Building Your Business What Business Owners Need to Know About Stripe Fees What you pay varies based on the transaction type By Rachel Leigh Gross Updated on May 31, 2022 Reviewed by Khadija Khartit Reviewed by Khadija Khartit Khadija Khartit is a strategy, investment, and funding expert, and an educator of fintech and strategic finance in top universities. She has been an investor, entrepreneur, and advisor for more than 25 years. She is a FINRA Series 7, 63, and 66 license holder. learn about our financial review board Fact checked by David Rubin In This Article View All In This Article Stripe's Business Plan Options Stripe Payment Processing Fees The Tax Impact of Stripe's Payment Processing Fees Alternatives to Stripe Frequently Asked Questions (FAQs) Photo: Luis Alvarez / Getty Images Stripe’s advanced, well-documented, and user-friendly API technology makes it a top choice among business owners who are seeking to integrate online payment into their platforms, websites, and in-store checkouts. But that level of payment technology comes with Stripe processing fees to be aware of, including credit card fees, ACH debit fees, and more. Selecting a payment processor for your small business is a big decision, and fees play an important role in that choice. Here's what you should consider when you're reviewing Stripe. Key Takeaways Stripe is a customizable payment processing platform used by Fortune 500 companies and small businesses. Stripe charges various fees based on transaction type, each of which comes out of the customer's payment before being deposited in your account. Processing fees may be considered a deductible business expense if they're reported to the IRS. Stripe's Business Plan Options Stripe is a popular platform for companies that want a reliable payment service provider. It handles over 13,000 requests per second. It has also built transparent pricing strategies so customers know the fees they'll encounter. Stripe has two payment plans. Its Integrated Plan is perfect for small businesses who want a pay-as-you-go option. The Customized Plan is best for companies with large payment volumes. Note Contact the Stripe Sales team if you operate with a unique business model or have a higher sales volume than similar businesses in your niche. The Integrated Plan is a quick-to-start option, but the Customized Plan may fit your needs better. Stripe Payment Processing Fees All payment processors come with different processing fees for the types of transactions that are necessary to your business. But Stripe puts the business owners first when it's creating a pay-as-you-go plan that outlines small business payment processing fees. Here's a short list of the most common fees you'll encounter with Stripe’s Integrated Plan: Accepting Payments Online Stripe has an online payment processing fee of 2.9% + 30 cents per successful card or digital wallet payment. ACH debit, ACH credit, and wire transfers carry a fee of 0.8% per transaction with a $5 cap. Note It's crucial to understand how payment processors charge different fees for international cards. Stripe’s 2.9% + 30 cents is a flat fee across only domestic card transactions. You’ll pay an additional 1% fee for international cards and a 1% fee for currency conversion. Two additional features included with the Integrated Plan for online payments are the “3D Secure authentication” and “card account updater.” The first feature verifies a customer's identity before online purchase. The second automatically updates the saved customer's expired or renewed card information, protecting your business and securing customer satisfaction. Accepting In-Person Payments Stripe’s fees for in-person payment (debit and credit cards, including Google and Apple Pay) cost 2.7% plus 5 cents per transaction. You'll have to purchase Stripe’s $59 Reader M2 or BBPOS "Chipper" battery-powered card reader or the $249 BBPOS WisePOS E with a five-inch touchscreen if you want to accept in-person payments. How Does Stripe Charge Its Fees? You already have to keep up with enough small business taxes and deductions as a business owner. Stripe has considered you with its charging process for the Stripe fees listed above. The fee amount is immediately reflected as withdrawn upon the transaction being successful. Stripe has already deducted the fee from the total by the time the money hits your account. Note Stripe users have increased their revenues by 6.7%, even with the fees, according to a 2018 IDC white paper sponsored by Stripe. Understand the Impact of Refunds Stripe fees may become a nuisance when your customers have refunds. Let’s say a customer is unhappy with the product they purchased using Stripe payment processing. Stripe has already deposited the funds minus the fees into your account, but the customer requests a full refund. You would be responsible for refunding the total amount, including the lost cost in the Stripe fees. Each returned item comes with a negative profit, assuming you don’t charge a fee for returns. Note There can be no existing balance before closing out if you want to cancel your Stripe account. The Tax Impact of Stripe's Payment Processing Fees It's essential to understand how Stripe’s fees impact your bottom line as a business owner and your taxable business revenue. You must report to the IRS the total amount of each sale before the fees are subtracted. Stripe-Issued 1099-K Forms Stripe provides a 1099-K form at the end of the calendar year. You must meet specific criteria to receive a 1099-K, as required by the Internal Revenue Service: More than $600 in gross volume in the previous calendar yearAccount is U.S.-based or owned by a U.S. taxpayer. The $600 threshold is a dramatic decrease that went into effect on Jan. 1, 2022, under the terms of the American Rescue Plan of 2021. This used to be 200 transactions and $20,000 through Dec. 31, 2021. There is no longer a transaction limit. That's been eliminated from the equation. The 1099-K shows your total sales activity for the year. Total sales activity would include the cost of each sale before fees, but you may be able to deduct the cost of fees as a business expense if the IRS considers them “ordinary and necessary.” Alternatives to Stripe Stripe isn’t the only payment-processing option you have for your business. Alternative companies and fees as of January 2022 include: PayPal (3.49% + 49 cents per transaction)Square (2.6% + 10 cents for standard card payments) Apple Pay (depends on payment service provider) Frequently Asked Questions (FAQs) What does Stripe charge for online payments? The Stripe fees for an online payment depend on the method your customer uses to complete the transaction. A credit or debit card and digital wallet payment have a 2.9% fee plus 30 cents per successful charge. An ACH payment or transfer costs 0.8% with a $5 cap. An international card will be an additional 1% and another 1% if currency conversion is necessary. Do I claim the full total before Stripe's fees or after for tax purposes? You must claim the full total of your sales before Stripe's fees when reporting your business information at tax time. It's crucial to confirm that your reported totals are before fees so you aren't misreporting income. However, fees may be considered a deductible business expense, so make sure to share that information with your accountant. Is Stripe free to use? Stripe has no setup fees for the Integrated Plan and can be used immediately upon making an account. But the platform can't be considered free to use because each transaction will have a fee deducted before being deposited in your business account. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Stripe. "Payments Infrastructure for the Internet." Stripe. "Pricing Built for Businesses of All Sizes." Stripe. "Pricing Built for Businesses of All Sizes." Stripe. "Extend Stripe Payments to Your Point of Sale." IDC. "The Business Value of the Stripe Payments Platform," Pages 1, 14. Congress.gov. "H.R.1319—American Rescue Plan Act of 2021." Internal Revenue Service. "Understanding Your Form 1099-K." Internal Revenue Service. "Deducting Business Expenses." Paypal. "Paypal Merchant Fees." Square. "Fees and Payments FAQ."