take a look at how Stripe makes it happen.

Stripe Plug & Play Setup Using Integrations

Did your eyes glaze over on the previous section? Understandable. Not every business is going to have access to a developer. While Stripe itself is developer-focused, there are ways to work it into your payment processing pipeline without having an in-house tech team:

  • Contract with one of Stripe’s partnered developers.
  • Use a pre-built eCommerce solution that supports Stripe integration.

You’ll see a lot of familiar names if you consider the second option. Let’s use WooCommerce as a case study. (The exact process with other integrations may be a little different, but the big commonality is that you’ll need to enable Stripe via two keys provided by the processor.)

WooCommerce exists both as a WordPress theme and an integration that can be plugged into other WordPress themes. Make sure you’ve installed WooCommerce’s Stripe Payment Gateway plugin. Once you have, you’ll find the necessary settings under (wait for it) WooCommerce —> Settings in your CMS sidebar. Click over to the Checkout tab and then look for the Stripe submenu link.

You’ll then have the option to Enable/Disable Stripe and make custom fields for your shopping cart. At this point, you can Enable Test Mode to try out the test credit numbers provided by Stripe. You’ll need your Test Secret Key and Test Publishable keys to do so (if you disable Test Mode, the plugin will instead ask for the Live versions).

From here, there are a few options you can enable or disable at your taste, including the ability to automatically capture credit card information or have to manually authorize it (beware, you have a limited window to do so), use Stripe Checkout’s prebuilt fields and assets, enable Apple Pay, enable payment via saved cards, and set languages. Note that card data is saved to Stripe’s servers, not yours, which should be a relief to you.

And that’s about it. You can start accepting eCommerce payments with Stripe! While this kind of set up doesn’t involve any coding, be aware that you’ll still need some familiarity with navigating your website’s CMS and submenus. Luckily, most of the bigger pre-built shopping carts have a wealth of tutorials online that should get you through the most commonly encountered problems.

Why Stripe Is Great For International Businesses

If you’re considering Stripe over a more cost-effective solution, there’s a good chance it’s because you’re interested in selling across international borders. Stripe markets itself as the premier payment services company for international business and, while its claim to the throne is debatable, it’s definitely a contender.

Stripe is available in 34 countries. That is, it’s available to merchants whose businesses are based in those countries, but it can accommodate over 135 different currencies. Better still, if the charge currency (yours) differs from the customer’s credit card currency, Stripe can convert the payment to your currency for a small fee based on daily mid-market exchange rates. You can avoid the currency conversion fee if you have a connected bank account that uses the credit card’s currency.

Another nice feature for international businesses is that Stripe allows you to display the cost of your products in the viewer’s native currency. So even if your hipster barber business is based in New York, you can sell your whisker trimmers in pounds sterling in London.

Finally, Stripe accepts a large number of payment types, including ones popular in foreign markets. We’ll take a look at them in the next section.

Stripe Payment Methods

Stripe supports a large number of payment methods, making it a convenient choice for doing business in foreign markets. Stripe even takes the rare approach of supporting local payment types in addition to the more common “universal” ones, which a particular focus on types that are popular in the EU and China.

Stripe’s Payments API supports the following universal payment types (these are supported in all markets):

  • Alipay
  • Apple Pay
  • Google Pay
  • Microsoft Pay
  • Amex Express Checkout
  • Masterpass by Mastercard
  • Visa Checkout
  • WeChat Pay

Additionally, Stripe supports local payment types in the markets where they’re popular. They are:

  • ACH
  • Bancontact
  • EPS
  • Giropay
  • iDEAL
  • Klarna
  • Multibanco
  • P24
  • SEPA Direct Debit

Here’s a handy chart to get an idea of what you can use, and where.

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