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PSD2 Compliance

How does Tipr approach payments?​

Tipr uses Stripe as its exclusive payment processor.

The payments regulatory burden in Europe falls on Stripe and their e-money license, rather than on Tipr. The payment flows ensure that Tipr does not come into possession or control of funds.

Tipr facilitates tipping rather than making sales or providing as service, and, as Tipr is acting on behalf of both Guests and Employees, it is critical that Tipr does not come into possession or control of funds. This is the central regulatory pillar behind our compliance with European payment regulations, and the central pillar of Stripe’s Connect platform.

By using Stripe Connect, Stripe contracts with both the Employee and Tipr to settle payments to the Employee and fees to Tipr. Funds that are owed by the Guest to the Employee are never in the possession or control of Tipr. Instead, these funds are settled to Stripe’s regulated client money bank account for the benefit of the Employee, before being paid out to the Employee by Stripe. The regulated payment services are rendered by Stripe instead of Tipr, so that Tipr does not incur the significant regulatory and compliance overhead of getting a payments license or exemption. Returning to our combined liability and funds flow diagram, Tipr operates like this:

In addition to taking on the payments regulatory burden, Stripe’s product design also provides other benefits and safeguards for Tipr, including:

  • Onboarding and KYC identity verification - Stripe onboards Employees as Stripe users and verifies their identity in accordance with applicable anti-money laundering obligations.
  • Innovative payment functionality within Stripe Connect that supports many business models, e.g., One-to-Many, Many-to-Many, Holding Funds, Account Debits, Instant Payouts, and more.
  • Local transaction routing, resulting in better acceptance rates and lower-cost payments from customers in 135+ currencies and payment types, including SEPA direct debit, Sofort, Alipay, WeChat Pay, and more.
  • Local payouts to employees in local currencies, allowing Tipr to internationalise their businesses without local entities or bank partners (enabling payouts in 15+ currencies in 30+ countries around the world).
  • Protection of sensitive card information to a PCI Level 1 standard so that Tipr don’t have to worry about being PCI compliant.
  • Advanced modeling and machine learning, which powers Stripe Radar, to monitor transactions from end to end, detect and prevent fraud, and take action where we find suspicious activity.

In summary, Stripe Connect provides Tipr with a compliant payments flow that enables Tipr to design their agreements with Employees in compliance with local payments law, without having to pursue our own payments licenses and become regulated businesses.

Stripe shoulders this regulatory burden so that Tipr can focus its time and resources on developing its product offerings.