Stripe is a payment processing platform that allows businesses to accept payments online. It facilitates transactions made with credit and debit cards. Here’s a basic overview of how Stripe card payments work:
- Customer Initiates Payment: The process begins when a customer makes a purchase on a website or app that uses Stripe as its payment processor.
- Payment Information Entered: The customer enters their payment information, including their credit or debit card number, expiration date, and CVC (Card Verification Code).
- Data Encryption: This information is securely transmitted to Stripe’s servers. Stripe uses SSL (Secure Sockets Layer) encryption to protect this data during transmission.
- Tokenization: Upon receiving the card details, Stripe converts them into a unique, secure token. This token serves as a reference to the card information, but it does not contain the actual card numbers. This token is what Stripe uses to process the payment.
- Authorization Request: The token is sent to the card network (like Visa, Mastercard, etc.) for authorization. The card network verifies the details and checks if the customer has sufficient funds.
- Authorization Response: The card network sends back an authorization response. If the transaction is approved, it means the customer has enough funds and the payment can proceed.
- Funds Capture: Once authorized, the funds are captured. This means that the amount of the transaction is reserved and will be transferred to the merchant’s account.
- Transfer to Merchant: After a holding period (usually a few days), the funds are transferred to the merchant’s bank account, minus any processing fees.
- Transaction Details: Both the merchant and the customer receive details of the transaction for their records. The payment is now complete.
It’s important to note that Stripe handles compliance with Payment Card Industry Data Security Standard (PCI DSS) requirements, which are industry standards for securing cardholder information. This means that as a merchant using Stripe, you don’t need to handle sensitive card data directly.
Stripe also provides a range of tools and features to manage payments, handle subscriptions, prevent fraud, and more, making it a popular choice for businesses looking to accept online payments.