Stripe payment fees explained: full breakdown and hidden costs

Key takeaways

• Stripe's headline rate of 1.5% + 20p for UK cards is just the starting point—international payments, currency conversion, and add-on services can significantly increase your total costs.

• Hidden fees like cross-border charges (1%), FX markups (up to 2%), and non-refundable processing fees on refunds can catch businesses off guard, particularly those with international customers.

• Airwallex offers transparent pricing with lower FX rates and multi-currency accounts, helping businesses reduce payment processing costs by up to 70% compared to traditional providers.

Understanding Stripe's true cost

Stripe markets itself as a simple, transparent payment processor. And to be fair, it's a lot more straightforward than many alternatives. But plenty of businesses discover their actual costs exceed expectations once international transactions, refunds, disputes, and optional features come into play.

This guide breaks down exactly how Stripe charges work, where hidden costs lurk, and how to calculate what you're really paying. You'll learn which fees apply to your business model and discover practical ways to reduce them.

What are Stripe payment fees?

Stripe payment fees are what you pay each time you process a transaction through Stripe's platform. Unlike traditional merchant accounts that charge monthly fees and use complex pricing tiers, Stripe keeps things simpler with a pay-as-you-go model. You're charged a percentage plus a fixed fee per successful transaction.

The standard UK rate—1.5% + 20p for domestic cards—sounds simple enough. But that baseline doesn't account for:

• International and cross-border transactions

• Currency conversion fees

• Digital wallet payments

• Refunds and chargebacks

• Subscription billing add-ons

• Fraud prevention tools

Your actual rate depends on where your customers are, how they pay, and which Stripe products you're using.

How Stripe's pricing model works

Stripe operates on a pay-as-you-go basis, which means you only pay when you process transactions. No monthly fees, no setup costs, no minimum transaction volumes.

Here's how their pricing philosophy works:

• Flat-rate structure – You pay the same percentage whether you process £100 or £100,000 monthly

• No automatic volume discounts – Unlike traditional processors, you don't immediately get better rates as you grow

• All-in pricing – PCI compliance, security, and basic reporting are included in the base fee

• Optional extras – Features like advanced fraud detection or subscription management cost extra

This differs from traditional merchant accounts, which often bundle services but charge monthly fees, gateway fees, and more variable pricing. Stripe's approach appeals to startups and growing businesses because it's genuinely easier to understand. But as your transaction volume grows, the lack of volume-based pricing can start to bite.

Standard Stripe transaction fees explained

Stripe's baseline fees vary depending on the type of card and how the payment is captured:

UK domestic transactions:

• Online card payments: 1.5% + 20p

• In-person (card-present): 1.4% + 20p

• European cards: 2.5% + 20p

• Non-European cards: 2.9% + 20p

A few things worth noting:

• Debit vs credit cards – Stripe charges the same rate regardless, unlike some processors that price debit cards lower

• In-person vs online – In-person transactions get a small 0.1% discount because there's less fraud risk

• Successful transactions only – Failed or declined payments aren't charged (though network fees might still apply in some cases)

The fee gets deducted automatically from your settlement. So if you charge a customer £100, you'll receive £98.30 after Stripe takes their 1.5% + 20p cut.

Stripe fees by payment method

Different payment methods carry different costs. Here's what Stripe charges for the most popular options:

Card payments

• Standard cards: 1.5% + 20p (UK), 2.5% + 20p (EU), 2.9% + 20p (non-EU)

Digital wallets

• Apple Pay and Google Pay: Same as standard card rates (no extra charge)

Bank transfers

• Direct debit: 1% capped at £4

• ACH debit (US customers): 0.8% capped at $5

Buy now, pay later

• Klarna, Afterpay: Around 6% per transaction (varies by provider and market)

Local payment methods

• SEPA Direct Debit: 0.8% capped at €6

• BACS Direct Debit: 1% capped at £4

• iDEAL (Netherlands): 0.29€

Digital wallets like Apple Pay don't add extra Stripe fees, which is good news. But they might still trigger cross-border or currency conversion charges if your customer's card was issued abroad.

International and cross-border Stripe fees

This is where costs can escalate quickly. Even with Stripe's relatively clear pricing, international fees stack up:

• Cross-border fee: An extra 1% whenever the customer's card is issued outside the UK

• Currency conversion: An additional 2% when you accept payment in a different currency from your settlement currency

Here's a real example. Say you're a UK business charging a US customer in USD. You'd pay:

• 2.9% + 20p (non-EU card rate)

• +1% (cross-border fee)

• +2% (FX conversion, if you're settling to GBP)

• Total: 5.9% + 20p

If you're processing £10,000 monthly in international transactions, you're looking at nearly £600 in fees compared to £150 for domestic transactions. That's quite a difference.

A note on settlement currencies:

You can reduce FX fees by receiving payments in the same currency you're paid (like settling USD payments to a USD account). But this means managing multi-currency accounts, which many businesses don't consider when they're first setting up online payments.

Stripe fees for refunds, disputes, and chargebacks

These post-transaction costs often catch people off guard:

Refunds:

• Stripe doesn't refund the processing fee (that 1.5% + 20p)

• You lose the original fee even on full refunds

• On partial refunds, you keep the fixed 20p but lose the percentage fee

Chargebacks and disputes:

• £15 per chargeback (when a customer disputes a payment)

• You're charged this fee even if you win the dispute

• High dispute rates can trigger Stripe account reviews

Here's what that looks like:

You sell a £100 product and later refund it. You originally paid £1.70 in fees, and Stripe refunds you £0 of that. Your net cost for that refund: £1.70.

For businesses with high return rates—think fashion or electronics retailers—these non-refundable fees add real costs. A 10% return rate on £50,000 monthly revenue means you're losing about £850 in unrecoverable processing fees each month.

Stripe add-on and platform fees

Stripe offers various paid extras that increase your total costs:

Stripe Billing (for subscriptions):

• An additional 0.5% on recurring transactions

• This stacks on top of standard processing fees

• Invoice management: £1.50 per invoice

Stripe Connect (for marketplaces):

• Extra 0.25% fee

• Lets you handle multi-party payments

• Custom account management fees may apply

Radar (fraud prevention):

• Radar for Fraud Teams: £0.05 per screened transaction

• Includes advanced machine learning rules and custom lists

Other features:

• Stripe Tax: 0.5% per transaction

• Revenue Recognition: Custom pricing

• Stripe Sigma (advanced reporting): £800/month

These features solve genuine problems, but they're not included in the headline pricing you see advertised. A SaaS business using Billing, Radar, and Tax could be looking at effective rates of 2.5%+ per transaction before even factoring in international fees.

To understand the real cost of payment gateways, you need to account for both baseline fees and any add-on services you're using.

Hidden or overlooked Stripe costs businesses miss

Beyond the advertised fees, several costs tend to catch businesses unprepared:

FX margins hidden in currency conversion:

Stripe's 2% FX fee is applied to their exchange rate, which already includes a markup above the mid-market rate. You're essentially paying twice—once in the markup, once in the fee itself.

Multiple fees stacking on single transactions:

An international customer using Apple Pay might trigger:

• Base card rate (2.9%)

• Cross-border fee (+1%)

• Currency conversion (+2%)

• Any add-on fees you're using

Failed payment retries:

While Stripe doesn't charge for failed payments, your system still attempts authorization, consuming server resources and potentially triggering card network fees with some setups.

Engineering and operational costs:

Stripe's API is genuinely developer-friendly, but integration, maintenance, testing, and reconciliation still require ongoing engineering time. For lean teams, this "hidden" cost in developer hours matters more than you might think.

Payout timing:

Standard Stripe payouts happen on a rolling 2-7 day schedule. Want faster payouts (1 day or instant)? That costs extra, which affects cash flow for businesses operating on tight margins.

Real-world examples of Stripe fees in practice

Let's look at what you'd actually pay in common scenarios:

Example 1: Domestic UK card transaction

• Transaction value: £100

• Stripe fee: 1.5% + £0.20 = £1.70

• You receive: £98.30

Example 2: International customer paying in foreign currency

• Transaction value: $100 (USD)

• Base fee: 2.9% + 20p = $2.90 + 20p

• Cross-border fee: +1% = $1.00

• Currency conversion: +2% (settling to GBP) = $2.00

• Total fees: Around $6.10 (£4.73)

• You receive: Around £73.08 (assuming $1.30 = £1)

Example 3: Refunded transaction

• Original sale: £100

• Original fee paid: £1.70

• Issue full refund

• Fee refunded: £0

• Your net cost: £1.70

Example 4: Subscription business with add-ons

• Monthly subscription: £50

• Standard fee: 1.5% + 20p = £0.95

• Billing fee: 0.5% = £0.25

• Total per transaction: £1.20

• Annual cost per subscriber: £14.40

Example 5: Marketplace with Stripe Connect

• Transaction: £200

• Standard fee: 1.5% + 20p = £3.20

• Connect fee: 0.25% = £0.50

• Total: £3.70

These examples show how quickly fees compound, especially for businesses with lots of international customers or high transaction volumes.

How to reduce Stripe payment fees

You can't eliminate payment processing costs entirely, but smart optimization can reduce them significantly:

Choose the right settlement currency:

If 60% of your customers pay in USD, consider settling in USD to avoid that 2% FX conversion on most transactions.

Reduce FX exposure:

• Use multi-currency pricing so customers can pay in their local currency

• Settle in the currency you receive to minimise conversion

• Compare Stripe's FX rate against mid-market rates regularly

Optimise payment methods:

• Encourage bank transfers or direct debit for high-value transactions (lower percentage fees)

• Promote local payment methods where appropriate (often cheaper than cards)

Manage disputes and fraud proactively:

• Implement fraud detection early to reduce expensive chargeback fees

• Provide excellent customer service to prevent disputes happening in the first place

• Respond quickly to disputes to increase your chances of winning

Know when to negotiate:

Stripe typically negotiates custom pricing for businesses processing over £1M monthly. At that volume, you can request volume-based discounts or reduced international fees.

Consider alternative providers:

If international payments make up a big chunk of your business, purpose-built global payment platforms might offer better rates. It's worth evaluating alternatives when Stripe's flat-rate model stops making sense for your business profile.

Stripe fees vs other payment providers

Stripe vs flat-rate competitors (Square, SumUp):

Stripe and competitors like Square charge similar headline rates (around 1.5-1.75% + 20p in the UK). The real differentiator is international pricing, where Stripe's robust multi-currency support comes at a premium.

Stripe vs traditional merchant accounts:

Traditional processors often charge 0.8-1.2% on interchange-plus pricing, but they add monthly fees (£20-50), gateway fees, and PCI compliance costs. Stripe's simplicity appeals to smaller businesses, but high-volume merchants often save money with negotiated merchant accounts.

Stripe vs bank-based solutions:

Banks like Barclays or HSBC offer payment processing, but typically with less flexible APIs and slower innovation. Their pricing varies but might be competitive if you're already banking with them.

When Stripe makes sense:

• Low to medium transaction volumes (under £100k monthly)

• Tech-forward businesses needing flexible APIs

• Companies prioritizing integration speed over cost optimization

When Stripe gets expensive:

• High international payment volumes

• Large transaction volumes without negotiated pricing

• Businesses with high refund or chargeback rates

How Airwallex helps businesses reduce payment processing costs

Airwallex takes a different approach that's designed specifically for businesses with international exposure:

Lower FX and cross-border costs:

Airwallex's FX fees start from 0.5% (compared to Stripe's 2%), which saves substantially on international transactions. For a business processing £50,000 in foreign currency monthly, that difference saves about £750 every month.

Multi-currency settlement:

Collect, hold, and pay out in 23+ currencies without conversion fees. This eliminates the 2% Stripe charges when you want to hold USD, EUR, or AUD.

Transparent pricing:

No hidden FX markups or margin layers. Airwallex shows you exactly what you're paying with complete rate transparency.

Global accounts without borders:

Open local currency accounts in the UK, US, EU, and Asia-Pacific. You can receive payments like a local business, which reduces cross-border fees for your customers too.

When Airwallex fits better than Stripe:

• You process 30%+ international payments

• Currency volatility impacts your margins

• You need multi-currency accounts for global operations

• You're scaling internationally and want infrastructure built specifically for cross-border commerce

Airwallex isn't necessarily a complete Stripe replacement for every business—Stripe excels in developer experience and local payment method coverage. But for globally-minded businesses, combining Airwallex's global accounts with payment processing can deliver meaningful cost reductions and operational flexibility.

Conclusion

Stripe's appeal lies in its genuinely transparent, easy-to-understand pricing and excellent developer experience. But "transparent" doesn't always mean "cheap." Understanding the full scope of Stripe payment fees—including cross-border charges, currency conversion, refunds, and add-ons—is essential for accurately forecasting your payment processing costs.

For UK businesses with mostly domestic customers, Stripe's 1.5% + 20p rate is competitive and hard to beat. But as you scale internationally or process higher volumes, those fees compound quickly. Taking time to evaluate your actual transaction profile, customer geography, and payment methods helps you work out whether Stripe remains cost-effective or whether alternatives like Airwallex might suit your needs better.

The key is knowing your numbers. Calculate your blended rate across all transactions, factor in those hidden costs like non-refundable fees and FX margins, and regularly audit your payment setup as your business evolves.

Ready to reduce your payment processing costs? Open an Airwallex account to access transparent pricing, lower FX fees, and multi-currency accounts designed for global businesses.

FAQs

Why are Stripe fees higher than the headline rate for some businesses?

Stripe's headline rate of 1.5% + 20p only applies to UK domestic card transactions. International payments incur additional cross-border (1%) and currency conversion (2%) fees. Add-ons like Stripe Billing, Radar, or Connect increase costs further. Most businesses end up paying an effective rate of 2-6% depending on where their customers are and which features they're using.

Does Stripe charge extra for using Apple Pay or Google Pay?

No. Apple Pay and Google Pay transactions are charged at standard card rates (1.5% + 20p for UK cards). However, if the customer's underlying card is foreign, cross-border and FX fees still apply. There's no additional "digital wallet" surcharge on top.

Can Stripe fees be negotiated as a business grows?

Yes. Stripe typically offers volume-based custom pricing to businesses processing over £1M monthly. Negotiations usually focus on reducing international fees, cross-border charges, or add-on pricing. Smaller businesses on standard pricing won't see negotiated rates, but you can still optimize by managing settlement currencies and payment methods strategically.

What Stripe fees matter most for international businesses?

Cross-border fees (1%) and currency conversion fees (2%) have the biggest impact for international businesses. A UK business processing 50% international payments effectively doubles its fee rate from 1.5% to somewhere between 4-6% per transaction. Optimising your settlement currency and using multi-currency accounts can dramatically reduce these costs.