Create a charge

To accept a payment from a customer, you must first create a charge. The type of charge you create 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

Charges can be direct charges, which are payments made directly to a connected account, or indirect charges, which are payments made to your platform. Indirect charges include destination charges and separate charges and transfers, which differ in the way they transfer funds from your platform to connected accounts.

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. The account’s customers are often unaware of your platform’s existence. You can add an application fee, which transfers to your platform’s account balance when the connected account collects the payment.

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 connected account, so the payment appears in the connected account’s balance, not in your platform’s balance.
• The connected account’s balance increases with every charge.
• Funds always settle in the country of the connected account.
• Your platform’s balance increases with any application fees you collect for a charge.
• Refunds and chargebacks reduce the connected account’s balance.
• You can choose whether to have Stripe debit fees directly from connected accounts or from your platform account.
• You can use Stripe Managed Risk if you meet these additional requirements.

Destination charges

Create a charge on the platform and immediately transfer funds to the 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 a home rental marketplace or a ridesharing app.

With this charge type:

• You create a charge on your platform, so the payment appears in your platform’s balance. A portion of the funds immediately transfers to the connected account’s balance (see the funds flow diagrams below).
• The portion of the funds that remains in your platform balance represents the fee you charge your connected account.
• Refunds and chargebacks reduce your platform’s balance.
• Stripe debits fees from your platform’s balance.

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 transfers 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.

For Express and Custom accounts, Stripe recommends that you create separate charges and transfers if destination charges don’t meet your business needs.

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.

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 to minimize declines and avoid currency conversions.
• Uses the fee structure for the connected account’s country.
• Uses the connected account’s statement descriptor.
• Uses the connected account’s address and phone number (rather than the platform’s) on the customer’s statement if the connected account is in a different country than the platform.
• Pays out a connected account, depending on the days specified in its delays_days setting.

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 behaviors 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 a customer back for money spent on a returned good or to compensate for unsatisfactory service. Stripe handles refunds for each of the following charge types:

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 behavior 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 Fraud Stripe Apps to automate dispute management and handle chargebacks.