Stripe is a popular payment processing platform that allows businesses to accept online payments from customers worldwide, capable of handling payment collection, fund transfers, subscription management, and financial reporting within a single integrated system. Is it suitable for a small e-commerce business in Hong Kong though?
In this article, we’ll answer the question by going over the pros and cons of starting a Stripe account from their perspective.
Pros of Using Stripe as a Small e-Commerce Business in Hong Kong
Easily Accept Global Payments
Stripe’s global presence accepts payments in over 135 currencies, with support for credit cards, debit cards, and digital wallets, including Alipay, WeChat Pay, ideal for Hong Kong based e-commerce businesses serving the global market.
Customers can also pay and receive payouts in their local currency, saving them money on conversion rates.
Ready to Use with Established e-Commerce Platforms
Shopify integrates directly with popular e-commerce platforms such as Shopify, Woocommerce and Shopline, forgoing the need for e-commerce businesses to build custom payment solutions, and allowing non-technical business owners to quickly get setup.
Keep in mind that the onboarding experience can differ between platforms, so users should read the respective documentation before proceeding.
Customise Using the Developer-Friendly API
Stripe provides APIs that allow developers to customize payment experiences, provide subscription services, and create fully branded checkout pages. The API also allows integration with custom business systems and workflows, integrating with the business’s reporting system or allowing businesses to use physical terminals for retail stores.
Highly Secure with Encrypted Transactions and Fraud Prevention Measures
As one of the largest merchant service providers in the world, Stripe offers premium quality security and fraud prevention services with their platform. All credit card data is securely stored on Stripe’s servers backed by PCI Level certification, the highest security standard for payment processors, and 3D secure authentication for additional payment security.
Connect Easily with Online Accounting Software
Stripe integrates directly with accounting platforms like Xero and QuickBooks Online, allowing businesses to reduce their time spent on reconciliation and accounting tasks by automatically synchronizing sales transactions, refunds, and payouts without hassle, minimizing manual data entry and reducing bookkeeping errors.
The integrations can also automate invoice generation, and help manage payouts, tax calculations and monthly balance reports, features that are immensely useful for business owners that need robust, basic accounting functions for daily operations.
Cons of Using Stripe as a Small e-Commerce Business in Hong Kong
Constrained Customer Service
Stripe’s complaints against them have for the most part been focused on their slow response times to emails and online chat for non-urgent inquiries, and significant wait times to resolve issues even when the problem has been communicated to their support team. The platform has been making efforts to fix these issues in recent times and has recovered in their online reviews as a result.
Higher Transaction Fees
Stripe charges by transaction, with different rates depending on the transaction type and the merchant’s region of operations. Compared to other merchant service providers, Stripe tends to charge higher transaction fees.
| Payment Method | Transaction Fee | Additional Fees |
| Credit/Debit Cards (Local) | 3.4% + HK$2.35 | – |
| Credit/Debit Cards (International) | 3.4% + HK$2.35 | +0.5% |
| Alipay / WeChat Pay | 2.2% + HK$2.00 | – |
Stripe will also charge businesses a 2% conversion fee, so businesses are recommended to have amounts in alternative currencies readily available to avoid paying conversion fees.
API is Too Complex for Businesses to Use Without a Developer
Stripe’s API is too complex for businesses without access to developer expertise, as its documentation assumes the user has technical knowledge. This means that further customization of its pre-built solutions like Stripe Checkout are not possible without building an entirely new solution with developer help.
Unestablished Businesses Risk Being Flagged As ‘High Risk’
Stripe maintains a list of prohibited and restricted business categories it calls high risk industries, including financial services, gambling, adult content, and drug paraphernalia. These industries aside, ordinary businesses can also be flagged as high risk if they match any of the following characteristics:
- Frequent chargebacks: High chargeback rates of 1% of transactions or more can indicate potential fraud or customer dissatisfaction, which Stripe views as a business risk.
- International Transactions: Frequent and / or large amounts in international transactions can be flagged as high risk, especially with regions with higher rates of fraud cases
- Bad credit history: A business with spotty credit history runs the risk of investigations and account holding by Stripe.
- Subscription-based services: The nature of subscription services means potentially higher rates of refunds, which could also invite Stripe’s scrutiny should the chargeback rate increase beyond the accepted threshold of 1% or more.
- New or unestablished businesses: Businesses with an unproven track record will naturally be scrutinized as high risk until proven otherwise. This means less room for error for new e-commerce businesses, or waiting until they are more established before beginning to use Stripe.
Accounts that get flagged as high risk can be suspended or terminated with little to no warning by Stripe, significantly disrupting business operations, with catastrophic consequences for new businesses with little runway.
Summary
When it comes to merchant service providers, few companies can compare to the dominance of Stripe.
Their well-developed integrations with e-commerce platforms and smooth onboarding make them an easy choice to make for small businesses, though the high transaction fees can be difficult to sustain for extended periods.
Stripe’s highly secure and well-protected platform simplifies global transactions for much of the e-Commerce industry. Yet their high security also means that businesses that use them must constantly walk a fine line to keep their accounts running or risk being frozen or terminated, all the more so when it comes to new or unestablished businesses.
If you’re looking for help walking that fine line, whether it’s advice on building good credit history or best accounting practices to help sustain your business over the long run, drop us a message and we’d be happy to help!
