How to activate payouts in Stripe?

How to Activate Payouts in Stripe: A Comprehensive Tutorial

 

Step 1: Create and Set Up Your Stripe Account

 

Before you can activate payouts, you need to have a Stripe account properly set up. If you don't have one yet, follow these steps:

• Go to stripe.com and click "Sign up"
• Enter your email, full name, and create a secure password
• Verify your email address through the confirmation link Stripe sends you
• Complete the initial business information Stripe requests

 

Step 2: Complete Your Business Information

 

To activate payouts, you need to provide complete business details:

• Log in to your Stripe Dashboard at dashboard.stripe.com
• Click on "Settings" in the left sidebar
• Select "Business settings"
• Fill out all required information about your business, including:
  • Business name and legal structure
  • Business address
  • Industry and business description
  • Tax ID number (EIN for US businesses)
  • Website URL
• Click "Save" after completing each section

 

Step 3: Verify Your Identity

 

Stripe requires identity verification to comply with financial regulations:

• Navigate to "Settings" → "Account settings" in your dashboard
• Under the "Verification" section, click "Verify identity"
• Provide your personal information:
  • Full legal name
  • Date of birth
  • Home address
  • Last 4 digits of SSN (for US-based accounts)
• Upload a photo of your government-issued ID (passport, driver's license, or ID card)
• Take a selfie if prompted for additional verification

 

Step 4: Add and Verify Your Bank Account

 

To receive payouts, you must connect a bank account:

• Go to "Settings" → "Payments" in your dashboard
• Click on "Bank accounts and scheduling"
• Click "Add a bank account"
• Enter your banking details:
  • Account holder name (must match the name on the account)
  • Account type (checking or savings)
  • Routing number
  • Account number
  • Bank account currency
• Verify your bank account using one of Stripe's verification methods:
  • Instant verification (where available)
  • Micro-deposits verification (takes 1-2 business days)

For international accounts, you may need to provide additional details like:

• IBAN or SWIFT code
• Sort code
• BSB number
• Branch code

 

Step 5: Configure Your Payout Settings

 

Once your bank account is verified, configure your payout preferences:

• Navigate to "Settings" → "Payments" → "Bank accounts and scheduling"
• Click "Edit" next to "Payout schedule"
• Choose your preferred payout frequency:
  • Daily (funds arrive 2 business days after capture)
  • Weekly (specify the day of the week)
  • Monthly (specify the day of the month)
  • Manual (you'll initiate payouts yourself)
• Set a minimum payout amount if desired
• Click "Save" to apply your settings

 

Step 6: Implement Payout Functionality in Your Code (Optional)

 

If you need to programmatically manage payouts, you can use Stripe's API:

For Node.js:

const stripe = require('stripe')('sk_test_your_secret_key');

async function createPayout() {
  try {
    const payout = await stripe.payouts.create({
      amount: 1000, // amount in cents
      currency: 'usd',
    });
    console.log('Payout created successfully:', payout.id);
    return payout;
  } catch (error) {
    console.error('Error creating payout:', error);
    throw error;
  }
}

createPayout();

For Python:

import stripe
stripe.api_key = "sk_test_your_secret\_key"

try:
    payout = stripe.Payout.create(
        amount=1000,  # amount in cents
        currency="usd",
    )
    print(f"Payout created successfully: {payout.id}")
except Exception as e:
    print(f"Error creating payout: {str(e)}")

For PHP:

 1000, // amount in cents
        'currency' => 'usd',
    ]);
    echo 'Payout created successfully: ' . $payout->id;
} catch (\Exception $e) {
    echo 'Error creating payout: ' . $e->getMessage();
}

 

Step 7: Monitor Your Payout Status

 

After configuring payouts, it's important to monitor their status:

• Go to the "Payments" → "Payouts" section in your dashboard
• Here you can view:
  • Pending payouts
  • Completed payouts
  • Failed payouts
  • Payout history
• Click on any individual payout to see detailed information
• Set up webhooks to receive notifications about payout events

To set up webhooks for payout notifications:

// Server-side code to handle webhook events (Node.js example)
const express = require('express');
const stripe = require('stripe')('sk_test_your_secret_key');
const app = express();

// Use JSON parser for webhook requests
app.use('/webhook', express.raw({type: 'application/json'}));

app.post('/webhook', async (req, res) => {
  const sig = req.headers['stripe-signature'];
  let event;

  try {
    event = stripe.webhooks.constructEvent(
      req.body,
      sig,
      'whsec_your_webhook_signing_secret'
    );
  } catch (err) {
    return res.status(400).send(`Webhook Error: ${err.message}`);
  }

  // Handle payout events
  if (event.type === 'payout.created') {
    const payout = event.data.object;
    console.log(`Payout created: ${payout.id} for ${payout.amount / 100} ${payout.currency}`);
  } else if (event.type === 'payout.paid') {
    const payout = event.data.object;
    console.log(`Payout paid: ${payout.id}`);
  } else if (event.type === 'payout.failed') {
    const payout = event.data.object;
    console.log(`Payout failed: ${payout.id}, reason: ${payout.failure_message}`);
  }

  res.json({received: true});
});

app.listen(3000, () => console.log('Running on port 3000'));

 

Step 8: Troubleshoot Common Payout Issues

 

If you encounter issues with payouts, follow these troubleshooting steps:

• Check for incomplete verification:
  • Ensure all identity verification steps are complete
  • Verify your bank account information is correct
  • Make sure all business information is up-to-date
• Review account restrictions:
  • Look for any warning messages in your dashboard
  • Check if your account has been flagged for review
• Confirm sufficient balance:
  • Verify you have enough available balance for the payout
  • Check for any pending disputes or refunds that might affect your balance
• For failed payouts:
  • Note the failure reason provided by Stripe
  • Contact your bank to ensure they're not rejecting Stripe transfers
  • Verify the bank account is still active and can receive deposits

 

Step 9: Setting Up Connect for Marketplace Payouts (Optional)

 

If you're building a marketplace or platform where you need to pay out to third parties:

• Navigate to "Connect" in your Stripe dashboard
• Set up your platform using one of the Connect integration types:
  • Standard Connect: Stripe hosts the onboarding process
  • Express Connect: Customizable onboarding with Stripe handling compliance
  • Custom Connect: Fully customized onboarding experience
• Implement the onboarding process for your connected accounts

Code example for creating a payout to a connected account:

const stripe = require('stripe')('sk_test_your_secret_key');

async function createConnectedAccountPayout(connectedAccountId) {
  try {
    const payout = await stripe.payouts.create(
      {
        amount: 1000, // amount in cents
        currency: 'usd',
      },
      {
        stripeAccount: connectedAccountId, // ID of the connected account
      }
    );
    console.log(`Payout created for connected account: ${payout.id}`);
    return payout;
  } catch (error) {
    console.error('Error creating connected account payout:', error);
    throw error;
  }
}

// Example usage
createConnectedAccountPayout('acct\_123456789');

 

Step 10: Best Practices for Managing Payouts

 

Follow these best practices to ensure smooth payout operations:

• Regularly reconcile payouts:
  • Match Stripe payouts with your bank statements
  • Create automated processes to track and verify payouts
  • Set up accounting integrations with Stripe
• Implement proper error handling:
  • Monitor webhook events for payout failures
  • Set up email notifications for payout issues
  • Create retry mechanisms for failed payouts
• Maintain security best practices:
  • Regularly rotate API keys
  • Use restricted API keys with minimal permissions
  • Implement proper authentication for admin users who can manage payouts
• Keep documentation updated:
  • Document your payout processes
  • Create internal guidelines for handling payout issues
  • Maintain a knowledge base for common payout scenarios