Choosing Stripe Connect: A Lesson Learned the Hard Way

I was building a platform where users needed to get paid directly. Stripe restricted the account. The reason? I'd selected the wrong business category.

Since I'm learning as I'm building, I run into problems I haven't come across before. But the upside is solving them forces me to understand things much more deeply. This Stripe issue was no exception.

The Problem

I was working on a client project where a major part involved setting up Stripe payments. Everything was working until Stripe restricted the account because I had selected the wrong business category.

That forced me to properly learn the difference between Stripe Single Account and Stripe Connect.

Stripe Single Account vs Stripe Connect

Stripe Single Account is, as the name suggests, for businesses selling their own products or services. It's great for normal e-commerce but not suitable for marketplaces or platforms.

My mistake was assuming it would work—but what I was building was a platform, not a standard single-business setup.

Stripe Connect is built for platforms where users need to get paid directly. Each user connects their own Stripe account, payments go directly to them, and Stripe handles payouts, compliance, and onboarding. The platform never touches funds or card details—exactly the setup I needed.

Understanding the OAuth Flow

Once I understood the difference, the next step was getting a high-level overview of Stripe's OAuth flow:

1. User clicks a button to connect their Stripe account
2. They're redirected to Stripe's OAuth page
3. They log into Stripe, fill in details, and authorize the connection
4. Stripe sends them back to my app with a special one-time code—the authorization code
5. Backend takes the code and immediately sends it to Stripe's API to exchange it for a Connected Account ID
6. That Connected Account ID is saved in the database and used for all future payments for that user

Here's the key part of the implementation:

// Exchange authorization code for Connected Account ID
const response = await stripe.oauth.token({
  grant_type: 'authorization_code',
  code: authorizationCode,
});
const connectedAccountId = response.stripe_user_id;

// Save to database
await saveConnectedAccountId(userId, connectedAccountId);

What I Learned

Understanding the difference between Single Account and Connect upfront saves time. If users need to get paid, use Connect from the start—don't assume Single Account will work.

Once the OAuth flow clicked, everything else fell into place. Understanding the Stripe connection flow during debugging became so much easier because I knew what each step was doing and why.

Gotchas to Watch For

• OAuth cancellation: Users can cancel the OAuth flow. Handle this gracefully and allow them to retry.

• Account updates: Connected accounts can be updated or disconnected. Set up webhooks to handle account status changes.

• Testing: Use Stripe's test mode with test accounts. Don't test with real accounts.