Create a charge

To accept a payment from a customer, you must first create a charge. The type of charge you create – direct, destination, or separate charges and transfers – determines how these funds are split among all parties involved, impacts how the charge appears on the customer’s bank or billing statement (with your platform’s information or your user’s), and determines which account Stripe debits for refunds and chargebacks.

Charge types

There are many factors to consider when choosing a charge type, as listed in the table below. Your platform’s business model is particularly important because it can affect how funds flow through Stripe. To review charge type recommendations for your business, refer to your platform profile.

You can use a single approach, more than one approach, or switch approaches as appropriate for your organization.

Direct charges

Create a charge directly on a connected account. Customers are often unaware of your platform’s existence. You can add an application fee to the charge which is transferred to your platform’s account balance.

This charge type is best suited for platforms providing software as a service. For example, Shopify provides tools for building online storefronts, and Thinkific enables educators to sell online courses.

With this charge type:

• You create a charge on your user’s account so the payment appears as a charge on the connected account, not in your account balance.
• The connected account’s balance increases with every charge.
• Funds always settle in the country of the connected account.
• Your account balance increases with application fees from every charge.
• The connected account’s balance is debited for refunds and chargebacks.
• You can choose whether to have Stripe debit fees directly from connected accounts or from your platform account.

How are funds routed with direct charges?

Destination charges

Create a charge on the platform and immediately transfers funds to a specified connected account. You decide whether some or all of those funds are transferred, and whether to deduct an application fee.

This charge type is best suited for marketplaces such as Airbnb, a home rental marketplace or Lyft, a ridesharing app.

With this charge type:

• You create a charge on your platform’s account so the payment appears as a charge on your account. Then, you determine whether some or all of those funds are transferred to the connected account (see funds flow diagrams below).
• Your platform account balance is debited for the cost of the Stripe fees, refunds, and chargebacks.

Send the balance after platform fee to your connected account.

Send the full payment amount to your connected account, then charge your platform fee.

Separate charges and transfers

Create charges on your platform and split funds between multiple connected accounts, or hold them when you don’t know the specific user at the time of the charge. The charge on your platform account is decoupled from the transfer(s) to your connected accounts.

This charge type is best suited for marketplaces that need to split payments between multiple parties, such as DoorDash, a restaurant delivery platform.

With this charge type:

• You create a charge on your platform’s account first. Create a separate transfer to move funds to your connected account. The payment appears as a charge on your account and there’s also a transfer to a connected account (amount determined by you), which is withdrawn from your account balance.
• You can transfer funds to multiple connected accounts.
• Your account balance is debited for the cost of the Stripe fees, refunds, and chargebacks.

Transfer funds to multiple connected accounts.

Using separate charges and transfers requires a more complex Connect integration.

Use this charge type if your business has specific use cases:

• A one-to-many relationship. For example, a payment made to a delivery service needs to be split between the store (the source of the items being delivered) and the delivery person.
• A many-to-one relationship. For example, a carpool trip with a ride-hailing service.
• Charges created before the destination account is known. For example, a janitorial service could process a payment before deciding which janitor to assign to the job.
• Need to transfer funds before receiving a payment, or while the charge is pending. For example, an ad network needs to purchase ad space before they can sell ad time or before receiving any payment from customers.
• Transfer amounts greater than the associated payments. For example, a platform provides a discount to its customer but pays its user the full amount.

In some cases, the transfer amount can be greater than the charge amount, or the transfer is made before the payment is processed. You must monitor your account balance carefully to make sure it has enough available funds to cover the transfer amount. You can also associate a transfer with a charge so the transfer doesn’t occur until the funds from that charge are available.

on_behalf_of parameter

To make the connected account the business of record for the payment use the on_behalf_of parameter. When on_behalf_of is set to the ID of the connected account, Stripe automatically:

• Settles charges in the country of the specified account, thereby minimising declines and avoiding currency conversions.
• Uses the fee structure for the connected account’s country.
• Uses the connected account’s statement descriptor.
• If the account is in a different country than the platform, the connected account’s address and phone number shows up on the customer’s credit card statement (as opposed to the platform’s).
• The number of days that a pending balance is held before being paid out depends on the delay_days setting on the connected account.

Stripe fees

There are two components to Stripe fees with Connect: which pricing plan applies to the payment and which account pays Stripe fees.

When using Direct charges, you can choose how Stripe fees are billed to your connected accounts.

Read more about fee billing behaviours with Direct charges.

Destination charges and separate charges and transfers typically use the platform’s pricing plan and are assessed on the platform. When the on_behalf_of field is set, the country of the connected account is used to determine the country specific fees charged to your platform account.

For more information on Connect fees and how to request custom pricing, please see Connect pricing.

Refunds

You can issue a refund to pay back the money spent on the returned good or to compensate for unsatisfactory service. Below describes how refunds are handled for each charge type:

Disputes and chargebacks

For disputes on payments created using direct charges, Stripe debits the disputed amount from the connected account’s balance, not your platform’s balance. Stripe can bill the dispute fee to either the platform or the connected account, depending on the connected account’s configuration. For more detail about how we bill fees for disputes on direct charges, see Fee behaviour on connected accounts.

For disputes where payments were created on your platform using destination charges or separate charges and transfers, with or without on_behalf_of, your platform balance is automatically debited for the disputed amount and fee. When this happens, your platform can attempt to recover funds from the connected account by reversing the transfer either through the Dashboard or by creating a transfer reversal.

If there’s a negative balance on the connected account, Stripe attempts to debit the external account on file for the connected account only if debit_negative_balances is set to true.

For more details, see Disputes and fraud and Dispute categories. You can also use Stripe Fraud Apps to automate dispute management and handle chargebacks.