What distinguishes Direct Charges from Destination Charges?

Direct Charges and Destination Charges are both payment models used in Stripe, but they have distinct characteristics that determine how the transactions are structured and who is involved in the payment process.

The key difference lies in the way the transaction is handled. In Direct Charges, the transaction occurs solely between the customer and the connected account (such as a seller or service provider). This means the connected account directly receives the payment from the customer without involving the platform as an intermediary in the financial transaction. As a result, the platform does not take a cut from the transaction itself. Instead, it may charge the connected accounts fees separately.

In contrast, Destination Charges involve the platform in facilitating the payment, where the customer's payment is directed to the platform, which then transfers the funds to the connected account after deducting any fees or charges. This model allows the platform to maintain more control over the payments and manage fees more transparently.

Understanding this distinction is essential for choosing the right payment structure based on the nature of the transaction and the relationships between the parties involved. The focus on transactions occurring directly between the customer and the connected account underscores the straightforward nature of Direct Charges, making it particularly useful for scenarios where the customer needs a direct purchase experience with the service provider.