【Reproduction】How does Stripe work?

Author: Bozo Juretic

Source: https://www.quora.com/How-does-Stripe-work/answer/Bozo-Juretic?share=d8a82579&srid=5cZpe

Actually it is not complex at all. Think of Stripe as a normal PSP (using the European terminology) with a fancy API on top and you are there.

Let's get into bit more details..

In order to accept cards online a "provider" needs to have a deal with the acquiring bank in the background, which is in turn a member of the Visa/MasterCard and possibly other networks, and is the main responsible party in the legal sense as under both the domestic payment laws and Visa/MasterCard rules.

"Provider" can be just a technical processor ("payment gateway"), in which case it never deals with the customer funds (merchant revenue), or it can be an "aggregator", which means that the money is settled from the acquiring bank not directly to each merchant, but through the aggregator.

So in the processing model sense, Stripe is an aggregator (or (i)PSP if you like the European terminology).

In order to be an aggregator Stripe needs to have: 

a financial license of sorts (so that they follow certain rules when managing other people's funds) and

have a PCI-DSS certified processing platform/software and

of course, a deal with an acquiring bank which will accept them as an iPSP.

That is it.

On the technical side you should really just check the demos of the checkout page and see the API documentation on their site.