What are the key factors in choosing between Stripe vs Merchant Account

When companies begin to use online payment methods, one of the toughest aspects is choosing whether to use a Stripe account vs merchant account. Both offer card payment solutions yet serve unique purposes for different types of companies. Evaluating these parameters will assist your decision-making on which option best suits your needs as you grow your business, secure your data against potential threats, and control your operational expenses.

1. Convenience of Account Creation and Approval

A Stripe account is a very quick and simple way to get set up. A large number of small businesses will create their first Stripe account and begin accepting payment transactions within a short period of time, making it a good choice for start-up companies or small businesses. Obtaining a traditional merchant account will take significantly longer, as there will typically be more thorough documentation to submit, in addition to this documentation having to be verified prior to approval.

2. Managing Risk and Maintaining Account Integrity

With a Stripe account, you are using an aggregated payment services provider, which means that your business, along with many other businesses, also shares the same payment processing account with Stripe. This means that, if your account has been flagged for risk and/or you are in violation of certain policies established by Stripe, you may experience a hold or termination of your account. Using a dedicated merchant account means that you will have less risk and more integrity with your business, especially if you are conducting higher volumes of transactions as well as having complex payment processes.

3. Costs and Fees

With Stripe, there is one flat fee for each transaction, which makes calculating costs simple for merchants. However, as merchants' sales volume grows, their processing fees will increase. Other merchant accounts often utilize an interchange plus pricing model that can ultimately save a merchant more money in processing fees than a flat-rate model. A merchant who processes a considerable number of transactions each month will find this model particularly advantageous.

4. High-Risk Industries

Stripe has specific requirements that restrict their acceptance of high-risk industries like travel, subscription services, gaming, and certain digital goods. Merchant accounts have far greater flexibility to create a customized account solution for high-risk merchants that includes tailored fraud prevention tools, chargeback management, and higher acceptance rates than their Stripe counterparts.

5. Ability to Customize and Flexibility in Payments

Merchant accounts can provide more ways to pay, how to settle payments, and what currencies to settle in than Stripe does. Stripe provides many developer-friendly tools and powerful APIs; however, they do not allow as much customization as a fully underwritten Merchant Account.

6. Ability to Scale and Grow for the Long-Term

For start-up businesses, the Stripe Account provides the fastest and simplest means of accepting payments; however, as a business grows and becomes more established, a merchant account typically makes more economic sense to use than a Stripe account because it has lower costs, reduced risk of termination, and more control over payments.

Final Thoughts

Deciding whether to use Stripe vs merchant account comes down to your business’s size, risk level for the industry you are in, and potential for business growth. If you want to get up and running quickly, without a lot of risk involved, then use Trinity Consultings. A merchant account will give you more stability, flexibility, and save you more over the long-term if your company grows and/or is considered high-risk. By carefully taking all of these into consideration, you’ll find that selecting the best payment options for your business will provide you with the most support now and into the future.