Stripe vs PayPal comparison: Which Payment Gateway You Should Use?
Two big names are likely to come up as you go through the task of finding out how to take payments online through the website of your small business: Stripe and PayPal. You are looking at two payment processing firms that offer their services in slightly different ways when it comes to Stripe vs PayPal, but can eventually do the same for your company, enabling your consumers to buy your goods or services online.
So what is the Stripe vs. PayPal difference? And, once you have narrowed down your Stripe or PayPal online payment options, how do you pick between the two?
To help you discern between Stripe and PayPal, we’ve assembled a guide. Plus, once you have narrowed down the choices for these two online payment providers, we will help you determine if your company’s best choice is Stripe or PayPal, or another alternative.
Table of contents
- What are Stripe & PayPal?
- How do payment gateways & payment service providers work?
- Stripe vs PayPal comparison: Which one is better?
- Final reviews of Stripe & PayPal
What are Stripe & PayPal?
Both Stripe (founded in 2011) and PayPal (founded in 1998) are payment gateways, working to allow and accept payments as the middle man between retailers and the required credit card networks/financial institutions.
The intricacies of these experiences can become very complex. As an envoy that routes information between retailers and banks, an easy way to look at a payment gateway is.
Here’s a graphic overview of where e-commerce websites crash into payment gateways.
A payment gateway is not the only solution for online payment adoption, but it is one of the easiest ways to get started with.
Since gateways offer your financial data, the armed guard that it requires to move between the credit card networks, your client, and your store, unlike a payment processor.
In other words, it will help take the PCI enforcement off your back in certain situations. And if you plan to follow the portal route, you can come across Stripe and PayPal over and over again. There are several other payment gateways, such as Authorize. Net, 2Checkout, Braintree (owned by PayPal), but Stripe and PayPal are two of the easiest to use by far.
Stripe vs. Paypal work quite similar to each other as a payment gateway. In more detail, however, Stripe is an online payment service that helps users to take and transfer money over the internet. In the field of eCommerce, its popularity is increasing. Because of its customizable development instruments, Stripe is particularly liked by code-savvy individuals or teams of in-house programmers. For small businesses, it’s a common alternative, but it is also used by companies including Pinterest, Lyft, Blue Apron, and TaskRabbit.
On the other hand, PayPal is a payment solution that allows online purchases to be made and received by customers, and it is also well-known. PayPal, with over 21 million retailers, appears to have over 267 million user accounts. These days, nearly everybody has a PayPal account, and it is easily one of the most popular faces in the field of eCommerce payments.
How do payment gateways & payment service providers work?
In the last part, we discuss and witness Stripe vs PayPal as payment gateways. It will seriously simplify the quest for your company’s best online payment solution by recognizing all payment gateways and payment service providers (PSPs for short). So this part is about breaking down the terms and concepts.
Payment gateways provide the option to allow internet purchases to someone with an e-commerce website or brick-and-mortar shop, kind of like a go-between a card network and the payment processor of your company. As part of their operation, both Stripe and PayPal provide payment gateways, which is essential for those seeking to receive payments online.
To completely accept and collect customer payments both online and by a number of other means, payment processing providers provide business owners with the merchant accounts and services required. For handling online orders, payment service providers have both payment gateways and merchant accounts. Both Stripe and PayPal are payment service providers, so be assured that you will get everything you need from both of these providers to start making payments online and in person.
There is one more aspect that is important to consider when it comes to Stripe vs PayPal in terms of the way they all offer their services. Stripe and PayPal are called “aggregators.” This suggests that they group all of their customers under one broad merchant account, rather than giving their own dedicated merchant account to each customer. Business owners’ advantage is that beginning to process online credit card payments through either Stripe or PayPal is quick to get accepted, as aggregators have a lower barrier for accepting new customers than a dedicated merchant account provider.
However, when it comes to account holdings and terminations, be mindful that aggregators have a spotty track record. Generally speaking, since they have a smaller capacity for theft and chargebacks, you are more likely to face delays with your operation dealing with an aggregator. But aggregators like Stripe and Square are among your best and cheapest choices if you’re trying to start processing payments fast.
Now that you have an appreciation of these two important principles for the Stripe vs PayPal problem, let’s compare and contrast these two online payment solutions and see which is the company’s better choice.
Stripe vs PayPal comparison: Which one is better?
It is hard to tell which one is better. Stripe vs PayPal, however, shows their strengths and weaknesses in supporting multiple types of the e-commerce business. They may share some similarities, but the differences must be the ones you should seriously consider to and from that you can decide which method will be the one for your business.
When it comes to Stripe vs PayPal, you can see that there are quite a few parallels. Both are payment processing providers, both provide payment gateways, both allow you to accept online payments, and both provide added benefits such as invoicing and recurring billing.
But there are some unique aspects in which these two services are equivalent that haven’t been listed yet.
PCI compliance for their retailers is managed by both Stripe and PayPal
PCI compliance is a series of security requirements intended to ensure that a safe environment is established by all entities that receive, process, store, or transfer credit card information. PCI enforcement is administered on your behalf at no extra charge for both Stripe and PayFlow Pro, which can save a lot of time for your business.
You are not forced to sign long-term contracts with either PayPal or Stripe
Instead, at any point, without paying an early termination charge, you will pay when you go and cancel. In comparison, it’s pretty straightforward to apply for a Stripe or PayPal merchant account, and both are payment processing providers. However, the purchases are often much more scrutinized by payment processing providers because this is a double-edged sword.
If you’re a high-risk merchant, you’ll have a rough time considering Stripe vs PayPal for the official payment account for your channel. This goes back to them being suppliers of payment systems that take a larger level of liability when they do not underwrite.
Outstanding customer care services are provided by both Stripe and PayPal
You can navigate a support center with helpful tutorials and guidance on both Stripe’s and PayPal’s websites. Community forums, developer documentation and email, live chat, and telephone support are also available (although only Stripe provides 24/7 telephone support).
Pricing & fees
The first thing you think when connecting your organization to any new software or program is how much it would cost. Transaction charges can be best defined as a fee charged per purchase, according to Christine Choi at FitSmallBusiness.com. But both PayPal and Stripe are free to use, as luck would have it, at least the simple plans are. So, it’s easy to sign up. Only enter the details of the account and get started. To start any programs, there’s nothing to pay, no monthly costs levied, and so on.
That said, when you continue to receive fees, there are fee arrangements that determine how you will be paid. For the most part, for all channels, pricing is identical. Let’s take a look at the pricing strategy between Stripe vs PayPal.
Stripe’s Base Fees:
Stripe’s payment processing costs have become a bit more complicated, especially for merchants planning to take advantage of the full range of Stripe’s instruments, from recurring billing to business intelligence. However, to use Stripe’s service, you will not pay any monthly fees, monthly minimums, or any early termination fees.
- Stripe Micropayment Fees: from $1.00: 2.9% of $1 = 2.9¢ and 2.9¢ + 30¢ = 32.9¢, from $5.00: 2.9% of $5 = 14.5¢ and 14.5¢ +30¢ = 44.5¢
- Transactions with online credit cards: 2.9 percent + $0.30
- Transactions from ACH: 0.8% (capped at $5)
- Transactions for Stripe Terminal (POS): 2.7 percent + $0.5 percent
- Billing: Stripe broke down its billing instruments into two levels: Starter and Scale. For the first $1 million in recurring transactions, the Starter Plan for Billing is free. Stripe charges 0.4 percent per transaction after that threshold, on top of processing costs. 0.7 percent per transaction is charged by the Scale plan. As a tradeoff, however, Stripe provides a discount on ACH credits and wire transfers as well as access to Stripe Sigma, which alone would be a separate fee.
In the competition between Stripe vs Paypal, Stripe has its fee system much more streamlined. Stripe has fees associated with: outside the standard fee charged per transaction;
- International credit card payment processing.
- Currencies Converting.
- Processing disputes regarding payment.
- Services for billing (invoicing).
- And refunds cost you the assessed original fee.
PayPal’s base fees:
- Micropayment fees (under $10 transaction): from $1.00: 5 percent of $1 = 5¢ and 5¢ + 5¢ = 10¢, from $5.00: 5 percent of $5 = 25¢ and 25¢ +5¢ = 30¢
- Online Transactions: 2.9 percent + $0.30
- Internet Invoices: 2.9 percent + $0.30
- Transactions for POS/mPOS (PayPal Here): 2.7 percent
- Transactions for Keyed Entry: 3.5 percent + $0.15
PayPal also has a non-profit discount (2.2 percent + $0.30) for online payment processing and a micropayment alternative (5 percent + $0.05) for low-value transactions. If they go through one of PayPal’s alliances, such as Vend, high-volume vendors could also apply for exclusive rates.
PayPal charges a minimum of 4.2 percent among every other mix of countries if you are doing business abroad.
For its Payments Pro program, which provides a hosted payment website and a virtual terminal, PayPal costs an extra $30/month. Another $10/month fee is recurrent billing. The optional expenses are all of these.
When thinking about Stripe vs PayPal’s fees, PayPal does go through a more detailed fee breakdown based on considerations like:
- The U.S. or abroad
- Micropayments or bigger payment
- Web, cellular, or in-store
- Earnings or non-profits
- Digital Terminal for receiving phone payments
- Checkout hosted, embedded, or personalized
Furthermore, PayPal also assesses costs on the following:
- Billing recurring
- Conversion of Money
- The Chargebacks
- Payments rendered by American Express
- Transactions with a handheld card reader
- So even more than that,
Ease of use
Stripe vs PayPal both makes it easy for merchants to pay customers. But as a merchant, it will be quite a bit different from your experience setting up your payment processing.
While PayPal offers developer tools, it is designed for almost anyone to be able to set up payments and start taking them. You can get by just fine with pasting a little bit of code into your website if you’re happy with the basic functionality of PayPal.
For easy setup (normally a plugin), Stripe also integrates directly with third-party eCommerce platforms. You can certainly go this route, but if that’s all you’re after, so why you wouldn’t choose PayPal or even Square, both of which may provide a better user experience with identical pricing and comparable contract terms. Beyond that, with code, you’re going to have to “get your hands dirty.”
PayPal Commerce will be significantly simpler to use for the average merchant.
If you wish to expand their functionality, both Stripe vs PayPal has an enormous number of integrations, ranging from shopping carts to accounting software to email marketing services. Unless you are looking for specific brands that are only supported by one of these services, you should not have much trouble finding a tool that performs the task you want it to do or making an API call that pulls the data you need into your chosen program.
While PayPal is lacking all that is needed or expected in working with plugins like CRM.
On the other side, Stripe shines, including collaborations with HubSpot and Agile CRM, all of which also make the top five list eligible for the best free CRM suites.
Part of the reason why you entrust a third party with payment processing is to relieve yourself of the burden of trying to manage the information safely, right? While your website is still well-secured, payments require a whole new level of protection for eCommerce that you might not be prepared for or have the time to handle. So, it’s nice to see that you’ve covered both PayPal and Stripe in the PCI compliance way.
In addition, Stripe has taken steps to conform to international requirements in the competition of Stripe vs PayPal.
PayPal is not only about the business of helping corporations accept anonymous one-time purchases. A variety of other alternatives are offered by the payment processor, too:
On the PayPal website, from your website, on a mobile app, in-store, and by phone, multichannel payments can be made. Mobile and in-store options, of course, enable you to order extra hardware and sign up for PayPal here, and additional payments also come with payment by phone. If your company expands beyond your website’s boundaries, this would be nice to consider when you have to make a choice between Stripe vs PayPal.
Compatibility with the marketplace-PayPal for Marketplaces is a solution for websites involving multiple parties in the transaction process. Think as an example of something like Envato. You have Envato, the developer/seller of the theme or plugin, and the customer who needs funds to go between them.
Subscriptions- It is possible to produce recurring and automatic payments using PayPal.
Invoicing-You can also use PayPal to produce and deliver invoices to clients, which is especially useful from month to month for those of you who provide freelance services that differ in price.
Stripe, on the other hand, focuses exclusively on the e-commerce space, so you won’t find choices for mobile chip readers or collaboration with POS. That said, Stripe provides other types of advanced options for billing:
Subscriptions-Know the Stripe has your back whether you are developing a recurring sales enterprise or operating a membership or loyalty service. You should not only automate and arrange these kinds of payments, but Stripe includes functionality such as:
Contacting credit card firms when a credit card is about to expire to retrieve new material. Easier handling for new clients to be added, subscription information to be updated, and cancellations handled.
Stripe also provides a workaround for the industry with the Stripe connect.
However, for this one, you have a configuration option. Will you require transfers on a one-to-one basis to take place? How about a basis that is one-to-many? Or many-to-many-even? In addition, the more complex problems that come into play with these transfers, such as international payments, royalties, and transmission licenses, can help you pay for Stripe.
Invoicing-Unlike PayPal, which only allows you to configure the invoice logo and areas, Stripe Billing (which, by the way, is brand new) will do much more.
Of course, from the entire list of providers Stripe deals for, you will welcome payments. You can also personalize the invoices entirely, generate multiple forms, and then choose whether or not to make them a one-time occurrence or set them to recur automatically.
Just be mindful that more than $1 million in billing will contribute to higher processing costs.
To help consumers accept purchases from both mobile websites and mobile applications, Stripe has taken great care. Stripe has developed UI elements that simplify the mobile payment workflow. It’s yours to configure, of course, but it’s good to know there is an option to speed up this process.
There are many forms PayPal ensures to get answers to your questions. They include:
- Help center: PayPal’s information base is a helpful start if you have a basic question about how PayPal operates. It addresses frequently asked questions about payment receipt, rebate issuance, and other day-to-day account management.
- Community Forum: You should post to the PayPal Discussion Forum if you only want to know if PayPal accepts a service, if others are facing the same problem, or to find a solution for a missed feature.
- Developer Center: The dev documentation of PayPal is certainly not as detailed as Stripe’s, but it remains, and it sounds like the investment capital of PayPal to develop.
- Email Support: You should send an email to PayPal’s staff if it’s not a pressing question. Remember that to be able to do this, you have to log into your account.
- Live Chat Support: This is pretty recent, but to have your questions answered, you can now jump into a live chat with a PayPal customer service rep. Before you enter, PayPal posts the approximate wait period, so you know how long you’ll have to wait.
- Phone Support: the quality of the phone support from PayPal is at best inconsistent, but if you need to, you can reach a real live individual.
- Social Media: Service and help requests for the PayPal Twitter account fields Mon-Fri 9 AM-5 PM CST. You can not post on the Facebook page of PayPal, so if you have questions, you can comment directly on PayPal posts and tweets.
In order to provide free 24/7 live service for all its merchants, Stripe has changed its customer support options and it makes the competition of Stripe vs Paypal more interesting. This is a huge deal because the failure to find someone to speak to in real-time was one of the most controversial difficulties with Stripe. You can also rely on Stripe’s other tools for help:
- Knowledgebase: The knowledge base of Stripe covers the basics
- Developer Documentation: The documentation from Stripe is always the best way to read more about what specific features, even though you are not a developer, can do. This portion of Stripe’s assistance is even more extensive than the information base, which is not all that shocking. Again, this is a developer-focused alternative, and Stripe has properly spent its capital.
- Freenode-Based Chat Support (# stripe): For a very technical question, would you like to meet the developers of Stripe? The IRC chat is where they’re going to be identified.
- Live Chat Support: The live chat support from Stripe isn’t the same as the channel from Freenode. You will jump into a live chat with a help rep when you log into your Stripe account and go to the Contact Us tab.
- Phone Support: Rather than calling in and standing on hold, you should insist the Stripe call you immediately. It’s very unusual to see it. The only other company has ever done this, it must be SquareTrade, the third-party electronics warranty company.
- Email Support: Send Stripe’s team an email if your question isn’t urgent. This has long been the mainstay of the support network for Stripe.
- Social Media: As you see with PayPal and Square, there’s no dedicated Twitter support account, but you can tweet Stripe or check for outage notices and updates with Stripe Status. The Facebook page can also be a message.
However, here’s the thing. Just because a business has multiple support channels and a phone number to call or even a support account on Twitter does not imply that the actual customer service is any good. We can’t overlook that the quality of both companies’ customer service is at best dubious; both Stripe vs PayPal is trying to make it easy for customers to reach them.
Both firms tend to fail to provide their customers with a reliably good customer service experience. For the brand, the phone help from Stripe is a much-needed move forward, but it has not yet actually converted into better user feedback. In the meanwhile, with PayPal, whether you have a nice or terrible customer service experience seems like a coin flip; there seems to be a big difference between reps.
All in all, while there are some differences, the level of customer service and the range of customer support balance PayPal and Stripe fairly equally.
Your checkout’s perception directly influences the website’s user experience and accessibility: too much, in fact, not to analyze it closely.
Stripe’s method of checkout is quick. Your client inserts a credit card number, submits hits, and then they are taken to the website for your thank you or follow-up. In your hands are the template and flowing.
A bit more complex is PayPal. Let’s say we want Barnes & Noble to buy this novel. We’ll bounce back to the checkout segment after applying it to our cart.
But we do press the PayPal button instead of going through the on-site checkout process. This launches a new pop-up of the lightbox type that we have to wait before we can log in.
All in all, while keeping us away from the checkout tab, PayPal added extra clicks to our operation. This will, though, vary depending on how you have installed PayPal and what payments you accept. Additional solutions and integrations are provided by PayPal to accept credit cards right from your own platform.
While these extra measures are admittedly minimal and may not sound like much, there is a plethora of statistical proof that shows that the bottom line may be hit and that may affect the final choice of you between Stripe vs Paypal.
Feedbacks & Complaints from consumers
For Stripe vs PayPal, the two main complaints are similar (from retailers, not consumers):
- Withheld money, account locking, and account termination
- Phone service that is unreliable or unresponsive
Both Stripe and PayPal have a fairly conservative attitude to taking online orders, which might subject some retailers to account freezes and chargebacks. That’s because they’re both processors from third parties. It’s pretty simple to build an account, as described before. The minimum underwriting, as a trade-off, ensures you are at higher risk of a sudden hold or termination. Unfortunately, if you want any third-party processor, it is something you will have to live with.
It’s difficult to differentiate complaints about held/terminated accounts from those about phone support. More often than not, customer service complaints are about not settling their hold/termination account. The dilemma is that customer service agents are not privy to what happens to a particular account, and even though they know, they will typically not reveal something. In third-party processors, this seems to be very standard.
However there is no lack of favorable feedback for both companies. They’re famous services for a cause.
Let’s get started with Stripe. Here’s what pleased traders mean about the service:
- Simple and easy to sign up
- Nice API to be dealing with
- Nice documentary
- Good assistance at international level
Fans of PayPal’s merchant services usually have a few clear comments on what they like:
- Simple set-up
- Widely accepted/trusted method of payment
- Offers various products/services in addition to payment processing
- Transparent price
Both businesses tend towards rather polarized consumer feedback, so take both extremes with a grain of salt.
Forms of payment approved
It’s a major one to pay attention to.
PayPal actually accepts transfers using the following methods:
- PayPal Credit
- Cards of credit
- Debit Card
- Paying by phone
Some forms of payment are only valid on the basis of the selected price amount, so pay particular attention to that before you sign up. For eg, Pay-by-Phone Virtual Terminal payments can only be done through the Payments Pro package.
If you are worried about this limitation of payment types, you can choose to use Stripe that recognizes a wide variety of payment types, including:
- Credit cards
- Debit cards
- International cards
- AmEx Checkout
- Masterpass by MasterCard
- Visa Checkout
- WeChat Pay
- Apple Pay
- Google Pay
- ACH credit and debit
- SEPA direct debit
Currencies and Nations supported
On a similar note, we need to look at how far and wide Stripe vs Paypal can allow you to do business and take payments.
Here’s where it’s going to get interesting:
- PayPal accepts orders from customers in more than 200 countries. Stripe allows fees from customers in 25 countries only.
- PayPal can handle only 25 currencies, while Stripe processes more than 135.
This one comes down to the most important thing about you. Can you serve customers in countless countries but notice that they normally only pay in one of a few hundred currency options? Or are your consumers more regional? Why doesn’t it matter if you can only process payments from 25 countries? You’re going to need to review the company’s data to make this call.
Final reviews of Stripe & PayPal
Although the two offerings are somewhat similar on the surface, they are targeted at different categories of consumers, making it impossible to make a general conclusion about which one is better. Having studied the pros and cons of using Stripe and PayPal, it almost seems like companies will benefit from using them on their websites. While it would appear to be the most logical choice because both platforms carry their special strengths to the table, and don’t have to pay to get started with them, this alternative will enable you to handle finances from two different platforms. Yeah, it can get interesting.
Who is Stripe for?
Having solidified what Stripe and PayPal have to do in their own right, it’s time to consider them compared to each other in order to get to the bottom of the Stripe vs PayPal controversy.
Next, let’s take a moment to illustrate where Stripe dominates when weighed against PayPal. To begin with as opposed to Stripe, PayPal online payments are still pretty basic technology—if you can believe it. Since Stripe provides a completely optimized online payment processing setup, a lot of historically disparate, low-tech processes have been consolidated into a single, tech-enabled bundle.
Plus, Stripe is more user-friendly than PayPal. That is, Stripe would still be personalized and engineer-oriented, while PayPal will not necessarily be flexible or customized to software professionals. As a result, Stripe will be primed for branding—and may also be considered a white-label operation. Indeed, big marketplace and shopping cart providers such as Shopify use Stripe as their white-label payment solution. What’s more, you’re not going to have to pay a high fee for this white-label alternative.
The other place where Stripe is superior is reporting. PayPal comes with many built-in files, but only Stripe helps you tailor reports to get the exact kind of details you need. With Stripe Sigma, you can ask a query using SQL and get a report.
All in all, whether you are a tech forwarding business that has or can access engineering tools, Stripe provides a more organized, branded interface for your clients. And the pros and cons of Stripe we can witness can be shorted bellow:
- Flat, predictable pace
- Simple to use by your customers
- Hold and pass the data to the consumer
- Customers will never abandon the platform during the order period.
- Non-profit discounts
- No contract is required
- Lower fee for refund ($15)
- Aid for 24/7
- Many support options (help centre, internet, live chat, email)
- Developer of live chat support for complex problems
- Compliant with PCI
- Is not as user-friendly to set up (the WPForms support team you protected with this guide on how to install the Stripe Addon)
- Not as well-known or household name as PayPal.
- Takes longer to reach your money (average 2-day)
- No refund payments refunded
- Inconsistent standard service
- Enabled in less countries than PayPal.
- Online invoicing is only open after $1M in revenue.
Who is PayPal for?
On the other hand of the Stripe vs PayPal controversy, PayPal internet transfers still have a lot to give to small companies. If you’re extending your brick-and-mortar business to an online marketplace, we suggest you launch your e-commerce presence with PayPal Payflow. This online payment choice is one of the simplest and most inexpensive to install on the market. Unlike Stripe, PayPal Payflow does not need a dedicated tech specialist to set up—the processing fee you pay is almost the same as Stripe.
That said if you’re interested in your website’s branded checkout, then we recommend that you look at Stripe instead of PayPal, because both would probably need a developer, and Stripe will come with no simple cost or setup fee.
Finally, PayPal would be a simple winner for you if you are already working with a pre-existing merchant services account with your business, and you want to use the same account for your online payment processing.
Let’s find out some advantages of accepting payments on your website using PayPal Standard:
- Predictable, flat prices
- Simple to configure an account
- Simple to use on the clients
- Integrations of such POS schemes if you would like to sell in person
- Customers are familiar with PayPal and trust it.
- Funds are automatically available from your PayPal account.
- Discounts for Nonprofits
- No contract required
- Several options for assistance (help centre, web, live chat and email)
- Compliant PCI
- Available in countries of 200+
- Invoicing free online
- For your storefront, free card readers
There are a few downsides of using PayPal Norm to receive payments on your website, much as most stuff. We’re going to take a look:
- Unable to pass all the client records to another payment processor
- No Billing Recurring
- Redirects clients during the shopping period away from the website
- Lower ($20) chargeback compensation
- Non Consistent level of service
- For refunds, no payments returned
In Stripe vs PayPal, PayPal will win for companies that are not solely web-based as you zoom out. If you are able to sell your products or services online, but you are mainly a brick-and-mortar business, then the online payment mechanisms of PayPal are a strong fit for your requirements.
In conclusion, the best payment gateway for you must be the one that fits your company. We hope that in this article you will find out some useful information between two most common methodologies Stripe vs Paypal. Bear in mind that you are not simply searching for a way to make online purchases. That can be performed by virtually every service out there. Concentrate on the characteristics you like, not only now but in the future. An mPOS, invoicing, convenient checkouts, subscriptions, everything that will make you more efficiently run your company.
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