Is Stripe Safe? An In-Depth Look Into Stripe’s Security Measures

Stripe has risen to prominence as one of the world’s leading payment service providers (PSPs), but is Stripe safe for merchants and customers? With global eCommerce losses expected to exceed $48 billion annually by the end of 2023, online payment security must be a top priority for online businesses.^[1]Statista. “Value of e-commerce losses to online payment fraud worldwide from 2020 to 2023 (in billion U.S. dollars)“. Accessed on August 14, 2023. While many business owners use fraud prevention tools and other resources to reduce exposure to online scammers, it’s also critical to use trustworthy financial services providers.

Stripe uses a variety of security measures to protect its merchants and their customers, including FDIC insurance, encryption, tokenization, penetration testing, and more. Moreover, Stripe employs a third-party “bug bounty” program to preemptively detect any vulnerabilities in its security system.

So, how do these security measures stack up against other popular payment providers? This guide explores Stripe’s security features, trustworthiness, compliance standards, and other related topics to help you determine if its payment services are up to industry norms.

Is Stripe a Trustworthy Payment Platform?

Some of the largest companies in the world trust Stripe for processing payments. Industry giants like Google, Booking.com, Zoom, and Deliveroo use Stripe to accept customer payments. Stripe is transparent about its security efforts, providing an array of online resources detailing compliance standards, encryption protocols, deposit insurance, and bug testing, among others.

However, Stripe’s reputation isn’t flawless. There are numerous online complaints about Stripe freezing customer accounts and revoking payment processing rights with little warning. Also, Stripe customers are subject to phishing scams targeting banking details and other personal data.^[2]BleepingComputer. “Stripe Users Targeted in Phishing Attack That Steals Banking Info“.Accessed on August 14, 2023. Still, Stripe has an overall positive reputation in terms of safety and security.

However, while Stripe appears to be a trustworthy payment platform, it’s always critical to keep tabs on your financial services providers. Ensuring your business isn’t exposed to excessive risk from a single financial services provider will help avoid major problems in the case of bankruptcy or scams. Many businesses diversify their risk by employing multiple payment service providers and banking institutions.

Comprehensive Analysis: Is Stripe a Secure Payment Method?

Understanding Stripe’s fundamental security features is critical when comparing it to other payment providers. Factors such as a provider’s registration, licenses, encryption techniques, and data protection tools significantly contribute to its security standing. Let’s explore some of these features in more detail below:

It’s critical to work with payment providers with valid licenses and registrations for accepting payments, transferring funds, holding funds, and conducting other payment-related activities. Working with unregistered financial services providers puts your business at risk—and may even be illegal.

Fortunately, Stripe has valid licenses and registrations across the world, making it a suitable choice for businesses handling international transactions. Stripe is licensed to provide services in 46 countries, including the United States, Australia, France, Hong Kong, Ireland, Singapore, Brazil, Canada, Germany, Italy, the United Kingdom, and more. In addition, the “Stripe Atlas” service allows overseas entrepreneurs to incorporate US businesses and open US business bank accounts from abroad, simplifying the process of entering the US consumer market.

Working with Stripe ensures that you’re partnering with a payment provider approved by some of the world’s leading financial regulators.

Encryption is a critical step in processing a secure transaction. Stripe uses AES-256, an industry-leading encryption standard, to secure its transaction communications. While AES-256 can suffer from brute force attacks, the protocol is widely considered one of the most robust encryption standards on the planet. AES-256 offers an efficient process for encrypting, communicating, and decrypting payment information.

Tokenization is a technique that allows a payment provider to replace sensitive payment information with non-sensitive data. It enables merchants to avoid storing vulnerable payment details on servers. Essentially, a customer’s payment details are replaced by a unique string of numbers. The string of numbers is subsequently used to verify payments instead of the customer’s card number, CVV code, etc. Stripe allows merchants to create tokens to store personally identifiable information (PIL) to ensure no sensitive information touches their servers.

However, Stripe’s tokens are only valid for one transaction. If you want to process future transactions with stored card details, you must create “customer objects” or “customer accounts.” These alternatives may have their security vulnerabilities.

In addition to using AES-256 encryption to transmit transaction information, Stripe also uses SSL and HTTPS connections to provide additional data protection and communication security. SSL (or TLS) is an encryption protocol used to secure a wide range of communications, including messaging apps, payments, and more. HTTPS combines HTTP with SSL—it’s primarily used to secure communications between web users and websites. Most web browsers no longer allow users to access websites without HTTPS and SSL certificates.

Stripe uses SSL for all transactions, effectively deterring scammers from hijacking transactions or accessing customer payment data. Similarly, Stripe ensures that browsers, apps, and other web applications interacting with its website or products use an HTTPS connection to prevent security breaches.

Stripe’s Compliance Standards and Certifications

Various world institutions and governments set compliance standards for financial services providers and other businesses handling client and customer data. These compliance standards help reduce exposure to data leaks, scams, invasions of privacy, and other significant issues. Let’s explore Stripe’s compliance standards and certifications below:

PCI DSS Compliance

Stripe’s payment systems are PCI DSS compliant. PCI DSS compliance is an industry standard for reducing payment fraud—it dictates how to store and communicate customer information securely. While PCI DSS compliance is not required by federal law, not adhering to the compliance standards can have significant financial repercussions for your business. Card brands can assess fees and other penalties to businesses, payment processors, and other payment stakeholders not adhering to PCI DSS compliance.

This also means payment processors may charge fines to your business if you don’t follow PCI DSS compliance requirements. Your merchant agreement will likely include a list of fees applicable if your business fails to uphold its compliance standards.

Not all PCI DSS compliance is the responsibility of your payment provider; you must also understand your responsibilities as a business owner. For example, if your business accepts payments via telephone, you cannot write down or store card details during the payment process—PCI DSS compliance does not permit businesses to store CVV codes improperly.

GDPR Compliance

The General Data Protection Regulation (GDPR) is a European Union data privacy regulation first implemented in 2018. The regulation dictates rules regarding data collection and storage, as well as other privacy-related matters. While GDPR isn’t required in the United States, the regulation has become a benchmark for many similar rules worldwide, meaning businesses conducting transactions abroad must be mindful of its implications.

Stripe is an approved payment provider in many European countries, so it is aware of GDPR and its requirements in terms of payments. However, using Stripe for payments does not automatically mean your business is GDPR compliant, as GDPR compliance encompasses much more than the types of payments you offer customers. For example, GDPR regulates the use of cookies and other online trackers.

Stripe states the following information about GDPR in the Stripe Privacy Center:

Other Notable Certifications and Third-Party Audits

PCI DSS and GDPR are the two primary compliance certifications the company adheres to when developing its payment products. However, Stripe doesn’t expect its merchants to trust it provides PCI DSS-compliant services without third-party verification. Stripe’s systems undertook a third-party, PCI-certified audit to ensure it complied with PCI DSS. As a result, Stripe is now a PCI Service Provider Level 1, meaning it has attained the “most stringent level of certification available in the payments industry.”.^[4]Stripe. “Security at Stripe“. Accessed on August 14, 2023.

Continuous Security Testing: Stripe’s Bug Bounty Program

HackerOne’s platform also exhibits a range of useful statistics about Stripe’s safety record. Throughout the program, just over $209,000 worth of bounties have been paid, with the top bounty range being $2,500 to $13,000.^[5]HackerOne. “Stripe“. Accessed on August 17, 2023.

Security Assessments and Penetration Testing: How Stripe Ensures Its Infrastructure’s Security

Security assessments on Stripe’s payment systems don’t stop at its bug bounty program. While the bug bounty program is useful for spotting niche vulnerabilities, it’s critical to simulate full-scale cyber attacks on a business’s systems to ensure they have adequate defenses from hacking groups. Stripe hires third-party security experts to impersonate cyber attacks—this form of continuous penetration testing ensures Stripe’s security systems are capable of dealing with modern threats.

Exploring Stripe’s User Responsibilities and Best Practices

Using a payment provider with robust security protocols helps protect your business and its customers from security threats. Stripe uses significant efforts to protect its merchants from payment fraud, data leaks, account breaches, compliance issues, and more. However, Stripe can’t protect its merchants from every security threat—merchants must also make an effort to follow a range of best practices to avoid vulnerabilities. Let’s explore Stripe’s user responsibilities and best practices below:

The Role of Strong Authentication

Stripe allows its merchants to implement additional authentication measures. Doing so provides added assurances the individual processing a payment is the cardholder. An example of a robust authentication measure offered by Stripe is two-factor authentication (2FA). Stripe provides a range of two-factor authentication options, including text message authentication, mobile app authentication, hardware security keys, and Windows Hello. Most of these tools require customers to receive and enter a security code to verify their identity. Using strong authentication can reduce chargebacks and resulting financial losses.

The Importance of Regular Monitoring and Security Awareness

Stripe users should routinely monitor account activity to spot any potential irregularities, including suspicious payments, changing payment trends, increases in chargebacks, or disputes. Responsible business owners are acutely aware of the need to manually monitor their payment systems.

Likewise, it’s critical to remain aware of emerging threats and scams. Staying current on the latest cyber threats and payment scam trends can help you remain wary of potential problems. It’s also critical to report issues to Stripe, ensuring they understand problems in their network.

Comparing Stripe’s Security With Other Payment Providers

Modern businesses are spoiled for choice when it comes to payment processing; a range of PSPs and merchant account providers offer services to US-based enterprises. PayPal and Square are two other popular PSPs offering similar in-person and online payment solutions to Stripe. So, how do they stack up in terms of security? Let’s find out:

Stripe vs. PayPal: Which Offers More Security?

PayPal made its name by providing secure, easy-to-use digital wallet payments to customers across the globe. Customers can use PayPal to process payments and store card details, making it easy for online shoppers to purchase products and services without re-inputting card details. However, with PayPal, customer card details are still processed through the merchant’s servers, resulting in extra security responsibilities for businesses using PayPal.

On the other hand, Stripe allows businesses to avoid processing credit card details through the merchant’s servers, reducing compliance requirements and risks. By shouldering additional data security responsibilities, Stripe makes it easier for merchants to maintain strong safety protocols. Additionally, PayPal accounts are not backed by FDIC insurance, whereas Stripe users can access FDIC-insured accounts.^[6]Consumer Financial Protection Bureau. “Analysis of Deposit Insurance Coverage on Funds Stored Through Payment Apps“.Accessed on August 14, 2023.[/foontote] This means if PayPal fails as a business, your funds may be at risk.

Regardless, many businesses use Stripe and PayPal in conjunction. As PayPal is one of the world’s most recognized digital payment providers, many businesses allow their customers to choose between using PayPal and another payment processing portal.

Stripe vs. Square: A Comparison in Terms of Safety Measures

Square is another popular payment provider offering a range of in-person and online payment tools. Square offers similar security features to Stripe. Both companies offer FDIC-insured accounts, PCI DSS compliance, rigorous security testing, payment encryption, and other useful security tools.

Still, while Square offers similar security benefits to Stripe, it doesn’t provide as advanced digital payment features as Stripe. Square is better suited for in-person transactions. The company is renowned for popularizing smartphone-based card readers among businesses nationwide. Additionally, Square offers a variety of industry-specific POS software platforms. Conversely, Stripe is admired for its advanced online payment tools, which include industry-leading customization and integration options.

Is Stripe FDIC Insured?

Fortunately, Stripe allows merchants to set up accounts insured by the Federal Deposit Insurance Corporation (FDIC). In most cases, FDIC insurance provides up to $250,000 in coverage for eligible accounts at banks approved by the FDIC program. This ensures an account holder will receive a refund of up to $250,000 if the bank collapses. The program is an integral component in preventing bank runs.

FDIC insurance isn’t always available at payment service providers, putting Stripe ahead of many of its competitors. PayPal, CashApp, Venmo, and many other digital payment provider accounts don’t have coverage from the FDIC program, making them much higher risk.

Does Stripe Require My SSN?

Due to legal obligations, Stripe requests your SSN when setting up payment processing services on your behalf. This is one of the many tools Stripe uses to verify the identity of its clients. While handing over your SSN to Stripe might sound risky, it’s also evidence that the company takes fraud and other compliance issues seriously. Stripe will use your SSN to ensure you have the right to act on behalf of your business. A payment provider without an SSN requirement is unlikely to follow financial regulators’ requirements—avoid payment providers with minimal information requirements in their setup process!

Conclusion: Stripe’s Commitment to Secure Transactions

Stripe exhibits a strong commitment to providing security-focused payment services to its users. The company combines robust compliance with targeted security testing, including using white-hat hackers to spot vulnerabilities and avoid exposure to security threats. Stripe merchants also have access to strong authentication tools to prevent scammers from using stolen credit card details. Likewise, merchants can set up FDIC-insured accounts via Stripe, providing extra protection from payment provider bankruptcy.

However, high-risk businesses may need even more security features than are available at Stripe. Businesses in risky industries face increased exposure to fraud, chargebacks, and other financial liabilities. For this reason, merchants in high-risk sectors often apply for high-risk merchant accounts.

A high-risk merchant account provider offers dedicated tools to help improve security and reduce chargebacks. Likewise, account managers at high-risk merchant service providers offer dedicated support, industry-specific tools, higher chargeback thresholds, secure payment gateways, and other resources to help businesses succeed in risky industries. If your business requires additional security to protect its payments, consider the benefits of a high-risk merchant account.

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