Why Not To Use Stripe As Payment Gateway in WordPress & WooCommerce
Stripe is a payment processing company. They provide a payment platform. Rather of dealing with the financial and legal complications associated with money processing on your own, you can just sign up for a third-party payment gateway such as Stripe, that will take care of everything for you.
There three main areas on why you might not want to select Stripe as your payment gateway, are the following:
Besides the three areas that we will discuss in great detail in this article, another consideration to make before doing business with Stripe, is the fact that if your business gets hit with just a few charge backs, Stripe will deem you as high risk and two things will happen:
1. Stripe will freeze your funds for 90 days- (To make sure they can cover any potential requests for charge backs, which usually happen within 90 days).
Having funds frozen for 90 days can have detrimental effects on small business, usually small e-commerce entities have expenses to pay for on a monthly basis. As a matter of fact, your might lose your entire operation if you cannot cover the costs associated with running your business during those 90 days.
2. Stripe will send you a notification explaining that since you are a high risk customer, they can no longer do business with you, and at most you will be given 5 business days to transition to a new payment gateway.
You have to understand, even for those that are technically savvy, who can make the move themselves, without the help of a developers, 5 days is not enough to transition to a new payment gateway.
A lot is involved in making such a move, there is the technical aspect of it, where you will need time to test it thoroughly. Yet there is also the business aspect of it, where you need to make sure that the new payment gateway will work in your target markets, and you will need the time to read the fine print to you understand the terms of service and the fees associated with the transactions. All this takes time and 5 days is just not enough.
We will now discuss the 3 main areas on why you might not want to select Stripe as your payment gateway:
1. High Service Fees
When you initially sign up for service, the 2.9% rate is what you see. However the reality of it, is with Stripe the fees can climb up to 8% with the add on services.
Lets be honest any and every business that is run successfully will require the additional add-ons. We all need to do the accounting for the business, also it is a must to figure out what we owe in tax calculations. A lot of businesses these days sell to a global market, and there is a fee associated with international cards and currency conversion.
To add insult to injury, Stripe charges 0.4% if a business wants charge back protection. If you don’t get the add-on, get ready to pay 15 dollars per charge back, and drown in a trail of providing the necessary documentation. So you see, when it is all said and done, the fee you pay for the ability to accept credit cards using the Stripe payment gateway is right around 8%.
That is a substantial amount to be paid just so that you can accept credit card payments. Traditionally in E-commerce profit margin rates are thin, you will need to plan ahead and make sure you are still turning in a profit when someone is taking 8% out of the sale of your goods.
Below is a list of add-ons provided by Stripe and their associated fees
Accepting Cards and wallets payment
2.9% + 30¢ per successful card charge +1% for international cards + 1% if currency conversion is required
Recurring billing-For charge subscribers or send invoices every billing cycle. The fee is 0.5%
Automate tax calculation and collection on your Stripe transactions. The fee is 0.5% per transaction.
For accrual accounting with automated revenue reporting. The fee is 0.25% of volume.
With Charge back Protection, Stripe will cover both the disputed amount and any dispute fees.The fee is 0.4% per transaction.
2. Prohibited and Restricted Businesses
As you will see in the section below, there are many sectors of the economy that Stripe does not support. There are some obvious areas that they cannot service such as illegal products, however, there are also a lot of legitimate areas that Stripe refuses to do business with.
In reality the list of legal yet Prohibited businesses and Restricted businesses are not just one off sector, they are sectors of the U.S economy that employ millions of workers and make up a good part of our GDP.
Let’s be clear. Stripe is a private company, and they can pick and choose who they do business with. Yet, because of these restrictions on the types of businesses that can work with Stripe, many business owners will not have the ability to accept payments and will suffer.
It is obvious that Stripe is trying to minimize their risks, they don’t want anything to do with businesses that might bring them liability issues down the road.
In all honestly, the blame should not be directed at Stripe alone. The U.S legal system has not only allowed but encouraged armies of greedy lawyers, to sue any entity, with the financial means that could have the slightest connection to any event that goes wrong.
At the end of the day, it is the failure of the politicians in charge, that have created this paralysis. They have repeatedly and over decades enacted laws that have had detrimental effects on innovation and job creation.
I apologize for getting off course, but once look below, and read the complete list of prohibited and restricted sectors. Only then, will you be telling yourself that it was probably easier for Stripe, to just list the very few sectors that they will accept to do business with.
Products and services that are unfair, predatory, or deceptive
Adult content and services
Certain legal services
Firearms, explosives and dangerous materials
Additional Jurisdiction-Specific Prohibitions
In addition to what is listed above as Prohibited, each of thw following counties below has their own individual list of additional services that are Prohibited.
Stripe with tell you that for Restricted businesses you will need prior approval. The facts are based on extensive research and interviews with hundreds of vendors, 9 out of 10 times, Stripe will decline doing business with the following restricted areas. It will almost be impossible to get Stripe payment gateway services if your business falls into any of the following areas.
Financial products and services
Pharmaceuticals and telemedicine
Non-fiat currency and stored value
3. Countries Stripe is Available for Businesses In
Once Stripe becomes available in your country, you will be able to accept payments from customers worldwide. However, the list of countries where businesses can accept payment in are limited to 47. Among the 47 countries, there are 6 countries where you will have to ask for an invitation.
If your Business falls outside the countries listed above, you will not be able to use Stripe for your payment Gateway.
This presents an issue, the reason being, is that the majority of countries where e-commerce is booming, are not countries where business owners can leverage the Stripe payment gateway.
Outside the United States, there is an explosion in e-commerce growth. As a matter of fact, the United States has only 16.5% market share of the entire worlds e-commerce sales.
In addition, if you are a U.S based business, you need to take advantage of the global e-commerce trade. If you don’t do so, you will be forfeiting most of your revenue potential.
One of the best ways in increasing your sales exponentially is by using WordPress Multi-Site network, where you have different installs of your website in foreign languages. You will need to make the installations on either sub-domains or sub-directories.
Each country you target will have its own localized version In a different language.
I do not recommend making use of a language translations plugins for a couple of reasons. Language translation plugins effect speed and performance of your website. There is a correlation between how fast your site loads and the number of people who make purchases. You will see more sales from a website that loafs within 1-2 second than from one that loads in 3 seconds.
Another reason why I am not a fan of language plugins is because a lot of the content will be lost in the translation. Even when the translation if performed by Artificial Intelligence such google translate, a lot of the content will not sound right to a local. It is best to pay a native speaker, you will then use as combination of AI and human translation to make your translated site sound correct.
The final reason why having a Multi-Site network is the right approach to take, is because of the fact that when you have an entire separate site for each country you target, you will be able to customize the content to account for local holidays and celebrations.
By using the cookie cutter approach of blindly translating your site, you are less likely to connect with your target markets.
Think about it, in the U.S, Thanksgiving is a huge e-commerce holiday. However outside the United States our beloved holiday is not celebrated by other countries.
By having a Multi-Site network, you will be able to localize your products to the customs and beliefs on your international clients.