Stripe Connect Alternatives: Top Competitors and Options

These days, there are plenty of viable eCommerce alternatives for your business. With estimates suggesting that annual domestic eCommerce sales now exceed upwards of $380 billion, it’s no wonder that new peer-to-peer sales platforms, such as Stripe Connect, are taking off in various niches.^[1]EMarketer.”How marketplaces from Amazon, eBay, and Walmart compare.” Accessed September 24, 2024. With that in mind, eCommerce merchants must develop a platform for buyers and sellers that offers users a singular experience.

Modern online marketplaces require modern payment solutions. Usually, these platforms distribute money between buyers and sellers while taking a small commission for their services. Stripe Connect is a payment processing platform designed specifically for online marketplaces. As a service, it automates money transfers between buyers and sellers, thus removing the burden on merchants to develop custom payment tools.

Of course, Stripe Connect is but one of many marketplace payment products. Plenty of viable alternatives to Stripe Connect exist for merchants to explore in-depth. In this guide, we’ll dive deep into Stripe Connect, consider whether or not it’s the right option for you, and unpack some of the alternative platforms that might be a better fit. Let’s get started!

What is Stripe Connect?

Stripe Connect is a payment processing resource that enables payments on marketplaces and platforms. While conventional payments often involve a direct transfer between a customer and a merchant, marketplace transactions involve a third-party seller. The marketplace receives a commission for hosting and overseeing payments, even if the primary engine of the transaction is still between the buyer and the seller.

With Stripe Connect, merchants can bypass the creation of in-house payment tools by facilitating these marketplace transactions. While many think of Stripe Connect exclusively as a payment platform, the truth is that it serves various other valuable functions. Through Stripe Connect, you can onboard new buyers and sellers, set up payments, create reports, confirm a buyer or a seller’s identity, collect taxes, and ensure the security of assorted payment methods. In other words, Stripe Connect is a one-stop shop for marketplace finance.

Let’s unpack Stripe Connect’s features in greater detail:

If you’re reading this and wondering what the difference between Stripe and Stripe Connect is, allow us to answer your question. Stripe is a financial services company that provides a wide range of payment processing services to its customer base. Stripe Connect is simply Stripe’s proprietary marketplace and platform payment solution.

Three kinds of Stripe Connect accounts exist: Standard, Express, and Custom. Let’s explore these options in more detail:

Why Explore Stripe Connect Alternative Options

With Stripe Connect offering its user base such an abundance of valuable features, you may be asking yourself: Why bother with alternatives?

It’s a valid question and one worth considering in detail. When debating what payment processing platform will best suit your needs, it’s critical to compare and contrast between prominent providers. Determining the most suitable partner for your professional needs will depend on several factors, including payment volume, payment type, and the industry you occupy.

Below, we’ll go into why a Stripe Connect alternative might be just what you’ve been looking for:

Stripe is renowned for its convenient application and onboarding process. However, as a platform, it is stringent about the industry partners it chooses to work with. Merchants in the gambling, marijuana, and telemedicine industries, or any industry that has been labeled “high-risk” for one reason or another, have been restricted from using Stripe’s platforms. To prepare, merchants should familiarize themselves with a list of sectors that are not permitted to use Stripe Connect’s services.

Though a convenient marketplace tool, Stripe is still renowned for its costly processing fees. Their pricing is as follows:

While Stripe Connect offers plenty of features to its users, it may or may not be what your marketplace requires. Let’s explore some features the platform lacks:

While setting up Standard accounts on Stripe Connect is relatively simple, the Express and Custom account options require a degree of technical experience. As platforms using Express and Custom control more of the payment stack, they must have developers capable of integrating and customizing Stripe Connect within their platform.

Stripe Connect Alternatives

Now that you understand why you may want to use an alternative to Stripe Connect, it’s time to explore which options you have at your disposal:

PayPal

PayPal has a long history as a marketplace payment platform. It was the primary payment facilitator on eBay from 2003 until 2020.^[2]SaleHoo. “eBay and PayPal break up: What eBay’s move to Ayden means for Sellers in 2024 and Beyond.” Accessed September 24, 2024. PayPal for Marketplaces is the Stripe Connect alternative this payment giant offers. It provides similar features, allowing users to integrate the platform into a custom marketplace and transfer funds between buyers and sellers.

One of PayPal’s other significant benefits is its considerable brand recognition. With a multi-decade reputation as a marketplace payment provider and an extensive international user base, PayPal has earned its stripes as a trusted payment option.

However, as with Stripe, PayPal users are subject to industry restrictions, potential payment freezes, and other issues. For example, PayPal even faced lawsuits in 2022 due to freezing user funds.^[3]Engadget. “PayPal faces lawsuit for freezing customer accounts and funds.” Accessed September 24, 2024. Make sure PayPal approves of your industry before signing up for its payment services.

Square Payments

Square is another prominent provider dedicated to making merchant services more accessible to businesses of all sizes. It makes it simple for companies to sign up for payment processing services but lacks Stripe’s marketplace functionality. Suppose you want users to pay each other using Square. In that case, your business will need to intervene manually, making the process challenging for anyone looking to avoid the intricacies of managing compliance, payouts, and more.

Authorize.net

Authorize.net is a payment gateway provider and payment processor renowned for its flexibility. You can link its payment gateways to various merchant accounts, making it a viable option for businesses with existing merchant services agreements. Authorize.net doesn’t have the same marketplace functionality as Stripe Connect; however, Authorize.net allows recurring payments and other custom payment arrangements, so depending on your business model, it may work. Also, as Authorize.net will enable you to integrate with different payment processors, your business can use your payment processor’s marketplace tools to onboard users.

One of the features that makes Authorize.net a standout product is its ability to offer high-risk payments. Since you can pair an Authorize.net payment gateway with a high-risk merchant account, industries banned by other payment service providers can use this platform.

Adyen

Adyen is a Dutch payments provider offering a range of processing services. Like Stripe Connect, Adyen simplifies onboarding, compliance, and other challenging payment tasks. Ayden makes it easy to set custom payment distributions, allowing your business to take more control over how much it retains from marketplace transactions. It’s simple to schedule routine or on-demand payments, making meeting user demands on your platform easy. On the downside, Adyen only supports payments from thirty-three countries, making it less internationally viable than Stripe Connect.

Payoneer

Payoneer offers a marketplace solution with a unique focus on your platform’s sellers. Its “mass payout” software makes sending money to sellers in more than a hundred and ninety countries easy. With its custom payout features, robust international payout options, and commitment to compliance, Payoneer is a formidable competitor to Stripe Connect. However, Payoneer doesn’t offer the same onboarding benefits as Stripe Connect. You must manually link your payees to your account (they can sign up via your website or a link) and then create a payment API or manually pay users by uploading a CSV file with payee details and transfer amounts.

Plaid

Plaid’s “Payout” product allows marketplaces and platforms to pay users via fixed-fee payments. In 2023, the company added instant payouts to its feature list, thus making sure that marketplaces could offer expeditious transfers to their users.^[4]EMarketer. “Plaid adds Instant Payouts ahead of FedNow launch.” Accessed September 24, 2024. Whether you’re running a web-based or app-based marketplace, Plaid’s payment API can facilitate seamless user payouts.

Verifone

Verifone is a payment platform servicing over a hundred and eighty countries, making it a solid option if you are looking for a Stripe Connect alternative that focuses on recurring payments. Its recurring payments solution offers localized checkout processes in overseas areas and integration with leading shopping carts (i.e., Shopify, Wix.com, etc.).

GoCardless

GoCardless is another Stripe Connect alternative that offers outstanding recurring payment options. Merchants can customize recurring payment schedules and modify due dates as needed. They can also accept recurring payments via bank transfer, credit card, and more. While GoCardless fails to offer its users marketplace-specific tools, it remains a dependable option for starting a subscription service.

Bolt

If nothing else, Bolt offers a seamless checkout experience. It aims to help businesses reduce abandoned carts by making the checkout process as effortless as possible. Bolt handles every element of the payment process, from fraud prevention to shipping updates. However, you can integrate it with third-party gateways and other tools without using Bolt’s full payment stack. While Bolt may not have the same marketplace-specific tools as Stripe Connect, it is nevertheless a respectable alternative if your platform is looking to guarantee a smooth checkout experience.

In Conclusion

Regarding offering a dynamic platform for transaction processing, there is no doubt that Stripe Connect offers plenty to like. Still, it pays to have a backup plan in today’s financial marketplace. After all, markets are forecasted to capture up to 61% share of total B2C sales, thereby making them a dominant force in the online commerce world.^[5]E-Tailize. “13 marketplace trends to watch out for in 2023.” Accessed September 24, 2024. Regarding building and maintaining a digital marketplace and finding the right payment platform to transfer funds between buyers and sellers, Stripe is nothing if it is not functional.

Nonetheless, Stripe may or may not be what your business needs, particularly if you operate in the high-risk sector. After all, you wouldn’t want to use Stripe and have payment accounts frozen or shut down without warning. While the platform offers plenty of bang for its buck, costs also add up. Stripe does not come cheap at $2 a month per active user, which doesn’t even account for supplementary fees. In other words, consider your alternatives carefully when debating whether Stripe Connect is best suited for your business purposes.

Merchants operating in high-risk eCommerce must protect themselves against fraud, excessive chargebacks, and more. That’s why we recommend partnering with a merchant services provider who has your needs in mind. No matter how much or who you’re processing for, this provider will help you handle secure payments and remain PCI compliant. Don’t wait any longer—start your eCommerce journey today.

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