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Fintech Fridays: Payments

What is a Stripe Payment? Stripe? Is this just another form of online banking that the world now has thousands of systems for? What's different and unique about this particular software? Stripe is a payment processor or gateway that allows your customers to safely and efficiently transfer funds from their credit cards or bank accounts in a variety of currencies. It aids in both one-time and subscription-based payments and also offers many other additional services, including billing, invoicing, and sales tax automation. How Stripe does this is that it takes all the tediousness and hard work out of processing payment systems by providing a solid payment infrastructure through a single, developer-friendly API. An API, Application Programming Interface, is a set of functions that allows applications to access data and interact with external software components or operating systems. To make this less gibberish, an API delivers a user response to a system and sends the system's response back to a user. But how is that different from the usual Paypal and CommBank Service, and Afterpay? What’s more interesting is that if a business wants to accept in-person payments, they can do so from a Stripe Terminal, the company’s point-of-sale system. Therefore, as a result, Stripe is the perfect solution for processing both online and offline payments, which is one of its unique traits. The difference between Stripe and other traditional forms of financial technology companies operating online payments systems will be discussed further in the article.

How does it work? Stripe has simplified the process of their service for business owners so it's easy to understand and navigate.

  • When creating an account for your business, Stripe software will connect to the purchasing page of your shop platform.

  • Once a customer is ready to purchase an item or service and ‘checkout’, they will input their financial information in the purchase page.

  • The information will then be sent from the website, through the Stripe software that will verify that the funds are available (payment gateway) and process the payment before sending it to the merchant account.

  • The merchant receives funds, and a confirmation of sale is sent to both the buyer and the seller

Stripe vs Paypal/ Other established fintech platforms It is easy to mistake the commonality of both these interfaces, the regular consumer may view these two as relatively similar as, after all, they both let you accept money from your customers online through your website. However, there exist key differences between both softwares including aspects like fees and pricing, advanced billing options, third-party integrations, and its ease of use. To begin with, the first thing any consumer (whether it the average individual or large scale businesses) consider prior to adding any new software or service to the business is, how much will it cost. In terms of payment processors, this includes transaction fees, meaning how much of a fee is charged per purchase. Despite both platforms having a flare-rate having a free basic plan, inclusive of no monthly fees or monthly minimums, and no interchange costs, Stripe does take the lead as its payment structure is significantly simpler than Paypals. This is as PayPal goes into a more thorough breakdown of fees. Moreover, there exists a stark difference between the Accepted Payment types amongst the two platforms, seen below:

Visibly, Stripe’s list of accepted payments is the most appealing option, especially for businesses collecting payments from customers around the world who may have different preferences in regards to their payment method, thus making it more facilitating. In terms of third party integration, especially if you are a company operating at a larger scale, you may want to connect your payment processor to. In terms of this, Paypal offers minimally, which is usually suitable if the user is just in need of a simple payment processing solution. On the contrary, Stripe goes above and beyond, therefore if the customer prefers the concept of being able to extend their payment processing technology so that it talks to your other third-party applications and makes life easier for you, Stripe is the way to go. Overall, some advantages of Stripe are its Set Of Security Features, due to the help of its TLS (SSL) and encryption features which are included with every account at no charge. In addition, they provide for an Expansive Array Of Customization Options through their extensive collections of developer tools and APIs. Subsequently, its Integrated Payments Processing System offers both a credit card payments processing service and a payment gateway as part of its service. It is one of the few to provide a single integrated system that fully supports both retail and eCommerce sales channels, it does this with support for countertop credit card terminals and POS systems. That being said, the few costs associated with it is the Difficult, due to its top class and extensive software development API tools being in the works constantly, it may be hard to employ staff or find people with that much knowledge and expertise. In addition, it has Limited functionality for in-person retail businesses and restaurants.

The views expressed within this article are those of the authors and do not represent the views of the Finance Student's Association. All images and references in this article are for fair and educational purposes only. The content in this article is not intended as legal, financial or investment advice and should not be construed or relied on as such.

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