Stripe is a popular online payment processing platform that allows businesses and individuals to accept payments over the internet. It was founded in 2010 and has since become one of the leading payment gateways globally, serving customers in over 120 countries.
How Stripe Works to Process Payments:
1. **Merchant Account Setup**: To use Stripe, a business or individual needs to create a Stripe account. This account acts as a merchant account, enabling the user to accept payments.
2. **Integration**: Stripe provides a set of developer-friendly APIs and plugins that can be integrated into websites and applications. This integration allows businesses to accept payments directly on their platforms, whether it’s an online store, mobile app, or a subscription service.
3. **Customer Initiated Payment**: When a customer makes a purchase on the merchant’s website or app and chooses to pay via credit card, debit card, or other supported methods, the payment information is collected securely using Stripe’s payment form or the custom payment integration created by the merchant.
4. **Tokenization**: Once the payment information is collected, Stripe converts the sensitive data (such as credit card numbers) into a secure token. This tokenization process ensures that the merchant’s server never directly handles sensitive payment information, reducing security risks and complying with Payment Card Industry Data Security Standard (PCI DSS) requirements.
5. **Sending Payment Data**: The tokenized payment information is sent securely from the merchant’s website or app to Stripe’s servers.
6. **Authorization**: Stripe then communicates with the payment networks (e.g., Visa, Mastercard) to authorize the transaction. The payment network verifies the customer’s card details, checks for available funds, and flags any potential issues like fraud.
7. **Payment Confirmation**: Once the payment is authorized, Stripe sends a confirmation back to the merchant’s website or app. At this point, the merchant can proceed with the order or grant access to the purchased service.
8. **Settlement**: After the payment is successfully processed, the funds are transferred from the customer’s bank to the merchant’s bank account. This process typically takes a few business days.
9. **Fees**: Stripe charges a processing fee for each transaction. The fee structure may vary depending on the region and the type of transaction (e.g., credit card, ACH, international card).
10. **Security and Compliance**: Stripe takes security seriously and employs various measures, such as encryption, to protect payment data. They are also PCI Level 1 compliant, which is the highest level of certification for payment processors.
Overall, Stripe’s user-friendly API, reliability, and range of features have made it a popular choice for businesses of all sizes to accept online payments securely and efficiently.