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Payment Fundamentals

It's helpful to have a high-level understanding of how payments work: how money moves from a customer to your business, how banks facilitate these payments, and the costs involved in the system.

Online Payments Flow

There are four major players involved in each online transaction, which we've consolidated into one system:

1) CARDHOLDER The person who owns a credit card

2) MERCHANT The business owner

3) ACQUIRER A bank that processes credit card payments on behalf of the merchant and routes them through the card networks (such as Visa or Mastercard) to the issuing bank. Sometimes acquirers may also partner with a third party to help process payments.

4) ISSUING BANK The bank that extends credit and issues cards to consumers on behalf of the card networks.

To accept online card payments, you need to work with each one of these players (either via a single payment provider or by building your own integrations).

Costs Involved In Online Payments

There are a variety of fees that accompany each transaction processed through this four-party system. Visa, Mastercard, and other card networks set the fees, referred to as interchange and scheme fees.

Interchange typically represents the bulk of the costs involved in a transaction. This amount is given to the issuing bank because it takes on the greatest amount of risk by extending credit or banking services to the cardholder.

Scheme fees are collected by the card networks themselves (Visa, Mastercard, AMEX) and can include additional authorization and cross-border transaction fees. Fees can also be assessed for refunds and other network services.

Together, these fees make up the network costs. Stripe's standard pricing offers a single, transparent rate of 2.9% + 30¢ per successful card charge for all card payments, helping provide more predictability over payment costs. We also support recurring payments, which incur an additional 0.5% on all recurring charges.

Platform usage charge

In order to drastically reduce subscription costs, a variable platform usage charge is included per successful transaction. The variable platform usage charge corresponds with each organization's active subscription level.

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