Choosing a third-party payment processor: Stripe vs. Tipalti

Stripe vs. Tipalti: What’s the best payment processor for your business? 

In today’s payment landscape, having a fast, reliable, and secure payment processing system is non-negotiable. Customers increasingly expect great user experience, personalized features, and compatibility across all devices. In answer to these changing demands, we’ve seen a rise in the quality of popular payment processing solutions. The payment processing industry has reached a high level of maturity, offering businesses flexible, secure, and scalable solutions through providers like Stripe, PayPal, Tipalti, and Square. If your company wants to purchase payment processing software, now might be a great time to shop. 

These platforms deliver robust features such as multi-currency support, fraud detection, and compliance with global regulations, making it easy for businesses to accept payments with minimal upfront investment. The quality of service is generally reliable, with competitive uptime, secure transactions, and strong customer support.  

While we mentioned four of the most popular solutions, in this blog, we’ll dive deeper into Stripe and Tipalti. Our experts believe these two platforms can effectively address various use cases across industries. Based on our expert’s assessment, we’ll provide insights to help you decide which tool to use and when.  

As always, features and functionalities are subject to change, so we advise evaluating each tool against your organization’s unique needs and business objectives, independently confirming features and functionalities, and researching other tools available on the market before making a decision. 

Stripe — a flexible solution with a global reach 

Stripe is a leading payment processing platform that provides a comprehensive suite of APIs and tools for online and in-person payments. It is known for its ease of integration, flexibility, and powerful developer tools, making it an attractive option for businesses of various sizes. Stripe currently supports a wide range of payment methods, including credit and debit cards, Automated Clearing House (ACH) transfers, and digital wallets like Apple Pay and Google Pay. 

Strengths of Stripe as a ready-made solution 

• Ease of integration: Stripe offers developer-friendly APIs and extensive documentation. These features can help businesses integrate payment processing into their websites or apps with minimal development time. 

• Global reach: Stripe supports over 135 currencies and a wide variety of payment methods. The processor’s broader currency support may help businesses looking to expand internationally. 

• Security and compliance: Depending on the user’s integration type, Stripe can help simplify the PCI DSS compliance process. It currently offers built-in fraud detection tools, like Stripe Radar, that may help mitigate risks. 

• Extensibility: Stripe’s API allows for customization. This feature may support businesses building bespoke checkout experiences and help integrate Stripe with their existing tools, such as customer relationship management (CRM) systems, accounting software, and inventory management platforms. 

• Recurring billing and subscriptions: Stripe provides robust tools for managing subscriptions, automated billing, and invoicing. This can be beneficial for businesses with recurring revenue models, such as Software as a Service (SaaS) companies. 

• Scalability: Stripe’s infrastructure is scalable. The tool’s scalable infrastructure can empower businesses to grow without worrying whether their payment system can handle increased transaction volumes. 

Limitations for B2B transactions 

While our experts believe that Stripe is a strong payment processor, especially for business-to-customer (B2C) transactions, the team also identified some potential limitations for business-to-business (B2B) use cases: 

1. ACH transfers: Although Stripe supports ACH transfers, it’s less robust than traditional B2B payment processors that specialize in bank transfers or checks. Stripe’s ACH setup can also be more complex and slower, with transactions taking up to four business days to acknowledge. The slower setup can be a challenge for businesses that rely heavily on direct bank payments. 

2. Invoicing features: Stripe has invoicing features, but they may not be as comprehensive as specialized B2B invoicing tools. B2B companies often require more advanced invoicing capabilities, including features for managing purchase orders, line-item discounts, payment terms, and partial payments, which may not be as flexible with Stripe. 

3. Large transactions: B2B businesses often deal with larger transaction values than B2C businesses, and while Stripe can technically handle large payments, the fees associated with credit card processing (typically 2.9% + $0.30 per transaction) can be prohibitively expensive for high-value transactions (though there may be opportunities to negotiate a lower rate). ACH payments are less costly, but as mentioned earlier, they are slower and may not offer the reliability needed for B2B workflows. 

4. Limited net payment terms: At this time, Stripe does not natively support net payment terms (e.g., Net 30, Net 60), which are common in B2B transactions. Often, B2B customers expect to pay invoices after a specific period rather than immediately, and businesses using Stripe may need to develop custom invoicing workflows as a workaround. 

5. Complex payment workflows: B2B companies often have complex payment approval workflows involving multiple stakeholders. Stripe is designed primarily for quick, consumer-level transactions, and its out-of-the-box workflows may not fully align with the complexity of some B2B approval processes. 

Tipalti — B2B-focused finance automation 

Tipalti is a payment processing and accounts payable (AP) automation platform designed specifically for businesses looking to streamline their invoice management, supplier payments, and overall financial processes. Tipalti focuses heavily on B2B transactions, offering solutions that handle complex payment workflows, multiple payment methods (including virtual cards, ACH, and wire transfers), and compliance and risk management support. It aims to improve cash flow visibility and increase efficiency for companies that process a high volume of payments to suppliers. 

 Tipalti’s strengths as a payment processing solution 

1. B2B-focused features: Tipalti advertises itself as a solution tailored to B2B payment environments. Its core strength lies in handling supplier payments and accounts payable functions, making it highly suitable for companies with complex B2B workflows. 

2. Invoice automation: Currently, Tipalti offers a standout feature — automated invoice processing. This feature can help reduce manual entry, eliminate paper invoices, and accelerate the approval and payment process, allowing businesses to focus on more strategic tasks. 

3. Payment flexibility: Tipalti supports a wide variety of payment methods, including ACH, wire transfers, and virtual cards. This capability can offer crucial support for businesses managing multiple vendor payment preferences. 

4. Supplier portal: The platform includes a supplier portal where vendors can track the status of their invoices and payments. This improves transparency and reduces administrative back-and-forth between buyers and suppliers. 

5. Risk and compliance: Tipalti can also help businesses work toward compliance with industry regulations. Its solutions offer encrypted account data and two levels of authentication, which may help users mitigate fraudulent payments. The tool also offers supplier vetting and auditing features that make it easier for finance teams to manage risks associated with vendor payments. 

6. Enhanced cash flow management: The platform could potentially assist businesses in optimizing cash flow by offering dynamic discounts for early payments and extending payment terms where necessary, giving companies more flexibility in managing their finances. 

Limitations for B2B transactions 

Although Tipalti is designed for B2B, our team of experts flagged potential limitations for companies to consider: 

1. Limited integration for non-ERP users: Tipalti markets itself as a tool optimized for integration with enterprise resource planning (ERP) systems like SAP and Oracle. While Tipalti is expanding its ERP integrations, if a business doesn’t use a currently supported system, integration may require custom development, which can be costly and complex. 

2. Transaction costs for smaller vendors: Certain payment methods may incur higher percentage-based transaction fees, which could impact the cost-effectiveness of processing large volumes of payments. 

3. Complex implementation: While Tipalti is a robust solution, it may require substantial implementation time and resources, particularly for companies with less mature accounts payable processes. This can delay the time to value for businesses that need immediate improvements in payment processing. 

4. High customization needs: For companies with very specific needs or niche workflows, Tipalti may require significant customization to fully meet business requirements. While the platform is flexible, extensive customization can increase costs and implementation time. 

5. Global support: While Tipalti covers a vast number of countries and currencies, specific regions or currencies might not be supported or have limited capabilities. 

6. Transaction volume and amount limits: Tipalti can handle substantial payment volumes, but certain payment methods may have inherent limitations. For instance, PayPal mass-payment transactions may not be available in all countries, potentially affecting the efficiency of processing large batches of payments. Also, specific payment methods may impose caps on transaction amounts. For example, PayPal allows businesses to send up to $60,000 per transaction once the account is verified. It’s important to note that these limits are set by the payment method providers and not by Tipalti. 

Which third-party solution should you choose? 

Although the market offers a few robust and versatile processors, there is no one-size-fits-all solution. It’s also important to remember that providers are constantly innovating their solutions to keep up with emerging trends and technology and resolving tool limitations. 

Based on the assessment of our finance experts, B2C companies or small-to-medium B2B businesses may want to consider Stripe. Why? These organizations often prioritize ease of integration, speed-to-market, and global payment capabilities, and Stripe might be a good solution for startups, e-commerce platforms, and businesses with straightforward payment processing needs.  

On the other hand, Tipalti might be a solid choice for medium-to-large B2B enterprises with complex accounts payable workflows, significant vendor management needs, and a requirement for invoice automation. Our experts found that Tipalti’s current features work well in environments where B2B payments, supplier relationships, and cash flow management are critical. 

Is developing your own solution a good choice? 

You might also explore the option of building a payment processing system based on your organization’s size, industry, and unique needs — such as transaction complexity and growth ambitions. While custom payment solutions usually require more upfront investment than third-party platforms, they can offer more compliance control, security, and flexibility. 

For a more detailed analysis, download our recent eBook, “Build or buy: Choosing the best approach for your payment processing system.” The eBook provides a comprehensive overview of what you should consider when building or buying a payment processor, including the pros and cons of bespoke and ready-made solutions and a quiz to help you decide.