Patreon VS PayPal: Key Differences Between Donation & Subscription Services
Both of these services make it possible for content creators to accept recurring donations, but PayPal and Patreon differ in a few very important ways.
Ever since the inception of the World Wide Web in the 90s, the internet has been an invaluable resource for creative people looking to share their work with the world. However, finding effective ways to monetize one’s creative works has always been the tough part.
Whether you’re looking to solicit donations, get people to pay for access to your content, or both, we’re here to help. In this article, we’re going to detail and compare Patreon vs PayPal: two payment platforms that, despite their considerable differences, can both be used by artists, gamers, podcasters, writers, and video streamers to draw an income.
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Patreon VS PayPal: Key Differences
If you’re looking for a donation and/or subscription service to monetize the content you produce and you’re considering PayPal and Patreon, it’s important that you understand the differences between the two platforms. These differences will affect how you can get paid, what portion of your earnings will be taken by the platform, and more.
- Patreon is not for one-time donations. When you use Patreon, you invite people to subscribe to your campaign in order to access the content you decide to put behind your paywall. This means that you cannot accept a one-time contribution from somebody looking to access one particular piece of content.
- PayPal lets you accept both one-time and recurring payments. While you will have to pay more for the ability to accept recurring/subscription payments, the platform does support both kinds of payments.
- Patreon sets every creator up with a creator page. On this page, you can tell your story, detail your membership levels (if you offer more than one), and post your content. When you publish a post, you can either make its contents free for everyone, or you can make it subscriber-only. And depending on your Patreon subscription level, you’ll also have access to crowdfunding services like patron management, reward distribution, analytics, and more.
- Unlike Patreon, PayPal does not give you a creator page. If you want to use PayPal to accept donations and/or offer subscriptions on your own web page à la Patreon, you can do so, but PayPal won’t provide the page for you — you’ll have to make one yourself. Neither will you get the extra crowdfunding features you can get with Patreon. If you want those, you’ll need to add them yourself through third-party software integrations with services like MailChimp.
- Patreon and PayPal have different fee structures. We’ll discuss fees and payments further later, but for now, know that these differences affect how much you’ll pay on a monthly basis, how much you’ll pay per transaction, how often you can withdraw your earnings, and more.
Which Service Is Right For Your Creative Business Or Project?
Let’s run through scenarios that call for using one donation/subscription service over another in this PayPal vs Patreon debate.
- If you already have a website or blog (or you’re prepared to create one) and you simply want to solicit one-time contributions from your readers and site visitors with a donation button, go with PayPal.
- If you want to accept recurring donations or sell subscriptions to your content and you want an all-in-one platform that helps you handle all aspects of the crowdfunding process, go with Patreon.
- If you want to accept recurring donations or sell subscriptions and you want to keep as much of what you earn as possible and you and/or your team are prepared to handle the technical work necessary, go with PayPal.
I should point out that while we’re discussing PayPal vs Patreon and how the two services compare with each other, you do have other options. This is particularly relevant to video game streamers and others who accept lots of one-time small donations ($1-5 apiece). While Patreon isn’t meant for one-time donations, PayPal’s new fee structure (introduced August 2021) has hit recipients of small payments hard — a $1 donation, when processed by PayPal, is now mostly consumed by fees.
If you receive (or plan to receive) lots of small one-time payments and are thinking about using PayPal, ask PayPal if you can enroll in the company’s Micropayments plan. This plan allows people who receive lots of small payments to keep more of what they earn. If you can’t sign up for Micropayments (I’ve seen recent reports of PayPal users not being allowed to sign up for Micropayments for unclear reasons), I would recommend using a different payment service.
Patreon VS PayPal: In-Depth Comparison
Let’s go through exactly what Patreon and PayPal have to offer those seeking to accept donations or sell subscriptions.
Patreon offers a wide range of crowdfunding services beyond payment processing. All Patreon creators get a hosted creator page, communication tools that enable you to connect with your backers, and assistance with reward distribution. And with a higher-level Patreon subscription, you’ll get access to features like the ability to offer different membership tiers, unlimited app integrations, analytics tools, team accounts, and a dedicated partner manager. However, as you’ll see in the Fees section, these features come at a price.
PayPal, by contrast, lets you take payments and donations, but it’s not an all-in-one crowdfunding platform, and you won’t get your own creator page. Anyone with a free PayPal business account can accept one-time donations. To accept recurring payments, however, you’ll need to sign up for the Virtual Terminal or a PayPal Payments Pro account. For other crowdfunding features comparable with what Patreon offers, you’ll need to fill the gap with third-party integrations (thankfully, PayPal offers no shortage of those).
There are four main types of fees you’ll pay with Patreon and PayPal: Platform fees (charged either as a monthly fee or as a percentage of your total monthly earnings), per-transaction payment processing fees, payout fees (fees charged when you move funds from your creator balance to your bank account), and currency conversion fees (only charged when a payment is sent in a currency other than your own).
- With Patreon, your platform fee is a percentage of the contributions you earn, and the rate depends on your subscription level. With a Patreon Lite subscription, you’ll pay 5% of your monthly earnings to PayPal. With a Patreon Pro subscription, the fee is 8%, and with Patreon Premium, it’s 12%. Of course, you’ll get more advanced features and support with pricier subscriptions.
- With PayPal, you won’t pay any platform fee if you just have a standard business account. These accounts allow you to accept one-time contributions, but if you want to be able to take recurring payments, you’ll need to sign up for either a Virtual Terminal or the Payments Pro plan (which includes the Virtual Terminal and other features, but which also charges a slightly higher processing rate than an account using the Virtual Terminal on a standalone basis). Either of these options costs $30/month, with recurring billing itself costing an additional $10/month, meaning you’ll be paying $40/month to accept recurring payments with PayPal.
Payment Processing Fees
- With Patreon, for each payment over $3 you process, you’ll pay 2.9% + $0.30 per transaction, and for payments of $3 or less, you’ll pay 5% + $0.10 per transaction — the lower fixed portion of the fee helps make low-dollar monthly subscriptions more viable.
- With PayPal, determining your processing costs has become much more complicated since the company changed its fee structure in August 2021. If you have a standard business account, you’ll pay $3.49 + $0.49 per transaction — but if you receive lots of small donations and you’re able to sign up for the Micropayments plan (and it’s possible that you won’t be approved), the rate becomes 4.99% + $0.09 per transaction. Now, to accept recurring payments, you’ll need to either a) get the standalone Virtual Terminal, in which case you’ll be paying $2.59 + $0.49 per transaction, or b) sign up for Payments Pro, in which case you’ll pay $2.89 + $0.49 for most transactions and 3.49% per American Express transaction. Furthermore, when receiving payments in a currency other than your own, you’ll pay an additional fee (separate from the currency conversion fees).
- With Patreon, US creators receiving a payout via direct deposit pay $0.25 per payout. If you’re receiving a payout via PayPal, you’ll pay 1% of the amount transferred with a minimum of $0.25, capped at $20 (you have the option of accepting PayPal payments and receiving payouts via PayPal when using Patreon, though your processing rates and payout fees will be different than they would be if you were using PayPal directly… sorry; it’s complicated)
- With PayPal, receiving a payout will cost you 2% of the total transaction amount, capped at $1 for US transactions and $20 for international transactions. However, this changes if you take payouts through the Payouts API, in which case you’ll pay a flat $0.25 per payout.
Currency Conversion Fees
- Patreon charges creators a 2.5% currency conversion fee on all payments made in a currency other than the creator’s payout currency.
- PayPal charges a 3% to 4% currency conversion fee on all payments made in a currency other than the recipient’s payout currency.
Ease Of Use
- Patreon is exceedingly easy for non-techies to use. Patreon combines most of the features needed for effective ongoing crowdfunding under its platform, making it less likely that you’ll have to use third-party integrations or implement your own solutions.
- PayPal generally has a higher learning curve than does Patreon. If all you want is a simple donation button to place on your website or a payment link to put into an email, you should be able to handle that, but for anything more complex, you may need the help of a developer.
If you’re looking to fund your creative business or project through accepting donations or offering subscriptions, Patreon and PayPal can both be used to facilitate earning an income. However, if you specifically want to sell access to your content on an ongoing basis, Patreon is a much more complete crowdfunding solution. You’ll have a much easier time earning subscription income, offering rewards, and communicating with donors/patrons if you go through Patreon’s platform. However, you’ll have to deal with Patreon’s significant platform fees.
PayPal, on the other hand, is better if you intend to take individual donations on a one-off basis. It’s entirely possible to use PayPal to draw subscription income, too. Just know that it will require more effort on your part, and you may need to hire a developer. However, if you can make it work, you may end up keeping more of what you earn, considering Patreon takes a percentage of your earnings, whereas the $40/month required to take recurring payments with PayPal will stay fixed as your income rises. However, without Patreon’s built-in tools, building that deep subscriber base may prove more challenging.
If you’ve used either PayPal or Patreon to earn money through donations or subscriptions, we’d love to hear about your experience. Please drop us a comment!
For more information on accepting donations and earning subscription income, check out the following resources!
- 10 Tips For Building A Winning Patreon Campaign
- The 5 Best Patreon Competitors & Alternatives For 2021
- PayPal Nonprofit & Donations Guide: What You Need To Know About Fundraising & Accepting Donations Via PayPal
- The 11 Best PayPal Alternatives For Business
- How To Accept Donations Online: Everything You Need To Know To Improve Your Fundraising
- The 8 Best Options For Recurring Payment Systems & Subscription Billing Platforms