Both Stripe and PayPal offer reasonably-priced payment processing. PayPal is easier to use, while Stripe offers more bang for your buck, but which is right for you?
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|
Stripe |
PayPal |
Ideal For |
- Multichannel sellers
- Businesses that need a lot of customization
- International commerce
- Businesses that need big data
|
- Businesses that need to accept PayPal
- Low-volume businesses
- International commerce
|
Online Payments Rate |
2.9% + $0.30 (2.2% + $0.30 for nonprofits) |
2.99% + $0.49 for standard credit & debit transactions; 3.49% + $0.49 for PayPal & Venmo payments |
Standout Features |
- Top-tier developer support
- Advanced security tools
- Strong multicurrency support
|
- Enormous proprietary ecosystem
- Easy to use
- Strong international support
|
What’s Missing |
- Native POS app
- Bundled pricing plans for advanced features
|
- Competitive pricing
- ACH payments (important for B2B sales)
|
PayPal VS Stripe: At A Glance Comparison
Stripe and PayPal are two of the most popular ways of accepting payments — mainly online, but increasingly in-person as well. While they aren’t the only all-in-one payment processors around, both providers stand out in terms of the breadth and depth of their services.
Doing a nuanced PayPal or Stripe comparison requires a close look at each company’s ready-made services, features, and pricing.
Stripe and PayPal are eCommerce-friendly online payment processors that support recurring billing and invoicing. PayPal is a universally recognized brand and incredibly user-friendly, but Stripe offers a deeper feature set thanks to powerful developer tools. Additionally, Stripe is usually cheaper than PayPal for online merchants on a per-transaction basis.
Both PayPal and Stripe have plug-and-play eCommerce support. They also work on a global scale. Both companies also have pay-as-you-go pricing that works for businesses of nearly any size. However, PayPal lacks ACH support, and Stripe lacks any sort of ready-made POS. Both features could be deal breakers for merchants.
For merchants, the Stripe vs PayPal choice comes down to what payment types and currencies you need to accept, how much customization you need, and whether you need in-person payments and POS support. In short, PayPal is best for newer businesses, businesses with lower sales volumes, and merchants seeking a POS app for in-person sales, while Stripe is best for international sellers and larger businesses requiring a high degree of payment customization.
Where PayPal Wins
PayPal offers everything from digital wallets to loans, but the eCommerce giant made its name with its user-friendly payment processing.
PayPal Commerce is primarily focused on eCommerce but can be used to accept POS payments through PayPal Point of Sale (formerly PayPal Zettle) or a third-party partner. You can add PayPal buy buttons to your site for no monthly cost, but for a monthly fee, you’ll get a virtual terminal, a hosted checkout page, and recurring billing.
While top-notch developer tools are Stripe’s specialty, PayPal offers some strong developer tools as well.
Here’s where PayPal excels:
- Designed for ease of use
- Multiple subscription plans are available
- Extensive integrations
- One of just a few ways to accept PayPal digital payments
- Virtual terminal, hosted checkout pages, and recurring billing are available at extra costs
Where PayPal Falls Short
But PayPal isn’t for every small business. Here are a few areas where it might leave something to be desired:
- Account stability issues typical of a third-party processor
- PayPal’s per-transaction pricing is complex and usually pricier than Stripe
- Inconsistent customer support
Where Stripe Wins
Stripe is an all-in-one payment processor that combines payment processing with a payment gateway. Though you can use it for in-person transactions, Stripe Payments prioritizes eCommerce, offering a robust suite of developer tools for integrating Stripe’s payment features into your online store.
With international transactions, Stripe supports numerous currencies and payment methods, as well as features that help you navigate VATs and exchange rates. Advanced features are usually paid for with an additional cost per transaction.
- Straightforward flat-rate eCommerce pricing
- Developer-focused and highly customizable
- Advanced reporting tools
- Multicurrency support for international merchants
- Great marketplace and subscription tools
Where Stripe Falls Short
Here’s a closer look at where Stripe could use some work:
- Account stability issues typical of a third-party processor
- Needs technical skills to implement
- No virtual terminal
Stripe VS PayPal: Pricing Comparison
|
Stripe |
PayPal |
Monthly Fees |
$0/month |
$0/month, $5/month, or $30/month, depending on your checkout flow |
Online Transaction Rates |
2.9% + $0.30 (2.2% + $0.30 for nonprofits) |
2.99% + $0.49 for standard credit & debit transactions; 3.49% + $0.49 for PayPal & Venmo payments |
In-Person Transaction Rates |
2.7% + $0.05 per transaction (Stripe Terminal) |
2.29% + $0.09 |
ACH Payments |
0.8% per transaction ($5 cap) |
N/A |
Invoices |
0.4% per transaction |
3.49% + $0.09 for keyed-in mobile & in-store transactions; 3.09% + $0.49 for virtual terminal transactions |
Virtual Terminal |
N/A |
$30/month + processing fees |
Cross Border Fee |
1.5% |
1.5% cross-border fee |
Currency Conversion Fee |
1% |
3% – 4% |
Both Stripe and PayPal are expandable services. There are countless add-ons you can buy for additional functionality. But at their core, they offer simple, flat-rate pricing with no monthly fee, though PayPal offers two premium plans for merchants seeking more advanced checkout options.
The table above doesn’t cover every possible PayPal vs. Stripe fee. Check out our guide to Stripe pricing and our guide to PayPal pricing for the complete rundowns.
Which Is Cheaper: PayPal Or Stripe?
Not all merchants will save money with one processor over the other. However, in most cases, Stripe fees vs. PayPal’s will be cheaper for most merchants who primarily sell online. International sellers who have to contend with cross-border and currency conversion fees will especially benefit from Stripe’s pricing over that of PayPal.
The fixed portion of PayPal’s online per-transaction fee is higher than Stripe’s, which means that online PayPal merchants with small average ticket sizes will be paying more with each transaction. This is unfortunate, as PayPal is otherwise a great choice for smaller eCommerce businesses.
However, it’s a different story for physical sales, as PayPal’s swiped/dipped/tapped transaction fees are lower than those of Stripe. This, combined with the fact that PayPal’s POS functionality is stronger than Stripe’s, highlights PayPal’s advantage over Stripe for brick-and-mortar businesses.
Microtransaction Rates
Both PayPal and Stripe offer special microtransaction rates to select merchants with low average ticket values. These per-transaction rates consist of a higher percentage fee but a lower fixed fee, which means less money is taken out of transactions under $10.
However, with both PayPal and Stripe, not all merchants will qualify for microtransaction rates (Stripe barely mentions them at all). Merchants with small average tickets should certainly ask Stripe/PayPal about the possibility, though.
Interchange-Plus Pricing
Stripe and PayPal both offer some (but not all) merchants the ability to opt into interchange-plus pricing. This type of pricing can be more cost-effective than flat-rate pricing for businesses processing upwards of $5K-10K/month in sales.
Stripe offers interchange-plus pricing to high-volume businesses, though it does not define which businesses it considers high-volume for this purpose. PayPal, by contrast, allows any business that has successfully applied for Advanced Credit and Debit Processing to choose a form of interchange-plus pricing (a form it calls “interchange plus plus”) if it wishes.
Additionally, while Stripe doesn’t disclose any sample rates regarding its interchange-plus program, PayPal’s listed rate is a bit higher than the interchange-plus rate offered by many competitors. Another wrinkle in PayPal’s interchange-plus program is that it uses “gross settlement” — instead of paying the processing fee on a per-transaction basis as with flat-rate pricing, your processing fees will accumulate and be auto-debited from your bank account on the 10th of every month.
Stripe VS PayPal: Features
|
Stripe |
PayPal |
Online Checkout |
- Plug-and-play integrations
- Drop-in elements with on-site checkout
- Customizable on-site checkout
|
- Plug-and-play integrations
- Off-site redirected checkout (no customization)
- Customizable on-site checkout
|
Card Reader & Mobile POS |
Stripe Terminal: $0/month, $59+ for card reader |
PayPal Point of Sale: $0/month, $29+ for card reader |
Invoices |
Starter & Plus Plans |
1 standard plan |
Buy Now Pay Later Options |
|
- PayPal Pay In 4
- PayPal Monthly
|
International Support |
- 46 countries
- 135+ currencies
|
- 200+ countries
- 24 currencies
|
Marketplace Tools & Support |
(Stripe Connect) |
(PayPal Commerce) |
Available Integrations |
Excellent |
Good |
Developer Tools & APIs |
|
|
Funding Time |
2 business days; immediately with Instant Payouts for 1.5% ($0.50 minimum) |
Instantaneously in PayPal Wallet; immediately in a bank account for 1.5% of the transfer amount |
PayPal and Stripe fill similar niches, so it should be no surprise that their feature sets closely resemble each other.
That said, the devil is in the details. These aren’t identical services going under a different name, but two slightly different ways to accomplish many of the same goals.
Business Accounts With Stripe & PayPal
Both PayPal and Stripe make it easy for new merchants to sign up for their services without undergoing a lengthy application/screening process. As for the details, let’s start with PayPal.
As we detail in our guide to creating a PayPal business account, the process is quick, easy, and free. Here’s what you’ll need to provide during signup:
- An email address
- A business phone number
- Your legal business name — your name is fine if your business is a sole proprietorship
- The last four digits of your SSN
- Your Employer Identification Number (EIN) — if you choose individual/sole proprietorship as your business type, you don’t need to provide an EIN
- Your date of birth
- Your home address
- Your bank name, account number, and routing number
There are three PayPal service plans to choose from:
- Checkout: PayPal Checkout works well if you just want to sell using simple buy buttons or if you want to add a supplemental payment option to your existing online store. PayPal will offer your customers an option to check out with PayPal as well as PayPal Credit and Venmo, based on what user data it has available. Merchants worried about PCI compliance may appreciate that PayPal Checkout takes the issue out of their hands by redirecting customers to its site to complete transactions.
- Payments Advanced: With PayPal’s intermediate option, Payments Advanced, you can build your payment buttons and simply copy/paste some code onto your site to enable PayPal as your shopping cart. You’ll also get hosted checkout templates, allowing customers to stay on your website during their purchase instead of rerouting to PayPal’s site. The Advanced plan is customizable, but doesn’t require a lot of technical knowledge.
- Payments Pro: Get your standard PayPal features, hosted checkout pages, and a virtual terminal for a monthly fee and processing costs. Payments Pro is the only PayPal plan that includes the virtual terminal for no additional charge — if you implement a virtual terminal without Payments Pro, the virtual terminal alone will cost $30 a month.
PayPal’s other services include:
- PayPal Point of Sale
- Recurring billing
- Online and in-app invoicing
- Donation buttons
- Mass payouts
As for signing up with Stripe, it’s a bit more involved than PayPal’s signup process, but it’s still quicker and less complicated than signing up for a traditional merchant account.
The first part of the signup process is similar to PayPal’s, and you’ll need to supply the same information about yourself and your business.
The second part of the process involves relaying information to your web developer that enables your website to connect to your Stripe account.
Stripe doesn’t have “service plans” the way PayPal does. Your access to Stripe’s payment processing features remains the same regardless of which other features and tools you choose to use. These online payment processing tools include:
- Support for credit cards, ACH, and localized payment methods
- Support for online and in-app checkouts
- A prebuilt embeddable checkout form (Checkout), plus the ability to either build a form from scratch or use prebuilt components (Elements)
- Invoicing, recurring billing, and subscription tools
Stripe offers numerous add-ons you can tack onto your service à la carte, such as Stripe Billing, which includes Stripe’s invoicing, recurring billing, and subscription tools.
Developer Tools & APIs
Both Stripe and PayPal allow for programmatic customization, as is typical for most payment processors. That said, while PayPal Commerce’s developer tools are good, Stripe (more or less) is a developer tool, assuming you aren’t using it through a white-label service, such as Shopify.
PayPal has taken some pains to flesh out its developer environment. Documentation is now broken up according to the type of business you’re coding for, so you can easily find tutorials for small businesses, marketplace platforms, or large enterprises. In the last case, PayPal will nudge you toward one of its subsidiary services, such as Braintree, Hyperwallet, or Simility.
Stripe’s API, on the other hand, is its major selling point. Stripe is a RESTful API that uses API keys to authenticate requests. Stripe provides official libraries for various programming languages and mobile platforms. You can code your features from scratch, follow one of the detailed guides, or clone an existing project to build off of.
International Support
Both Stripe and PayPal feature robust international support, though Stripe has the overall edge here. It supports a variety of payment methods and over 135 currencies. Stripe’s supported payment methods are broken down into two categories: universal and local. Local payment types are only available in the regions in which they are most popular.
Stripe supports too many currencies to list here, but you can find them on Stripe’s website. Additionally, Stripe allows businesses to avoid exchange fees by specifying “presentment” currencies when you set Stripe up. Stripe will accumulate separate balances for each currency you’re paid with, which it can then route to different bank accounts. If your presentment currency differs from the settlement currency, Stripe will automatically make the conversion for you for an additional fee.
PayPal handles things a little differently. To accept international payments, you simply toggle on the feature from your account. You can then specify whether you want all foreign sales to be automatically converted to US dollars or do so manually. You can hold foreign currencies in your PayPal Commerce account until you want to convert them. PayPal currently supports 24 currencies and also supports numerous local payment types, though not as many as Stripe.
Which is better? It depends on how much coding you’re willing to do. Stripe allows for an extraordinary amount of precise control over how you want your international payments handled. PayPal makes it pretty easy so long as you don’t need to do anything fancy. The edge goes to Stripe in terms of potential (the most important factor for an ambitious eCommerce operation) and to PayPal for ease of use.
Invoices & Recurring Payments
|
Stripe |
PayPal |
Accept Credit & Debit Payments |
|
|
Accept ACH Payments |
|
|
Buy Now, Pay Later |
|
|
Link Inventory |
|
|
Quotes |
Plus plan only |
|
Tipping |
|
|
Send Payment Reminders |
Plus plan only |
|
Auto Retry Failed Payments |
Plus plan only |
|
Stripe and PayPal have slightly different approaches to their invoicing features.
With Stripe, you’ll be charged a fee per paid invoice. In addition, you’ll pay Stripe’s standard transaction fee based on the customer’s chosen payment method.
PayPal has no limit on the number of invoices you can send, and no fees per invoice sent, but you’ll pay the standard online transaction fee for each paid invoice.
Recurring Payments
Stripe Billing is an additional feature that’s available if you’re dealing with recurring charges. This feature is available with a fee per each recurring charge. Custom pricing is available for large volumes.
With PayPal, you can enable recurring billing for no additional charge if you’re using PayPal Checkout. If you have Payments Pro or Advanced (in which case you’re already paying a monthly fee), it’ll cost you an additional monthly fee.
Overall, Stripe’s invoicing and billing tools are more flexible and less expensive than those of PayPal. Also, PayPal does not support ACH payments under its name-branded label.
Point Of Sale
We’re focusing on eCommerce in this article, but I also wanted to mention Stripe and PayPal’s respective POS capabilities.
PayPal’s service is the stronger of the two. PayPal Point of Sale may be far from fully-featured, but it’s robust enough to allow you to take card-present transactions when you need to reliably. The basic app is free, but you’ll need to pay a monthly fee if you want inventory tracking. You’ll also need to pay processing fees for each transaction and purchase card readers.
Stripe Terminal is an SDK that allows you to build Stripe’s payment processing into a point of sale app, either on a mobile platform or on the web. It comes with precertified hardware and additional features to make the integration process as simple as possible. Please keep in mind that this is not a ready-to-go POS or mPOS and will require some coding to bring online. You’ll pay Stripe’s card-present rates and will need to purchase hardware.
Accepted Payment Types
|
Stripe |
PayPal |
Credit & Debit |
|
|
ACH Transfers |
|
|
Wire Payments |
|
|
Apple Pay |
|
|
Google Pay |
|
|
AliPay |
|
|
Localized Payment Methods |
|
|
PayPal Payments |
No |
|
Klarna |
|
|
AfterPay |
|
|
Affirm |
|
|
Crypto Payments |
(with Stripe Connect) |
|
Stripe has been the leader in the sheer number of payment types accepted almost since the company’s founding. Recently, other online payment processors, including PayPal, have begun to catch up.
Even though Stripe and PayPal now offer a similar range of accepted payment methods, there are some key differences: First, PayPal lacks an ACH option, and its digital wallet equivalent is significantly more expensive to process than ACH payments. Second, PayPal doesn’t support as many third-party digital wallets as Stripe, though PayPal has recently started catching up with its newfound support for AliPay, Apple Pay, and Google Pay.
Which Is Best For My Business: PayPal Or Stripe?
As we’ve said, Stripe and PayPal are competing in similar market spaces, sharing a lot in common. However, upon closer examination, some key differences emerge, which can be pretty consequential depending on the nature of your business.
Choose PayPal If…
- You want to build your eCommerce business yourself without developer help
- Having a virtual terminal is a priority
- You want to accept PayPal digital payments
- You want access to the largest possible feature add-on ecosystem
- In-person sales are a significant part of your business
Choose Stripe If…
- You want advanced customization and can hire a web developer (if you’re not one yourself)
- You want to save money on online processing
- You want ACH processing (particularly important for B2B businesses)
- Your business depends on international sales
- You want to accept the widest possible variety of mobile wallet payments
As always, focus on the features you need, not just now but in the future, and choose the service that offers what you need at an acceptable price point. Finally, if you want to broaden your research, read our comprehensive guide to the best small business credit card processors.
And while both PayPal and Stripe suit a wide variety of businesses, both have their issues, and neither provider is a good fit for every small business. Don’t forget to check out our favorite Stripe alternatives and our preferred PayPal alternatives for more options!