Capabilities framework overview

    Learn about the capabilities framework and some of the use cases it supports.

    Government regulations require platforms to collect and verify information from users. This can be especially challenging for global platforms because regulations vary widely across the world.

    The Stripe capabilities framework

    Each account your platform creates represents an individual or business. You only need to request the information required by the capabilities that are assigned to the connected account, based on business type, country, and activity. The capabilities framework matches information requirements to each account you onboard, which helps you optimize the onboarding process.

    When you complete the platform profile questionnaire, Stripe provides recommendations for your integration and enables some capabilities for your connected accounts. You can test capabilities in test mode before completing the platform profile, but you won't be able to use them in live mode. To make onboarding as easy as possible, only request the capabilities you require.

    You can review the specifics of any capability with the API. The more capabilities you request, the more information you must collect. For example, a company that uses the transfers capability to pay its contract workers has minimal onboarding requirements to use this capability. On the other hand, an e-commerce platform using the card_payments capability to enable sellers to accept card payments must go through a more involved onboarding process.

    Multiple capabilities

    Having multiple capabilities set on an account is common but keep the following considerations in mind if you do this:

    • Capabilities operate independently of each other.
    • The exception is that if both card_payments and transfers are set on an account, both capabilities are disabled if either one is set to inactive.
    • You can request or unrequest any capability for a connected account at any time during the account’s lifecycle.

    Capabilities also allow you to collect information for multiple purposes at the same time, so users won’t be asked to submit the same information more than once. An example would be collecting both required tax information and the information required for a requested capability. If you onboarded a user who needed the transfers capability and who was also required to file an IRS FORM 1099-MISC (a U.S. federal tax reporting form), you could collect all of the required information for both at the same time.

    Supported capabilities

    The following is a list of available capabilities. Click on the items to get more information about them:

    Transfers

    You can transfer funds to connected accounts that have the transfers capability. On-demand platforms often use it to pay their connected accounts. For example, a ride-hailing platform could use this capability so they can pay their drivers. The following diagram illustrates the flow of funds and the relationship between the customer, platform, and connected account.

    Relationship between the customer, connected account, and platform.

    Your customer's bank statement displays your platform's information, and not that of the connected account, when you process charges using the transfers capability. The reason for this is because your platform processes the charges (as opposed to the connected account).

    You can use transfers with the following account and charge types:

    Account types Charge types Stripe's recommendation
    Express with destination charges

    Cross-border transfers

    Moving money across country borders introduces additional requirements. Transfers are not supported cross-border, except in the European Union (EU) where transfers between SEPA countries, other than the United Kingdom (GB), are supported.

    When a platform account is in a different country from the connected account, charges must be made directly on the connected account (using card_payments), or with the connected account specified as the settlement merchant (using on_behalf_of).

    If you don't want charges to be made directly on the connected account, create a platform account in that same region and onboard accounts to that account. Depending on your business structure, this might require creating a legal entity in that region and additional work to onboard users to the new platform account.

    Card payments

    Connected accounts with this capability can process (their own) credit card payments and ACH payments. For example, an e-commerce platform would use this capability so each storefront can collect payments. Without triggering additional requirements, connected accounts can also receive payments from your platform if the transfers capability is added. Many e-commerce platforms use both card_payments and transfers so their connected accounts can collect payments from customers as well as receive payments from the platform. The following diagram helps illustrate the flow of funds and the relationship between the customer, platform, and connected account:

    Relationship between the customer, connected account, and platform.

    Connected accounts with the card_payments capability have their statement descriptor displayed on the customer's bank statement, not the platform's.

    You can use card_payments with the following account and charge types:

    Account types Charge types Stripe's recommendation
    Standard with direct charges

    U.S. tax reporting

    The U.S. Internal Revenue Service (IRS) requires some platforms to file 1099 forms with the IRS between January and March, and to deliver the reporting of those filings to their users by January 31. As a result, these platforms need to collect additional user information.

    If your platform has federal 1099 filing requirements and you decide to file through Stripe, you can use the tax_reporting_us_1099_misc and tax_reporting_us_1099_k capabilities to collect the necessary personal and business information from your users.

    1099-MISC form

    Many types of payments require an IRS Form 1099-MISC, such as payments to non-employees or contractors, royalties, prizes, and so forth. The tax_reporting_us_1099_misc capability helps you collect the required information for Form 1099-MISC. For example, a dog-walking platform could use the tax_reporting_us_1099_misc capability to collect the necessary information from their dog walkers for tax filing season.

    1099-K form

    A 1099-K form reports payments received from credit card transactions and third-party payment networks. Traditionally, third-party settlement organizations have used Form 1099-K to report their gross payment transactions in a calendar year. For example, an e-commerce platform would use the tax_reporting_us_1099_k capability to collect the necessary information from each storefront for tax filing season.

    Next steps

    Now that you know about capabilities, read on to learn about managing them.

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