What a payment link is and how it connects to your bank

A payment link is a URL you send to someone that opens a payment form. When they enter their card details and submit, the money moves from their account to yours—but the link itself doesn't hold any of your banking information. Instead, it connects to a payment processor (Stripe, Square, PayPal, or similar), which then routes the funds into your bank account on a schedule you set up.

The link is safe to share publicly because it doesn't expose your account number, routing number, or login credentials. The payment processor handles the transaction, takes a small fee, and deposits what's left into the bank account you registered with them during setup.

You create the link through a payment processor's dashboard, not through your bank. Your bank sees the deposit later, after the processor has collected and settled the payment.

Key Takeaways

  • Payment links are created through a payment processor (Stripe, Square, PayPal, Wise), not your bank, and they route money into a bank account you connect during setup.
  • You need a business or personal bank account, a valid email address, and usually a government ID to create a processor account and link your bank.
  • The payment processor takes a percentage fee (typically 2.2% to 3.5% plus a fixed amount per transaction) before depositing the remainder into your account.
  • Settlement timing varies: some processors deposit daily, others weekly, and a few hold funds for 7 to 14 days before releasing them.
  • Payment links can be customized with your business name, logo, and a description of what the payment is for, but the processor always appears somewhere on the form.

Choosing a payment processor and signing up

The processor you choose determines the fee structure, settlement speed, and what customization options you get. Stripe charges 2.2% plus 30 cents per card transaction and deposits daily to your bank account. Square charges 2.6% plus 30 cents and also settles daily. PayPal charges 2.2% plus 30 cents for standard transactions. Wise (formerly TransferWise) charges a smaller percentage but is designed more for international transfers than domestic invoicing.

To sign up, go to the processor's website and click the button for "Create Account" or "get your free guide." You'll enter your email, create a password, and choose whether you're signing up as a sole proprietor, business, or nonprofit. Have your bank account details ready—you'll need your routing number and account number, which you can find on a check or in your online banking portal.

Most processors ask for a government-issued ID (driver's license or passport) and your Social Security Number or EIN. This is standard Know Your Customer (KYC) verification. The processor uses this to confirm you are who you say you are and to comply with anti-money-laundering rules. Verification usually takes a few minutes to a few hours.

Connecting your bank account to the processor

After you verify your identity, the processor will ask you to link your bank account. Click "Add Bank Account" or "Connect Bank" in the settings or payments section of the dashboard. You'll enter your routing number, account number, and the account holder's name.

Some processors (Stripe and Square, for example) use microdeposits to verify the account. They send two small deposits (usually under $1 each) to your bank account within 1 to 2 business days. You then log back into the processor's dashboard and enter the exact amounts of those deposits. This confirms you own the account. Once verified, those deposits are returned to the processor.

Other processors use when ready verification through Plaid, a service that connects to your online banking login. You enter your bank username and password into Plaid (not the processor), and Plaid confirms your account ownership directly with your bank. This is faster—usually when ready—but requires you to share your banking credentials with a third party.

After your bank account is verified, the processor will deposit any payments you receive into that account on their settlement schedule. You can usually change which account receives deposits by going back to the settings and updating the linked account.

Creating and customizing your payment link

Once your bank account is connected, go to the "Payment Links" or "Invoices" section of your processor's dashboard and click "Create Link" or "New Invoice." You'll fill in the payment amount, a description of what the payment is for (for example, "Consulting services" or "Product order"), and optionally your business name and logo.

The description appears on the payment form the customer sees, so be clear about what they're paying for. Some processors let you add a custom message or terms. You can also set whether the link expires after a certain date or number of uses, which is useful if you're sending a link for a one-time payment or a limited-time offer.

The processor will generate a unique URL—something like pay.stripe.com/pay/cs_live_abc123. This is your payment link. You can copy it and send it via email, text, or post it on a website. Every time someone clicks the link, they see the payment form with your business name, the amount, and the description you entered.

The processor's branding always appears on the form—you cannot remove it entirely. However, you can usually customize colors, fonts, and whether to show your logo. The payment form itself is hosted by the processor, not on your website, so you don't have to build or maintain it.

Understanding fees and settlement timing

Payment processors charge a percentage of each transaction plus a fixed amount. Stripe and PayPal both charge 2.2% plus 30 cents for card payments. Square charges 2.6% plus 30 cents. These fees are deducted before the money reaches your bank account.

If someone pays you $100 through Stripe, Stripe takes $2.30 (2.2% of $100 plus 30 cents) and deposits $97.70 into your bank account. You see both the full amount and the fee breakdown in your processor dashboard, but your bank only receives the net amount.

Settlement timing is how long it takes from when the customer pays until the money lands in your bank account. Stripe and Square both settle daily, meaning if you receive a payment on Tuesday, it typically arrives in your bank account by Wednesday or Thursday. PayPal settles daily as well, but holds funds for 24 hours after the transaction. Some processors hold funds for 7 to 14 days before releasing them, which is slower but less common for established processors.

You can check your settlement schedule in the processor's dashboard under "Payouts" or "Settlements." This shows you exactly when each payment will arrive in your account.

Security and what happens when someone pays

When a customer clicks your payment link and enters their card details, that information never touches your computer or your bank. The processor's payment form is encrypted and PCI-compliant, meaning it meets the security standards required by credit card networks. Your bank account details are also never shown to the customer.

The processor stores the customer's card information securely (or doesn't store it at all, depending on their policy). You can see in your dashboard that a payment was received, who sent it, and when it will settle, but you never see the full card number.

If a customer disputes the charge with their bank, the processor handles the chargeback process. You'll be notified in your dashboard, and the processor may reverse the deposit if the chargeback is upheld. Most processors charge a chargeback fee (typically $15) if the dispute is lost.

Sharing your payment link and tracking payments

You can send your payment link anywhere: email, text message, social media, or embedded on a website. The link works the same way regardless of how it's shared. When someone clicks it, they see the payment form and can pay with a credit card, debit card, or sometimes a digital wallet like Apple Pay or Google Pay (depending on the processor).

Every payment appears in your processor's dashboard with a timestamp, the payer's name and email, the amount, and the fee. You can read a CSV file of all transactions for your records or to import into accounting software. Most processors also send you an email receipt after each payment, and you can send a receipt to the customer as well.

If you need to refund a payment, you can do that from the dashboard. The refund goes back to the customer's card, and the processor's fee is usually not refunded to you—you absorb that cost. The refund typically takes 3 to 5 business days to appear on the customer's statement.

Frequently Asked Questions

Can I create a payment link without a business license?

Yes. Most processors allow sole proprietors and individuals to create accounts. You don't need a business license, though you will need a government ID and either a Social Security Number or an EIN. If you're operating as a sole proprietor, your SSN is sufficient.

What happens if my bank account is closed after I set up the payment link?

The payment link itself stays active, but when someone pays, the processor will try to deposit the money into the closed account and fail. You'll receive a notification in your dashboard, and the processor will hold the funds temporarily (usually 30 days) while you update your bank account information. If you don't update it, the funds are returned to the customer.

Can I use a payment link for recurring payments or subscriptions?

Payment links are designed for one-time payments. If you need recurring payments, you'll need to set up a subscription or invoice feature in your processor's dashboard instead. These allow you to charge a customer on a schedule (weekly, monthly, yearly) without them having to click a new link each time.

Do I need to report payment link income to the IRS?

Yes. Income from payment links is taxable income. Most processors issue a 1099-K form at the end of the year if you receive over a certain threshold (currently $5,000 in some states, $20,000 in others, depending on the processor and your location). Keep records of all transactions for your tax return.

Can someone pay with a bank account instead of a card?

Some processors offer ACH (bank transfer) as a payment method on payment links, but it's not standard. Stripe and Square primarily accept card payments through payment links. PayPal accepts both cards and bank transfers. Check your processor's documentation to see if ACH is available for your account type.