Stripe Connect: a premium payment gateway for e-commerce and SaaS

Stripe Connect: a premium payment gateway for e-commerce and SaaS

strategy
Dev

6 min read

November 7, 2022

Stripe Connect is a secure and easy way to integrate payments into your website or app. It works great with all sorts of businesses e.g. e-commerce or SaaS. Find out how Stripe Connect can help your product or service grow and expand globally.

Stripe Connect: a premium payment gateway for e-commerce and SaaS

Running a software platform or a marketplace is challenging in many ways. You need to deal with fierce competition, growing expenses, an ever-changing environment, scaling issues, and increasing user expectations. One of the critical factors affecting business results is how transactions are handled. It impacts user experience, IT security, legal liability, costs, and, ultimately, the viability of the whole enterprise. Seamless payment processing is essential for all parties involved: the provider, end-customers, and vendors (if the service is a marketplace). It also enables your product to scale faster and expand globally.

Stripe Connect – payment process made simple

There are several methods for collecting money online, but none combines convenience with safety more efficiently than a solid payment gateway. One of the top solutions on the market is Stripe Connect – a service for handling online transactions that streamlines the process of accepting money from customers and transferring it to sellers across industries and jurisdictions.

Stripe Connect was rolled out in 2012 by Stripe, a San Francisco-based company providing payment processing solutions for online businesses. Stripe offers a variety of software products spanning payments, invoicing, billing, fraud and risk management, pre-build payment pages, customizable UIs, tax and accounting automation, online identity verification, and more.

Easy-to-use, efficient solution for e-commerce and SaaS businesses

With Stripe Connect, the company reached out to e-commerce and SaaS companies providing an efficient tool for processing mass transactions. In the standard Stripe gateway, the customer payment is directed to the admin's account, from where it can be manually or automatically transferred to recipients. StripeConnect simplifies this process by remitting funds directly to sellers based on default or customized settings in the admin account.

As a result, Stripe Connect makes it easy for online platforms and marketplaces to support transactions between customers and vendors, delivering a smooth experience for both parties. Key features include:
- linking to and reading data from existing Stripe accounts,
- creating new accounts for users (sellers using the platform),
- creating payments on behalf of users,
- sending funds to and paying out users,

The service can be integrated with your system through an application programming interface (API) provided by Stripe – an easy task for an experienced development team (link do formularza). What's even more essential, Stripe Connect handles all the compliance requirements so that you don't have to cut through the regulatory jungle. The service applies state-of-the-art security measures, including rigorous encryption, and processes payments in full accordance with the Payment Card Industry Data Security Standard (PCIDSS).

With Stripe Connect, companies gain functionality crucial for business growth while customers get a quick, safe, and easy payment method.

Payment infrastructure for all types of industries and various business models

Stripe Connect provides payment infrastructure for businesses from all types of industries, offering customized guidance for companies from over ten broadly defined sectors, such as:
- on-demand services,
- e-commerce products,
- financial services,
- property management,
- website building or hosting,
- non-governmental organizations,
- crowdfunding or donations, and more.

The service works for various trading models. The products or services can be provided by:
- seller's website or app via your marketplace (e.g., Shopify customers buy from a business's website on Shopify's platform),
- seller's dedicated page within your platform's website or app (e.g., Indiegogo backers donate on unique campaign pages),
- your own website or app (e.g., Lyft riders buy rides from the Lyft app) with you being the seller,
- a physical store, a third-party website, or another source.
Stripe Connect will support the payments in each case, although it requires you to specify your trading model for customization purposes. 

Stripe Connect accounts: standard, express, and custom

Stripe Connect provides three types of accounts (called "connected accounts") for handling transactions: standard, express, and custom. An account must be created for each user receiving money through your platform. It is up to you which type you'll choose. However, your decision determines the way Stripe will be integrated with your software and your operational responsibilities, such as user support, chargebacks, etc.

The standard option ensures the easiest integration and exempts the platform from fraud and dispute liability (it lies with the user/seller). Single customers make payments to single users with Stripe as the only legal intermediary. Standard accounts provide automatic updates for new compliance requirements and support new countries without integration changes. This option is recommended especially for platforms with experienced online businesses as users.

Express accounts have similar features. However, they're more suitable for platforms interested in speeding up the procedure. With this option, Stripe takes care of onboarding and KYC identity verification, relieving the client of the effort. As a result, a vendor can sign up for the platform within minutes.Express accounts also allow the platform to specify charge types and program the payout settings for the connected account. However, in this case, the platform takes responsibility for handling disputes.

Custom accounts provide the platform with the highest flexibility, yet they require significantly higher integration effort and are dedicated to businesses with sufficient engineering resources. With this option, you can programmatically configure all account settings and gain full control over the user experience related to payment processing. The downside is that you don't benefit from automatic compliance updates with custom accounts. Also, like with express accounts, you are obliged to handle disputes.

Stripe Connect powers businesses worldwide. Check out the use cases

With all its features, Stripe Connect is a robust and extremely convenient tool for processing online payments. Currently, it supports transactions in over 135currencies from over 180 countries and a slew of popular payment methods worldwide, including credit and debit cards, Alipay, Apple Pay, Google Pay, GrabPay, EUR and GBP bank transfers, and many more.

It is used by millions of businesses worldwide, ranging from small companies to Fortune 500 giants. Well-known brands that have implemented Stripe or StripeConnect include:
- Amazon, the biggest e-commerce platform in the world,
- British Council, a platform for learning English providing services to over 80 million people in more than 100 countries,
- Decathlon, a sporting goods retailer with almost 1,700 stores in 60 countries and regions,
- Kickstarter, a crowdfunding platform, that accepts payments in 195 countries, and has funded over 160,999 projects
- Lyft, a ride-hailing app, which provides around one million rides per day,
- Pinterest, an image-sharing and social media platform with nearly half a billion active users,
- Shopify, an online store creator, powering over a million businesses worldwide.

Flexible pricing for all types of businesses worldwide

The list goes on and on, as the service has experienced immense growth in recent years. Currently, over 10,000 platforms use Stripe Connect, powering around six million businesses. The solution is valued not only for convenience and customizability but also for flexible, usage-based pricing fit for any business model. Standard accounts are not charged any platform-specific fee.For express and custom accounts, the price is $2 monthly per active account plus 0.25% and $0.30 per payout sent. Additional fees apply for currency conversions depending on the account holder's location. The details are available on Stripe's website.

Stripe is very transparent about its pricing, allowing for easy comparison with rates of other payment processors. Many detailed analyses are available online, with most focusing on Stripe's biggest contender – Paypal. One credible source to recommend is Forbes Advisor, where Stripe scored 4.2 stars compared to Paypal's 3.5.

Keep in mind, though, that Stripe Connect is but one of many quality solutions in the whole robust Stripe ecosystem. For a detailed description of all features, we suggest you check out the dedicated landing page on the Stripe.com website.  

Need Stripe Connect-savvy experts? Look no further!

Stripe Connect is a perfect solution for businesses of any type and size, operating online or both online and offline. It allows companies to choose between a range of options and customize the platform according to their needs and users' expectations. Aptly implemented, the service can be a game-changer driving company's growth and global expansion. Especially since Stripe offers top-grade security and full legal compliance. However, the scope of these features depends on the type of integration you choose.

If you are considering implementing Stripe Connect in your website or app and need expert advice or engineering support to move on with your project, feel free to contact us any time!

Are you considering building custom software applications?

Do you want to work with a partner that will deliver cost-effectively and on time? Contact Score Digital to find out more about our values and development process.

Created by

Karol Ludwikowski

FULL-STACK SOFTWARE ENGINEER

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