PayPal VS Stripe
|Products & Services||✓|
|Tie||Fees & Rates||Tie|
Ease Of Use
|Tie||Contract Length & Early Termination Fee||Tie|
|Tie||Sales & Advertising Transparency||Tie|
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PayPal (see our review) and Stripe (see our review) are tools you can use to handle online payment processing, but they’re also so much more. With its slew of interconnected products ranging from mobile payments to financing services, I think it’s safe to say that PayPal is a household name. And Stripe — while more of a “behind the scenes” processor with a brand name customers don’t necessarily recognize — also has a long list of very popular clients and partners. So in the PayPal vs. Stripe debate, which has the advantage?
First, allow me to explain that neither PayPal nor Stripe offers the cheapest payment processing rates around. For a basic payment processor with lower rates, you’d be better off getting a regular merchant account. You’ll get some basic eCommerce support, which might be best if you’re focused on cost and not so much on features.
Shopify Is An Excellent Alternative To PayPal & Stripe
|Mobile App + Free Card Reader||Point of Sale||Online Store||Social Media Selling|
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|Low-cost POS for iOS and Android with free hardware||All-purpose POS integrated with all sales channels||Build a store or integrate with your current website||Sell on Facebook and other platforms|
|Starts at $9/month||Starts at $29/month||Starts at $29/month||Starts at $9/month|
|Free Trial||Free Trial||Free Trial||Free Trial|
But if you’re looking for features and flexibility, you’re in the right place. PayPal and Stripe’s strengths lie in their myriad eCommerce features, including support for digital goods, subscriptions, and even mobile app payments. However, despite the fact that both these services do fundamentally the same thing, they do go about it in different ways. PayPal is definitely more user-friendly, especially for those who aren’t particularly tech-savvy. If, however, you know your way around code and you want something flexible and powerful, Stripe holds a lot of appeal.
If you’re not sure which of these online payment processors is right for your business, or just want a bit more context for both before you decide, read on for my comparison of both companies’ selling points: features, pricing, customer service, and more. If you have something to add or your experience differs from my conclusions, feel free to leave me a comment!
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Table of Contents
Products & Services
If you really want to break down into the nitty-gritty details, check out our PayPal review or our Stripe review. Have questions? You’re always welcome to drop us a comment at the end of this article, too! For now, here’s a brief overview of each company’s features and services:
PayPal Features & Services
PayPal’s core offering has always been its payment processing: allowing anyone to make a payment to a merchant using their own PayPal balance or a credit or debit card. But these days, merchants who use PayPal get access to a variety of supplemental services that allow them to go beyond selling on eBay.
There are three service plans for PayPal:
- Checkout: PayPal Checkout is a supplemental option you can add to your existing payments page if you already accept credit card payments through another processor or are integrating with an ecommerce platform. 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.
- Payments Standard: If you don’t have another payment processor, PayPal Standard essentially becomes your primary processor on the Standard plan. You can build your payment buttons and simply copy/paste some code onto your site to enable PayPal as your shopping cart. The Standard plan is customizable but doesn’t require a lot of technical knowledge.
- Payments Pro: Get your standard PayPal features PLUS a virtual terminal and hosted checkout page for a monthly fee plus processing costs. The hosted checkout page means customers stay on your website during their purchase instead of being re-routed to PayPal’s site.
Beyond the online payment processing, the PayPal platform includes all of the following
PayPal’s other services include:
- PayPal Here mPOS (read our review)
- Online & in-app invoicing
- Donation & Buy buttons
- Mass payouts
Plus, if you want to sell in person, PayPal offers several integrations with leading POS systems for retail and food businesses, with predictable, flat-rate pricing.
Did you know that PayPal integrates with Vend POS?
|PayPal + Vend POS|
|Advanced POS software|
Easy credit card processing integration
|Get Started For $0|
Stripe Features & Services
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. However, some of those extra tools and features may cost you a bit more. Check out our complete Stripe review for a more thorough look at what this payments platform can do for you.
Stripe’s online payment processing tools include:
- Support for credit cards, ACH, and localized payment methods
- Support for online and in-app checkouts
- A pre-built embeddable checkout form (Checkout), plus the ability to build a form from scratch or using pre-built components (Elements).
- Invoicing, recurring billing, & subscription tools
Technically speaking, Stripe’s invoicing, recurring billing, and subscription tools all fall under the auspices of Stripe Billing, one of the supplemental services that will potentially incur additional charges.
Stripe now has a beta for what it calls Stripe Terminal, which 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 pre-certified hardware and additional features to make the integration process as simple as possible. Please keep in mind, this is not a ready-to-go POS or mPOS.
Additional noteworthy features include:
- Stripe Radar: Advanced fraud management tools
- Stripe Sigma: SQL-based business intelligence
- Stripe Connect: Marketplace and platform-building tools
- Stripe Issuing: Generate physical and virtual cards for purposes such as employee expense accounts
I need to point out that generally speaking, you need a developer to even begin using these tools. They aren’t ready-made for someone without coding experience the way PayPal’s tools are. If you want to process with Stripe but you also want an easy-to-use payments platform that doesn’t require a developer, I would recommend looking at Shopify (and by extension Shopify Payments, which is just a white-label version of Stripe). However, you do get an ecommerce integration, the ability to create buy buttons, a virtual terminal, the ability to send invoices, and a mobile/tablet-based POS with a free chip card reader. So…. basically everything PayPal offers, plus a free credit card reader. For more information, check out our complete Shopify review.
Comparing Stripe vs PayPal
So these are two very different platforms. But I do want to draw your attention to a couple of things they have in common: PCI compliance and reporting.
Stripe handles PCI compliance for its merchants, which means no fees or additional work on your part. If you have the PayPal Standard plan, you’re automatically PCI compliant as well (and again, no additional fees). However, on the PayPal Payments Pro plan, you do take on some of the burden for ensuring PCI compliance. It won’t cost you more beyond the monthly plan; you’ll just have to put more work into it. PayPal gives you transparent redirects to help, and you much complete an annual self-assessment as well as quarterly scans.
You also get comprehensive reports from both PayPal and Stripe. PayPal’s reports are fairly advanced (and it’s a long list), but they are not customizable. At least not like Stripe’s. With Sigma, you’re not just selecting from a pre-generated list of options — if you can ask a question using SQL, you can get a report. If you’re after some serious business data, it’s hard to ignore this tool, and it is competitively priced, even for small businesses.
I also want to mention that PayPal does have developer tools. If you do have a developer on hand and you like PayPal’s feature set, but need a little bit of customization, that’s certainly a possibility. PayPal’s developer tools can be used for tweaking the checkout process, sending mass payouts, and even building marketplaces and platforms. However, PayPal’s platform isn’t even close to being on the same level of Stripe’s developer tools. When I say Stripe is the gold standard, it’s because this company really has set the bar for how all other payment processing platforms go about building their APIs and documentation.
While PayPal and Stripe offer solutions to the same problem (online payments), they go about it in very different ways. PayPal is the entry-level solution — something that anyone (or at least, almost anyone) with even a basic understanding of eCommerce or technology could use. However, you also get a lot more tools to take your business beyond just the Internet: mPOS, invoicing, POS integrations, and more. Unless you’re looking at something completely custom (which would mean relying on a developer), most of PayPal’s features don’t require specialized knowledge.
To get the most out of Stripe, you’re going to need a developer, because this system was not designed for the layperson. It’s meant for businesses that need a highly customizable and tech-based solution for payment processing. If you need an abundant array of features and your emphasis is specifically online payments, Stripe is the clear winner. If your priorities lie elsewhere (ease of use, or omnichannel commerce), you might be more inclined to consider PayPal. You can use Stripe to integrate directly with a third-party ecommerce platform, but I really don’t see why you would want Stripe over PayPal or Square, which offer the same capability, the same pricing, and a lot of extra value with no technical knowledge required.
Fees & Rates
PayPal’s pricing is, for the most part, pretty straightforward. You have no monthly fees, no monthly minimums, or interchange costs to worry about. You pay one flat fee regardless of the type of card. That makes for very predictable pricing. Just keep in mind that PayPal charges different amounts for different payment processing methods:
- Online transactions: 2.9% + $0.30
- Online invoices: 2.9% + $0.30
- POS/mPOS (PayPal Here) transactions: 2.7%
- Keyed entry transactions: 3.5% + $0.15
PayPal also offers a nonprofit discount for online payment processing (2.2% + $0.30) and a micropayments options for low-value transactions (5% + $0.05). High volume merchants might also qualify for special rates if they go through one of PayPal’s partners, such as Vend (read our review).
PayPal charges an additional $30/month for its Payments Pro service, which includes a hosted payment page and a virtual terminal. Recurring billing is another $10/month fee. Both of these are optional costs. For a more detailed look at PayPal’s payment processing, check out our PayPal review or The Complete Guide to PayPal’s Rates, Fees & Pricing.
Stripe’s payment processing costs have gotten a little more complex, in particular for merchants who plan to who take advantage of the complete range of Stripe’s tools, from recurring billing to business intelligence. However, again you will not pay any monthly fees, monthly minimums, or any early termination fees to use Stripe’s service.
- Online credit card transactions: 2.9% + $0.30
- ACH transactions: 0.8% (capped at $5)
- Stripe Terminal (POS) transactions: 2.7% + $0.5
Check out our Stripe review for a more complete look at what using Stripe’s additional fees will cost. Specifically, using Connect, Sigma, and Billing will incur additional fees.
The good news is that for most online transactions, PayPal and Stripe charge exactly the same amount. However, Stripe also accepts ACH transactions, which PayPal doesn’t, and offers them for just 0.8% per transfer. Stripe’s in-person payments solution is still in beta, so it isn’t widely available. However, it will still cost more than using PayPal and merchants with small ticket sizes will see the biggest difference.
It’s hard to say that one offers better pricing than the other because part of what affects the value of each platform is what features and services a merchant needs and plans to make use of. But if you’re just planning on integrating one of these payment gateways into an ecommerce platform, the pricing is identical.
Ease Of Use
Both Stripe and PayPal make it easy for customers to pay merchants. But as a merchant, your experience setting up your payment processing will be quite a bit different. While PayPal does offer tools for developers, it’s designed for almost anyone to be able to set up and start taking payments. You can integrate with various third-party ecommerce platforms for the easiest possible setup, or create your own site with payment buttons. If you can copy/paste and read a little bit of HTML, you’ll be able to use PayPal with no fuss.
Stripe also integrates directly with third-party ecommerce platforms for an easy setup. You can certainly go this route — but if that’s all you’re after I honestly don’t know why you wouldn’t choose PayPal or even Square, which offer identical pricing and comparable contract terms. Stripe’s value is in all of its developer tools and the customization the platform offers. If you have no experience with code, setting up Stripe is going to be a lot more complicated, and you won’t be able to really get the most out of Stripe.
Now, if you are a developer, there’s no question that Stripe is the better choice. You can do a lot with PayPal these days. But you can do so much more with Stripe. Again, Stripe was designed first and foremost for developers, .so this makes a lot of sense. But if you’re not tech savvy and you don’t have easy access to someone with the requisite skills, PayPal is going to be the smarter (and less stressful) option.
Here’s an example: You’ve probably seen PayPal’s ubiquitous “Buy it now” button, which allows you to order and pay for items on a number of sites. In order to integrate a “Buy it now” button into your site, all you need to do is copy the corresponding code from PayPal’s website and paste it into your own site. Stripe has a similar “Pay with card” option, but it requires you as the merchant/developer to create the necessary coding framework.
Contract Length & Early Termination Fee
Neither PayPal nor Stripe requires a contract (both services are pay-as-you-go), and that means no early termination fee for either service either. Yay! That’s exactly what we like to see at Merchant Maverick. However, this is because PayPal and Stripe are both third-party payment processors. They aggregate all of their users’ accounts into one large merchant account in the company’s name, which means they assume all of the risk and serve as the merchant of record.
On the one hand, it means you don’t need to provide a lot of information to get an account set up. PayPal and Stripe don’t need much more information than your name and address for identity verification purposes. On the other, it means you face a lot more scrutiny after your account is set up and suspicious transactions could trigger an account hold and review. We’ll delve into this problem more in a bit.
Sales & Advertising Transparency
Both PayPal and Stripe are very upfront about their fees and services. Neither company employs any schemes or gimmicks that will catch you by surprise. Both services are also pretty well known, so they don’t need to spam the internet with annoying advertising, and you’re not going to get salespeople pounding at your door (or your email inbox). These are all great things.
If there’s one area where we can really say there’s a flaw in the transparency of these companies, it’s in the lack of disclosure about the risks of using a third-party payment processor. And this is across the board with any aggregator: Many of the merchants who sign up for payment processing with them don’t realize that there’s usually (almost always) a clause in the agreement that specifically warns that the processor can and will terminate your agreement for any violation of the agreement, or for no reason at all. Both Stripe and PayPal include these provisions, and yes, merchants do find their accounts terminated with no warning.
Customer Service & Technical Support
PayPal offers several ways to get answers to your questions. These include:
- Help Center: If you have a simple question about how PayPal works, PayPal’s knowledgebase is a good start. It covers commonly asked questions about accepting payments, issuing refunds, and other day-to-day management of your account.
- Community Forum: If you just want to know whether PayPal supports a feature or if others are experiencing the same problem, or find a workaround to a missing feature, you can post in the PayPal Community Forum.
- Developer Center: PayPal’s dev documentation probably isn’t as thorough as Stripe’s, but it does exist, and it sounds like PayPal’s investing the resources to improve.
- Email Support: If it’s not a pressing query you can send an email to PayPal’s team. Note that you have to log into your account to be able to do this.
- Live Chat Support: This is relatively new, but now you can hop into a live chat with a PayPal customer service rep to get your questions. PayPal posts the estimated wait time before you join in so you know how long you’ll have to wait.
- Phone Support: Word on the street (see “User Reviews”) is that the quality of PayPal’s phone support is inconsistent at best, but you can reach a real, live person if you need.
- Social Media: The @AskPayPal twitter account fields service and support questions Mon–Fri 9 AM – 5 PM CST. You can’t post to the PayPal Facebook page, but you can comment on posts and message PayPal directly if you have questions.
Stripe has changed its customer support options to include free 24/7 live support for all its merchants. This is a big deal because one of the most contentious issues with Stripe has been the inability to reach someone to talk to in real time. I sort of expected to see a variation of what Square did — phone support, but limited hours. Instead, Stripe adopted a “go big or go home” attitude for its newly revamped customer service and rolled out round-the-clock chat and phone support in addition to its other support channels:
- Knowledgebase: Stripe’s knowledgebase covers the basics of your account, but to be honest, I haven’t found it particularly helpful for information about features. That’s because most of the information is based on the documentation, instead.
- Developer Documentation: Stripe’s documentation is often the best place to learn more about what particular features can do, even if you aren’t a developer. This part of Stripe’s support is far more comprehensive than the knowledgebase, which really isn’t all that surprising. Again, this is a developer-focused option, and Stripe’s invested its resources accordingly.
- Freenode-Based Chat Support (#stripe): Want to reach Stripe’s developers for a very technical question? The IRC chat is where you’ll find them.
- Live Chat Support: Stripe’s live chat support isn’t the same as the Freenode channel. When you log into your Stripe account and go to the Contact Us page you can hop into a live chat with a support rep.
- Phone Support: You can request that Stripe call you back, rather than calling in and waiting on hold. I actually like this, though it’s pretty rare to see. Off the top of my head, the only other company I’ve seen take this approach is SquareTrade, the third-party electronics warranty company.
- Email Support: If your question isn’t urgent, send Stripe’s team an email. This has been the mainstay of Stripe’s support network for a long time.
- Social Media: There’s no dedicated Twitter support account like you see with PayPal and Square, but you can tweet @Stripe or check @StripeStatus for outage notices and updates. You can also message the Facebook page.
Here’s the thing, though. Just because a company has multiple support channels and a phone number to call or even a Twitter support account, doesn’t mean that the actual customer service is any good. And while I am happy to see that both PayPal and Stripe are trying to make it easy for customers to reach them, we can’t overlook the fact that the quality of both companies’ customer service is, well, dubious at best.
PayPal’s problem with customer service appears to be consistency. Occasionally you can reach someone who will be very helpful and informative. Other times…not so much. Understandably, this causes a lot of frustration. And it is absolutely a flaw in the customer service. It’s disappointing that such a large company hasn’t figured out how to better manage the customer experience, especially for merchants. If necessary, I do suggest going through the BBB, as PayPal’s team dedicated to handling those complaints seems to be quite helpful.
Stripe has, for a long time, suffered the same sort of complaints about poor customer service. And over the past couple of years, I watched as the frustration about not being able to talk to a real person in real time escalated. Stripe finally announced the introduction of 24/7 phone and chat support in July of 2018, but I’m sad to say that we’re still seeing complaints about poor customer service. I do hope that changes and we start to see better customer support all around.
All in all, even though there are some differences, PayPal and Stripe are pretty evenly matched in the quality of customer support and the variety of customer support options available to them.
With PayPal and Stripe, the two major complaints (from merchants, not consumers) are identical:
- Withheld funds, freezing of accounts, and termination of accounts
- Inconsistent or unresponsive phone support
Both PayPal and Stripe have a pretty cautious approach when it comes to accepting online payments, which could result in account freezes and chargebacks for some merchants. This is because they’re both third-party processors. As I mentioned before, it’s fairly easy to create an account. As a trade-off, the minimal underwriting means you’re at a greater risk of a sudden hold or termination. Unfortunately, that’s something you’ll have to deal with if you choose any third-party processor.
Complaints about customer support often seem to relate directly to questions about holds, if I’m honest. The merchants who tend to be most unhappy about the quality of customer service are often the same ones who have encountered a hold or account termination and want answers. The problem is customer support reps are rarely privy to the knowledge of what happened with a given account and can’t usually divulge anything even if they do know. This seems to be pretty common across third-party processors.
The other thing to consider is that not all businesses are suitable for PayPal and Stripe’s third-party processing. Both companies have lists of business types that are on a no-go list. If you think you might be a high-risk merchant, or you know your line of business is on either company’s list of prohibited businesses, you should probably consider going with a traditional merchant account or even a high-risk processor such as Durango Merchant Services (DMS) instead.
You can also check our guide, How To Avoid Merchant Holds, Freezes, and Terminations, for more information
It sounds scary, but people build successful businesses on the backs of these services all the time. And not just large businesses — small ones too. And you can find plenty of small businesses that stand by both of these payment processors and have good things to say about them.
Let’s start with Stripe. Here’s what happy merchants say about the service:
- Quick and easy signup
- Nice API to work with
- Great documentation
None of this is surprising — the signup process is easy. And as I’ve said, Stripe is the go-to choice for developers, with good reason. I have seen some merchants even say that the customer support is top-notch!
Fans of PayPal’s merchant services generally have a few consistent comments concerning what they like:
- Easy setup
- Widely accepted/trusted payment form
- Offers multiple products/services besides payment processing
- Transparent pricing
All of this is pretty standard. One of the big appeals of PayPal is how popular it is with consumers and how trusted the brand is. PayPal’s Buyer Protection program is a big draw for consumers, even if it does mean an occasional headache for merchants.
Both companies offer a seriously mixed bag when it comes to reviews and you’ll find wildly varying opinions. It’s hard to say that one company stands out more than the other in terms of positive reviews.
You might have noticed that I have some pretty strong opinions about the value and capabilities of both Stripe and PayPal. I’ve been observing and reviewing these companies for years now. And while I can say that one company is definitely better than the other in this regard or that regard, there are still plenty of other ways in which these two companies are very similar.
And so in the end, I don’t think it’s easy to draw a clear winner in the PayPal vs. Stripe debate.
Ultimately, the choice depends on your needs. If you have coding experience (or someone on your payroll with the requisite skills) and want to build a customized online storefront or a complex platform for a SaaS subscription product, Stripe is the better choice. It’s an incredibly powerful, feature-rich platform. But I still don’t think it makes a lot of sense to use Stripe for your payment processing if all you want to do is integrate with an ecommerce platform. PayPal, Square, or Shopify would be just as, if not more, functional in these regards.
If you’re not a developer, don’t have the means to hire one, or don’t have very complex needs, PayPal is likely more suitable. Though you don’t get a hosted payment page without a $30/month subscription, PayPal does have a high degree of consumer trust, so it’s less of a concern if PayPal redirects your customers to its site to complete the transaction. Keep in mind that you also get invoicing, a free mPOS app, customizable buy buttons. PayPal also offers developer tools, but they aren’t as robust or flexible as Stripe’s. Still, if you like everything else PayPal offers, there’s no reason not use PayPal’s developer tools.
Keep in mind that you aren’t just looking for a way to take payments online. Just about any service out there can do that. Focus on the features you need, not just now but in the future. An mPOS, invoicing, flexible checkouts, subscriptions — whatever will help you run your business more easily.
However, neither PayPal nor Stripe requires you to sign a contract, which means you can try out one of these services (or both services) without having to commit. Your pricing is overall pretty similar, and you have no monthly costs, just transaction costs and any fees that you choose to add on.
Want to see which runs better? It might take a little bit of work, but you can totally test them both out for as long as you’d like. And that, my friends, is pretty cool.
What are your thoughts on Stripe vs. PayPal? Have you tried both services? Which did you opt for? We love to hear from readers, so please leave us your comments!
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