Stripe vs Merchant Account? Smart comparison every business should read

 

Choosing the right payment processing solution could have a direct effect on cash flow, customer experience, and long-term growth. One of the most common solutions businesses research is a Stripe vs merchant account. Both options allow businesses to accept online payments; however, Trinity Consultings each appeal to different business models and types of users. It is important to understand how they differ to make a more informed and profitable decision when choosing one over the other.

About Stripe

Stripe is an integrated payment service provider (PSP) that offers payment gateway and merchant account functionality all in one place; therefore, businesses can begin accepting payments quickly. Due to its ease of use and ability to be integrated into applications by developers, Stripe has become popular among new businesses, SaaS companies, and smaller online businesses.

An account maintained by an acquiring bank or another type of payment processor for businesses to accept credit cards and other forms of payment. Rather than having multiple accounts, businesses requiring a merchant account will have one designated account for all transactions. This gives merchants the ability to control how much money they have, how and when to withdraw from their accounts, and provides additional stability to their transactions.

Merchant Account

Merchant Account is the best for established businesses that are experiencing an increase in transaction volume and/or are operating in a higher-risk industry. Although there is a longer lead time for the approval process and obtaining necessary documentation, underwriting, and compliance reviews, the long-term advantages to a merchant account far outweigh the initial challenges.

Merchant Account vs Stripe 

The primary differences between Stripe vs merchant account, are:

Onboarding: Merchant Accounts have an extensive verification process, while Stripe offers instant access.

Risk Management: Because Stripe operates under a common platform, all users of Stripe's platform must adhere to platform-wide policies governing account management and can expect to lose their accounts if found in violation. Merchant accounts provide businesses that require a higher level of risk management a more personalized approach to risk management for each individual business.

Pricing: Stripe follows a flat-rate pricing model. This pricing model is straightforward and easy to understand, but is often expensive for businesses with a significant number of transactions to process. Merchant accounts typically allow for businesses with a higher volume to negotiate lower rates.

Account Stability: Compared to Stripe accounts, which are more likely to be susceptible to chargebacks, account stability is generally considered stronger than that of Stripe accounts.

Expansion: Merchant accounts are designed to support long-term business growth; Stripe is a more viable solution for early-stage business growth.

The Key to Success for Your Business

If you are a startup, freelancer or small online business that needs immediate access to payments, Stripe offers a fast and easy way to get that done. Stripe is designed to help small businesses grow, with less hassle and complexity than setting up a traditional merchant account.

On the other hand, if you are a business that handles high transaction amounts, has international clients, does recurring billing or has a high-risk category, then your best option is usually going to be a merchant account. Having a merchant account gives you more protection against having your account suspended for any unforeseen reason, and also gives you the ability to customize your payment solutions to match your specific business model.

All in all, the choice between using Stripe vs Merchant Account or setting up a merchant account should not be made based on which is better, but rather based on where you are at in your business's development, your risk tolerance and the type of business that you are running. For example, Stripe is faster and easier to use than a merchant account, while a merchant account provides more dependable and control. A well thought out comparison today can save your business from being blindsided by expensive inconveniences tomorrow and creating a solid foundation for years of future growth.



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