Stripe Business Model Analyzed and Explained

Editorial Team

Stripe Business Model Analyzed and Explained

Stripe is a financial services firm that provides payment software and infrastructure for the revenue model of any business. In addition to managing e-commerce transactions, recurring billing, marketplaces, and in-person payments, this solution also handles other payment types. Patrick and John Collison introduced Stripe to the public for the first time in September 2011. It was advertised as a service that made it easier for retailers to establish accounts and receive payments. Most of the site’s growth was due to word-of-mouth, as the creators needed a considerable marketing budget. Stripe works in 24 countries and is regarded as one of the world’s leading payment companies.

How Does Stripe Work?

Stripe is a platform that creates several financial software tools that enable online businesses to process and accept online payments. The organization’s payment platform intends to streamline the process of conducting online transactions and, as a result, stimulate online expansion. Stripe identifies itself as a full-fledged payments software facilitator composed of the following components:

  • A cloud-based payments infrastructure
  •  Machine learning enables instant applications for various functions, including billing, reporting, and fraud protection.

Stripe provides its developers and customers with extensive documentation to help them prepare for a successful experience. Although the platform has a speedy merchant approval process, each transaction has a seven-day period before the merchant can receive payment. The platform offers a variety of products and services to generate revenue.

A Breakdown Of The Business Model Used By Stripe Company

Stripe is a fintech company that provides financial services using technology. The company offers merchants simple, secure, and quick payment processing via a product-based business model. Payment processing is its primary service, which merchants can integrate into their websites or applications. By utilizing this function, businesses can process their transactions efficiently.

As a platform for e-commerce, Stripe employs a digital business model. However, it also functions offline by processing payments made in person. As stated, this feature is available through the Stripe Terminal product. This product is a component of the company’s merchant services. Nonetheless, this is not its primary service.

Stripe derives the majority of its revenue from transaction fees. This characteristic resembles a commission-based business model. The company processes payments for merchants, including online, in-person, and recurring transactions. When a transaction is processed through the platform, merchants must pay a portion of the transaction fee. In addition, Stripe provides numerous other services. For instance, it enables merchants to pay their international suppliers and service providers. Similarly, its final product contributes to its sales. However, Stripe’s primary business model falls within the fintech and commission-based categories.

How Stripe Generates Profit

Stripe generates revenue by charging merchants for each transaction it facilitates. Stripe charges an additional cost for manually-entered transactions and receives currency conversion fees for accepting payments. Stripe offers the following services to their customers:

1. Stripe Payments

 Stripe Payments is a software solution that enables businesses to incorporate Stripe’s payment network into their website. Similar to Checkout, it has a global reach and accepts multiple currencies. Customers can accept payments for online storefronts, subscription services, and marketplaces. Payment transaction fees are not listed publicly on the company’s website. However, they are likely comparable to Stripe Checkout rates.

2. Stripe Connect

Connect enables businesses with their marketplaces or software platforms to connect payments using programmable APIs and tools for sending worldwide payments. In addition to providing white-labeled versions of other Stripe products, such as financing and expense cards, organizations can extend these payment services to companies that use their platform.

3. Stripe Elements

Elements give businesses UI building pieces to allow them to construct their own payment experience to match their website’s style. It is a solution that assists businesses in optimizing their online payment conversion rates. Stripe does not publicly disclose the cost of this service.

4. Atlas

Stripe Atlas is a service that will help you establish and incorporate your startup business and assist with sustaining it. They will incorporate the company in the state of Delaware, hook your firm up to their payment infrastructures, and provide you with free credits and discounts from businesses with which they have partnerships to get your business off the ground.

5. Stripe Identity

Identity enables businesses to confirm the identity of users or customers, thereby reducing fraud and accelerating onboarding.

6. Radar

Radar is a service given by Stripe that utilizes an application based on machine learning. This service enables merchants to exclude potentially fraudulent transactions. For this functionality, the business alters each transaction by 5 cents. Although it is not a substantial source of revenue, it provides a terrific opportunity to offer a product that most merchants are likely to want.

7. Stripe Sigma

Sigma provides businesses with access to their Stripe data to generate reports and conduct queries directly within the Stripe interface. Businesses may schedule reports, organize data access, and gain a better understanding of how to optimize their operations. Stripe charges per transaction; however, the fee varies based on the number of transactions your business conducts.

8. Stripe Revenue Recognition

Revenue Recognition enables businesses to streamline their accounting, reducing the effort required to prepare audit-ready financial statements.

9. Stripe Treasury

Treasury is a banking-as-a-service alternative that enables businesses to include financial services in their platforms. It enables users to pay invoices, manage cash flow, and maintain account balances. This API is designed for businesses that construct platforms for their customers. Stripe does not disclose pricing information for this service on its website.

10. Stripe Capital

In addition to being a payment processing provider, Stripe has also developed a loan business under Stripe Capital for one of its products. When using Stripe Capital, you will only be required to pay a loan fee, which is sometimes referred to as an origination cost. There will be no interest charged, and the pace of repayment and the amount will be determined by the volume of the company’s sales.

11. Stripe Payment Links

Payment Links enable you to rapidly establish a payment page and then distribute a link to it to clients. The links cost 2.9% plus $0.30 per transaction for the service.

12. Stripe Billing

Billing is a quick way for businesses to send customers bills and invoices, including recurring global payments. The solution is compatible with any payment model and can interact with an organization’s existing technology stack. Stripe does not publish pricing information for this service online. However, it does indicate that it is a pay-as-you-go service.

13. The Stripe Climate

The climate platform enables businesses to give a percentage of their earnings to carbon reduction solutions. Companies can determine what percentage of their sales they would like to contribute to this initiative. This service is available to Stripe customers worldwide.

14. Stripe Data Pipeline

The Data Pipeline of Stripe enables users to send all their Stripe data to analytic databases such as Snowflake and Redshift. It enables businesses to combine their Stripe data with other data for enhanced business insights.

15. Stripe Corporate Card

Stripe now offers its corporate credit card, the Corporate Card, which is interest-free and provides a 1.5% reward on all business purchases across all categories. It is a credit card, so the balance is paid monthly. If the debt is not paid in full by the end of the month, interest, late fees, and penalties are unknown.

16. Premium Support

Standard service is provided at no additional cost to any Stripe customers. Customers, however, can upgrade to premium support at an additional expense to receive expedited and on-demand assistance within the dashboard.

17. Stripe Tax

You can automate the calculation and collection of sales tax with Stripe Tax. Stripe charges 0.5% per transaction for businesses with monthly revenue of less than $100,000 and 0.4% for businesses with monthly revenue above $100,000. Additionally, you may easily view your sales tax reports to file tax returns.

18. Financial Connections

Financial Connections enables the users of a business to exchange their financial data with you securely. It can aid businesses in reducing fraud, comprehending underwriting risks, and developing new products and services. It costs $1.50 for each verified account, $0.10 for every account balance inquiry, and $1.50 to retrieve account owner information.

19. Checkout

Checkout is a hosted payment page businesses can use for one-time online transactions and subscription signups. It is built for conversion and optimized for any device. It can be modified to reflect the branding of an organization’s website. Each transaction is charged at a certain percentage plus a fixed fee by Stripe. It also costs an extra $10 per month if a business uses its domain.

Stripe Advantages And Drawbacks


Simplicity of use

Online businesses highly value the user-friendliness of this credit card processor. Its well-designed API is not only free but also highly straightforward. Entrepreneurs with no technical skills can easily tweak it for their particular e-commerce endeavors.

1. A significant number of integrations

The Stripe staff immediately reviews their documentation, considering various operating system versions. To offer integration options so your business can select the most convenient one.

2. Extensive documentation

They maintain thorough, up-to-date documentation for multiple programming languages. You will find extremely extensive descriptions of gateway modification and its testing options. The documentation for Stripe is designed in simple language so that everyone can comprehend how to use its features and interact with its API.

3. Customized Libraries

Stripe’s proprietary library supports the majority of programming languages. Since no new subprograms are required to integrate Stripe, you can concentrate on the product.

4. Payment options

Stripe supports the vast majority of global payment methods. The system processes not only major brand cards but also cards for lesser-known brands. Stripe also supports recurring payments, such as subscription fees.

5. Testing Environment

Environment for testing Stripe can brag about its bug-free testing environment. The platform offers users dozens of sample credit card numbers, some of which are invalid. Stripe provides the ability to switch between production mode and testing mode. Thus, you can observe the system’s general operation and the specific error codes. Additionally, you can access the testing mode from countries that Stripe does not currently support.

6. Excellent Support

Among Stripe’s core values is unquestionably the highest regard for customer requirements. Stripe accepts transaction fees and payments for each active user of the system. Additionally, Stripe may offer discounts to startups. Startups can negotiate and obtain discounts and special deals to successfully launch their projects.


1. Geo limits

Although Stripe takes payments from anywhere globally, businesses from only 44 countries can utilize it now. Additionally, some of its features may not be accessible in all regions. You can incorporate a U.S. company with Stripe Atlas regardless of your location.

2. Requires a Developer

Customizing Stripe requires some API key manipulation. Therefore, you must be a developer or employ someone with technical experience to personalize it. Alternatively, you can leverage pre-built solutions developed by Stripe partners to launch the system without coding.

Top Stripe Competitors In The Market.

Stripe’s primary competitors in the market include the following companies:

1. Stax

Stax is a platform for payment processing that facilitates international payments. The program is one of the most cost-effective alternatives to transaction fees. Customers obtain a merchant account and can accept a variety of payment methods. Stax’s primary features include a robust dashboard with bi-directional syncing with Company Overview Report and QuickBooks Online. Customers can pay with a URL you send them, and there is an aesthetically beautiful dashboard with straightforward reporting. Integrations can be weak, necessitating the creation of workarounds; this is the primary drawback. You cannot gather credit card information via a form; instead, you must bill.

2.  Square

Square is one of the top alternatives to Stripe for small businesses. Additionally, the Square platform tracks real-time sales and inventory, allowing businesses to monitor payment updates, inventory levels, and sales prospects. Square facilitates the efficient management of a small business’s financial performance with its many payment options, in-depth reporting, and drag-and-drop capabilities. Square’s primary features include invoice tracking with real-time reporting and analytics, digital receipts, inventory management with daily stock updates, and real-time reporting and analytics.

The primary benefit of adopting Square is its free subscription and first chip card reader, as well as its user-friendly dashboard with direct inventory management and reporting. The primary downside of Square is that it is not ideal for high-risk industries, and some users have experienced account stability concerns.

3. Ayden

Ayden is an exceptional alternative to Stripe for enterprises with significant transaction volumes. The platform provides a merchant account with customizable online payment options, focusing on fraud detection and omnichannel commerce. It offers functions for risk management, transaction optimization, and multi-channel payments, and it is mainly free of charge. Ayden is functionally superior in terms of the actual process of accepting payments. Interchange-plus pricing is one of the most cost-effective pricing schemes for credit card processing costs. The defining characteristics of Ayden include Building experiences across numerous sales channels and incorporating payments into your marketplace on a single platform that accepts payments, protects revenue, and manages money. It is advantageous to use Ayden because it is quick and straightforward onboarding with flexible connectivity.

4. 2Checkout

Consider 2Checkout if your small business is interested in a global presence. It works best for businesses with an international emphasis that only wants to perform a little coding. As one of the leading alternatives to Stripe, 2Checkout performs admirably as a payment gateway for worldwide merchant accounts. If your internet business requires international payments, this is an excellent alternative. Optimize your e-commerce pages with A/B testing, global taxation, and subscription management; Recurring billing with a customizable checkout option; these are its primary features. The advantages of 2Checkout include Ease of use with the PCI data security standard, Integration that permits a single platform to serve many purposes, and a comprehensive admin panel with several checkout choices. Its disadvantages include:

  • An inability to execute card-present purchases.
  • A lengthy approval procedure with copious paperwork.
  • WooCommerce connection issues.

5. Paypal

The organization has years of experience in the online payments industry. It allows businesses to take several payment methods. Using the easy payment gateway service, a company can construct a hosted checkout page or use PayPal Here for in-person payment processing. The platform has comparable pricing to Stripe, is quite essential, and includes a free mobile application. PayPal’s primary features include data encryption to prevent fraud, online invoicing and payments with shopping carts, and rapid checkout. The primary advantage of utilizing PayPal is making instant, global prices via email. A free trial is not offered, and it can be difficult to cancel a membership.

6. Wise

Wise is rebranded global payments platform that gives you everything you need to expand your business overseas. The website facilitates international money transfers at reasonable exchange rates. Receive international payments without excessive conversion fees and pay up to a thousand individuals simultaneously. Wise also assists a company in obtaining an IBAN, routing number, and sort code for a single business account. Your staff may make in-store and online purchases without incurring international transaction fees, and you can transfer funds across accounts within seconds. The Key Characteristics of Wise Invoice payments are 19 times less expensive than PayPal. All you need is the recipient’s email address and bank account information to make international payroll, recurring payments, and employee reimbursements.

Funding, Revenue, And Valuation Of Stripe

According to Crunchbase, Stripe has raised over $2.2 billion in venture capital funding across 14 rounds. The current valuation of Stripe is $95 billion, which was determined during the company’s Series H round. Stripe’s valuation of $95 billion makes it the most valuable private firm in the United States and the second most valuable in the world. While Stripe does not disclose its income publicly, the firm claims to process over $200 billion yearly in transactions. Between its SME and Enterprise clients, Stripe charges a 2 percent fee, resulting in around $4 billion in annual income.


Stripe generates revenue by charging businesses a charge for payment processing. There are various goods with varying pricing structures. However, its primary business source is payment processing. This overview of Stripe’s business model should help you better comprehend how the company generates revenue. If your firm is comparable to Stripe’s, you can use its business model for your own. And suppose you’re considering investing in Stripe. This article might help you understand the company’s finances and how it generates revenue.