When should you consider using destination charges on Stripe?

Using destination charges is particularly relevant when a customer purchases services provided by the platform's connected account. This scenario is essential for several reasons. Firstly, destination charges allow the platform to facilitate payments directly from the customer to the connected account, ensuring that the funds are appropriately routed to the service provider. This is important for platforms that enable third-party services, as it streamlines the revenue process for all involved.

When a transaction occurs, the destination charge facilitates the payment processing workflow by directing the funds to the correct account while still allowing the platform to take a fee if necessary. This model enables the platform to maintain its role as an intermediary without managing or holding onto the funds directly, which can reduce compliance and risk management burdens.

Additionally, the use of destination charges supports better accounting practices, as it provides clear visibility into which service provider received the payment and for what specific service. This transparency can be critical for reporting and reconciliations on both the platform's side and the connected accounts.

In contrast, using destination charges may not be as relevant for scenarios involving multiple users or when products are sold on behalf of the platform without specific services being provided. In those cases, other charge types or revenue models might be more fitting depending on the nature of the transaction and relationships