A Guide to Online Payment Processing Companies

 April 7, 2025      Jing Yu

Whether you’re launching an eCommerce store, scaling a SaaS platform, or simply looking to upgrade your checkout experience, choosing the right payment processor is crucial. From industry leaders like Stripe and PayPal to specialized platforms like Klarna and Adyen, each provider offers unique features, fee structures, and tools for fraud prevention and chargeback management. In this guide, we’ll break down how popular payment processors work, how they handle disputes like chargebacks, and what sets each one apart—so you can find the best solution for your business needs.

Stripe is a widely used online payment processor that supports businesses in accepting payments through credit cards, debit cards, and other digital payment methods. Here’s how Stripe handles payment processing and chargebacks:

Stripe Payment Processing

1. Transaction Flow:

  •  Customers enter payment details on your website or app.
  •  Stripe securely encrypts and processes the payment.
  •  The funds are authorized, and the transaction is either approved or declined.
  •  If successful, the funds are transferred to your Stripe account (minus fees).
  •  Stripe settles the payment into your linked bank account on a rolling basis (e.g., daily, weekly, or monthly).

 2. Payment Methods:

  • Credit & Debit Cards (Visa, Mastercard, Amex, etc.)
  • Digital Wallets (Apple Pay, Google Pay)
  • Bank Transfers (ACH, SEPA, etc.)
  • Buy Now, Pay Later (Afterpay, Klarna)
  • Local Payment Methods (iDEAL, Sofort, Alipay, etc.)3.Fees:
  • Standard: 2.9% + $0.30 per successful card transaction (US)
  • Additional fees apply for international cards, currency conversion, and other advanced features.

Chargebacks in Stripe

A chargeback occurs when a customer disputes a charge with their bank, leading to a reversal of the transaction.

1.Common Chargeback Reasons:

  • Fraudulent transaction (stolen card)
  • Unauthorized transaction (customer doesn’t recognize it)
  • Product/service not received or not as described
  • Duplicate charge or billing error

2. Chargeback Process:

  • Customers dispute a charge with their bank.
  • The bank reverses the transaction and deducts the amount from your Stripe account.
  • Stripe notifies you and gives you the chance to submit evidence (e.g., invoices, proof of delivery, emails).
  • The bank reviews the evidence and makes a final decision.
  • If the chargeback is upheld, you lose the funds and may also pay a chargeback fee ($15 in the US).
  • If you win, the chargeback is reversed, and funds are returned to you.

3.Chargeback Prevention:

  • Use 3D Secure authentication for added fraud protection.
  • Clearly describe products/services and refund policies.
  • Provide tracking numbers and proof of delivery.
  • Respond promptly to customer inquiries to prevent disputes.
  • Use Stripe Radar (fraud detection tool) to block high-risk transactions.

Others

There are several payment processing companies similar to Stripe, offering online payment solutions, fraud prevention, and subscription billing. Here are some top alternatives:

1. PayPal (Braintree)

Best for: Businesses needing a trusted global payment processor with easy integration.

Features:

  • Accepts credit/debit cards, PayPal, Venmo, Apple Pay, Google Pay.
  • Fraud protection and chargeback management.
  • Supports subscription billing and marketplaces.
  • Fees: 2.9% + $0.30 per transaction (US).

2. Square

Best for: Small businesses needing both online and in-person payments.

Features:

  • Free POS (Point of Sale) system.
  • eCommerce and invoicing support.
  • No monthly fees, pay per transaction.
  • Fees: 2.6% + $0.10 per transaction (US).

3. Adyen

Best for: Large businesses with global operations.

Features:

  • Supports 150+ currencies and multiple payment methods.
  • Advanced fraud prevention tools.
  • Omnichannel payments (online, in-app, in-store).
  • Fees: Varies by region and transaction type.

4. Authorize.net (A Visa Solution)

Best for: Businesses needing a reliable payment gateway.

Features:

  • Accepts credit cards, PayPal, and eChecks.
  • Recurring billing and invoicing support.
  • Strong security and fraud prevention tools.
  • Fees: 2.9% + $0.30 per transaction + $25 monthly fee.

5. Klarna

Best for: Businesses looking to offer Buy Now, Pay Later (BNPL).

Features:

  • Allows customers to split payments over time.
  • No risk to merchants (Klarna pays upfront).
  • Integrates with major eCommerce platforms.
  • Fees: Typically 2.49% – 5.99% per transaction.

6. 2Checkout (now Verifone)

Best for: Subscription-based and global businesses.

Features:

  • Supports over 200 markets and 87 currencies.
  • Subscription management and recurring billing.
  • Fraud prevention tools.
  • Fees: 3.5% + $0.35 per transaction.

7. Worldpay (by FIS)

Best for: Enterprises needing high-volume payment solutions.

Features:

  • Supports online, in-store, and mobile payments.
  • Customized pricing for large businesses.
  • Advanced fraud protection.
  • Fees: Varies by business type and volume.

8. WePay (by JPMorgan Chase)

Best for: Marketplaces and SaaS platforms.

Features:

  • White-label payments for platforms.
  • Integrated ACH and card payments.
  • Strong API for developers.
  • Fees: Custom pricing based on business needs.

Note: The information provided is based on publicly available sources and may be subject to change. It’s recommended to review each platform’s terms and offerings to determine the best fit for your specific needs.

Jing Yu, April 2025

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