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PayPal VS Stripe

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Melissa Johnson

Melissa Johnson

Melissa Johnson has been writing about payment processing and mobile payments since 2014, and has been quoted in articles for Credit Karma and The Next Web, among others. She graduated from The University of Kansas in 2010 with bachelor's degrees in English and journalism.
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76 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Kay Ajayi

    Hi Guys I new to Paypal , I am in the process of trying to setup an online business where i want to accept payments. I am not technical, I wanted a simple easy solution to receive payments from my customers. Would Stripe be a good solution or Paypal?

      Jessica Dinsmore

      Hi Kay,

      This post that we are commenting on includes our pick for eCommerce use, and also makes an alternative recommendation. I’d definitely suggest reading it over to make the best decision for your particular business needs. Good luck with your new eCommerce business!

        mark fold

        I think Merchant Maverick is getting subsidized by Paypal in order to publish information subtly leaning towards Paypal and not giving us the full picture.
        The fact is that despite Paypal and Stripe having the same “fees”, the hidden cost is that Stripe will offer transactions much closer to the exchange rate of the day. That is where Stripe and Paypal differ. Paypal is not on the same footing as Stripe when it comes to setting the exchange rate at which international transactions are made; Paypal offers a rate far worse than Stripe. And when you’re moving millions on an hourly basis -. Needless to say who the cost conscious consumer will prefer; provided the information is unbiased.

          Jessica Dinsmore

          Hey Mark,

          Thanks for reading and commenting here! We always appreciate reader feedback, and the opportunity to clear the air. Merchant Maverick is actually not paid to influence our reader base. Our in-depth reviews are written with our readers best interest in mind so you can decide what will best suit your business. To better understand how Merchant Maverick makes money, while writing free, unbiased reviews for our readers, I’d definitely encourage you to read our post on the topic.

            Toby Burton

            Hi Melissa this is a really helpful article. We have the following problem – we are setting up a secondhand marketplace for school parents, where many parents will sell for example a $50 bicycle. We handle payments and send part, as a donation, to the parent association. Paypal adaptive payments have proved really tricky for our developer team on mobile. We are looking at using Stripe, which is fantastic for the buyer – but for the sellers, for each parent to set up a Stripe account seems very complex – it is really a merchant system and will put them off. Stripe also seems to require users to authorise a direct debit system where money can be taken from their account, which people who just come on board to sell a few items and receive proceeds certainly won’t want. Any thoughts? Paypal might seem the obvious answer but as well as integration challenges (where Stripe is much better), some of our parents don’t have Paypal accounts and don’t want to set them up!!

              Jessica Dinsmore

              Hi Toby,

              Your predicament is a bit tricky. I’d suggest looking into Braintree or possibly WePay, but the ACH payout is going to be pretty standard across the system.

                Ali Ramos

                in order to process credit card payments with paypal in Mexico you need to process at least $3000 Dollars a month, plus transfer from paypal to paypal there is a fee of 6% .

                  EMMANUEL MUTANGANA

                  Can integrate stripe with my online app to collect payments in Africa,Rwanda

                    Jessica Dinsmore

                    Hello Emmanuel,

                    According to their website, Stripe doesn’t appear to be available in Africa yet. I’d suggest reaching out to them to see if they have plans to expand to Africa in the near future.

                      Mojdeh Marashi

                      Hi,
                      this is a great article and it is very helpful. I am new to this world so this was a great read for me.

                      I have 2 questions that am hoping you can help answer for me.
                      1) I am creating something for which I am leaning towards Stripe Connect. However, their $2/month/active sellers is going to kill me. I was told Paypal had a service similar to this – multi sellers and ability to split proceeds – but they no longer have it. Are you aware of any alternatives to Stripe Connect that might cost less? It has to work on mobile though.
                      2) I am trying to find out the user experience for starting a Stripe account for my sellers but Stripe doesn’t have a demo so I have no idea how lengthy, how hard, and how seamless (or not) their experience would be. Any idea where I might be able to see how a user sets herself up to be a seller and set up a Stripe account?
                      Many thanks,
                      Mojdeh

                        Melissa Johnson

                        Hi, Mojdeh!

                        So, I’m happy to say I have lots of answers for you!

                        1. As far as alternatives, PayPal’s marketplace tools are limited to merchants who apply to be able to access them. I would suggest Braintree as an alternative. It tends to be the most “Stripe like” in terms of features, supported payment methods, and global reach. It’s owned by PayPal, and payments process at 2.9% + $0.30 per transaction. IF Braintree isn’t a good fit, another option that might work for you is WePay, which is specifically designed for platform payments. Unfortunately, WePay doesn’t publicize its rates at all.

                        However! You may not actually need to worry about the $2/month active account fee at all, and all of that ties into the answers to your second question.

                        2. Stripe does allow you to create a sandbox account. All you have to do is sign up for Stripe. There’s a secondary step after that in which you apply for payment processing. You can access the API keys and other features and get a feel for Stripe before you start processing payments or even building your infrastructure. As far as the onboarding experience for sellers, that depends on which Connect account type you choose — Express, Standard, or Custom. The active account fee only applies to Express and Custom accounts, not Standard. You can find more about that here but it boils down to the age-old tradeoff of convenience versus cost.

                        Hope that helps! Best of luck to you!

                          Dukagjin Karavidaj

                          Hi!

                          I am opening an online store shipping worldwide but based in Hungary. Stripes is not supported here, but of the other options, which one would you say is the most lowcost?

                            This comment refers to an earlier version of this post and may be outdated.

                            Jessica Dinsmore

                            Hi there!

                            We don’t know an awful lot about the European market yet, but Paypal does appear to be supported in Hungary, and we are quite fond of them! They are also very affordable, so I’d definitely suggested checking them out to see if they look like a good fit for your eCommerce business.

                              Paul

                              Hi! I am planning on offering a subscription service that is very low (around $2/month — obviously I’m anticipating a big chunk is going to get taken out from transaction fees). Would you recommend a particular service over another in this instance? Thank you for your time.

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                                Jessica Dinsmore

                                Hi Paul,

                                Thanks so much for writing! I would suggest looking at PayPal‘s micropayments plan. They charge $10/month for recurring billing plus each transaction processes at 5% + $0.05, which actually saves money. Best of luck!

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                                  Jeff Mcneill

                                  Since Stripe has ACH (and Paypal doesn’t, certainly not in the same way) it seems that Stripe is at least parity on the fees/processing options vs. Paypal. I really don’t see a Paypal win in this. Unless one just accepts manual ACH done by customers?

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                                    Peter Ridge

                                    Hello, great article, thank you. What’s the best online processing merchant for processing one product, price point $5000?

                                    Thanks.

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                                      Tom DeSimone

                                      Hi Peter,

                                      For large-ticket transactions, we recommend Fattmerchant. If they say that the account is too risky, try Payline Data.

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                                        raffa ello

                                        Hi Melissa,

                                        such a nice article here!
                                        This is maybe more a commercial aspect but still useful to take decision on which processor to choose, also I believe useful to share.

                                        Do you think/know credit card payment with a system such as stripe is more for luxury products? I think, but I might be wrong, that luxury target customers might not be familiar with a technology like paypal as they won’t spend their time by crating an account for that but they just use to put credit card details.

                                        If so this should be also considered before choosing your favourite payment processor.

                                        What’s your idea?

                                        All best!

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                                          Melissa Johnson

                                          Hi, Raffa!

                                          I don’t necessarily think of Stripe as a “luxury” option for payments, but it’s much more modern. PayPal came into prominence at a time when lots of people were still very wary of buying online and the idea that paypal hosted the checkout process and redirected you to the paypal site to complete a transaction actually helped win over consumer trust. But PayPal hasn’t significantly changed its model two decades later, and now a lot of consumers are much more trusting of online shopping. So redirecting to the PayPal site might be more of a hassle for some consumers. That’s why Stripe and other payment processors that offer a checkout form for your own website tend to focus on how modern and customizable their options are.

                                          It’s also worth considering that some 200+ million people have PayPal accounts and use them on the regular, so even if the system isn’t exactly sophisticated compared to some competitors, if your customer base likes to use paypal, you should probably consider adding a paypal checkout option. and PayPal does have an “express checkout” option for precisely this purpose.

                                          Thanks for your questions!

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                                            Dave

                                            Nice review.

                                            What is the best vendor to process virtual card payments (low volume of transactions (5 per month) and each transaction might be $100-$750) USING a virtual terminal only? I sometimes get paid for my consulting services by corporations with virtual credit cards rather than checks so there is no swiping and only manual entry. For whatever reason, SQUARE could not verify my identity despite accurately inputted information so that I can do credit card payments.

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                                              Jessica Dinsmore

                                              Hi Dave,

                                              In terms of virtual terminals, Authorize.net offers a pay as you go plan. If that doesn’t seem like a good fit, I’d suggest looking into invoicing solutions like Zoho Invoice or possibly Quickbooks Payments. Hope that helps!

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                                                Will

                                                Hi Melissa,
                                                Thanks for sharing such a comprehensive review.
                                                Im a personal trainer and about to launch a fitness magazine online and I need to make it profitable via recurring payments. If its not abusing of your kindness, i would like to know your opinion. If not possible, where else could you refer me to find reliable education/information. Thanks for reading. Will

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                                                  Melissa Johnson

                                                  Hi, Will!

                                                  I think Stripe’s subscription tools are going to be a better fit for you (so long as you have a developer with the tech experience), but you should be wary of what content you put behind a paywall. I’d double check Stripe and PayPal’s terms of services and prohibited businesses just to make sure you’re in the clear!

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                                                    Amy

                                                    I’ve used Paypal for years but I lose a lot of sales as customers lose interest or get confused during the Paypal payment process. Is Stripe more streamlined than Paypal? This would be my deciding factor as the 2 options seem pretty equal with exception to Stripe not refunding processing fees. However, I most sales completed successfully, it would be worth losing those fees.

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                                                      Melissa Johnson

                                                      Hi, Amy!

                                                      I assume when you say customers “get confused” that PayPal’s page redirect is what throws them off? If that is indeed the problem, I do think Stripe could be the better option for you. Stripe has a pre-built form (Checkout) that you can simply drop into your website with a few lines of code, but you can also create a custom form using Stripe Elements. That’ll take a little bit more technical knowledge, but it might be worth pursuing for you.

                                                      Hope that helps!

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                                                        Jimmy

                                                        Melissa,
                                                        Great article and details! Quick question! Is the recurring billing for Paypal the same thing as recurring donations? I’m looking to switch out my church’s merchant services from Square to Paypal for ease of integration to our church website, and I want to setup a donation button. I like the idea of Paypal supporting a recurring donation, but if it costs $10/month, then this may be too costly. Thanks!

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                                                          Melissa Johnson

                                                          Hi, Jimmy!

                                                          Quick disclaimer: I don’t have a nonprofit PayPal account myself, so I’m not 100% certain. However, when you create the donate button on your site it automatically includes an option to give on a monthly basis. Recurring billing tools are something you have to set up yourself. So I don’t think that PayPal will charge you a monthly fee for the recurring donations. PayPal is also usually pretty good about disclaimers and transparency, so I think they’d mention if that were the case. (If you wanted to create a tiered membership subscription with perks, that would be a different matter entirely.)

                                                          If you’re switching to PayPal, make sure that you get verified and that you’re getting PayPal’s discounted nonprofit rate (2.2% + $0.30 versus 2.9% + $0.30 for standard transactions).

                                                          Hope that helps!

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                                                            Rus

                                                            Thanks for the review, Melissa! I looked over your content and growing comments forum with interest. Can you share any insight regarding the 2 providers’ practices for helping(?) merchants deal with chargeback situations? PayPal reps state that merchants are 100% protected from buyers to resort to chargebacks if products have been described clearly and shipments are tracked and shipped to verified buyer shipping address. Wondering if anyone here can confirm this PP policy in actual practice, or weigh in on Stripe.

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                                                              Marilyn Fowler

                                                              When using swipe …does the money get deposited in your checking or is it similar to PayPal that you would do s manual transfer of funds to your company checking?

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                                                                Melissa Johnson

                                                                Hi, Marilyn!

                                                                Stripe transfers funds to your bank account once the transactions clear. It’s not a digital wallet like PayPal is.

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                                                                  Misty Smead

                                                                  Does anyone know if the stripe offers a business MasterCard debit card like PayPal Does?

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                                                                    Melissa Johnson

                                                                    Hi, Misty! Stripe doesn’t offer a business card. I think that’s because by default Stripe routes funds to your bank account, whereas PayPal keeps them in a digital wallet that was previously only accessible to online purchases. The debit card makes it easier to spend the PayPal balance anywhere, negating the need to transfer funds out of PayPal and to a bank account. That’s the same reason Square doesn’t offer a debit card for merchants — but it does offer a debit card for its Cash app (which is also a digital wallet).

                                                                    Hope that helps!

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                                                                      Brad May

                                                                      Thanks for writing this! What an excellent piece of work and research!

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                                                                        Henry Courbis

                                                                        I use Stripe and so far have only found one major issue which they seem to hide. You also did not seem to know about it in your well written article.

                                                                        When I refund a customer Stripe DOES NOT refund the transaction fees. Any of it. See here:
                                                                        https://stripe.com/us/pricing
                                                                        “You can issue either partial or full refunds. There are no fees to refund a charge, but the fees from the original charge are not returned.”
                                                                        It’s not mentioned at all here:
                                                                        https://stripe.com/docs/refunds

                                                                        Very sneaky indeed Stripe! I thought you were trying to be better than PayPal? Guess not.

                                                                        So users should be aware if they refund a customer they will out all of the transaction fees. Stipe will not refund ANY of the 3.9% or the $.30 charge. PayPal on the other hand will. As much as I hate PayPal this is a major reason to use them as a seller. $500 sale is $19.80 you will never see again – unlike with PayPal’s $.30. HUGE difference!

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                                                                          Amrita

                                                                          I just found this out!! very sneaky indeed. I am also managing a Vacation Rental business that has cancellations as part of it’s business. Now the owners have to EAT the fees. Am looking for an alternate system.
                                                                          Also in my e-commerce business, I have had 5 or 6 Fraudulent transactions a year. Stripe does not have Fraud protection….I have lost alot of money by shipping out our product (a $2500 product) and then receiving a chargeback which has never got resolved in our favour.

                                                                          Looking for another better payment processor.

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                                                                            RDBuras

                                                                            My problem with PayPal is the support. While phone support is nice, first you must convince the PayPal robot to let you talk with a person. Once you get a person, they are located overseas in countries not even subject to our laws. I don’t know about everyone else, but I don’t like handing access to my personal and financial accounts and information to someone not subject to the laws of my country.

                                                                            I often have trouble simple understanding their speech as we have different languages; PayPal support is located in the Philippines and I in the U.S.A. That said, I still end up getting a rep who has no authority to do anything for me, or pretends to, and normally only offers me canned or standard responses from a book of policy. I am looking for humanity these days coupled with good sense and common decency, not corporate policy.

                                                                            So, these days, I am making some changes in business. Most important in our sights is placing all of our accounts into the hands of Americans with U.S.A. based customer support. It’s not an easy task for many companies love to deceive just to land your business (get that money!), especially in Europe. At present we are moving hosting account because we were lied to by our current provider who assured us in advance that they and all servers and service were U.S. based and I find after the fact that they are in fact, operating from Germany and soon after signing on, they turned to Philippines based customer support as well.

                                                                            The article seems a fair and unbiased review of the products and services but I do see a slight tendency in your article of leaning toward PayPal for personal or professional reasons. Very informative and thorough. I appreciate the info very much. Even the comments contain some handy info to know. Hopefully, someone might find my info of some value as well 😀 Thank you

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                                                                              John

                                                                              I agree with your comments about PayPal asking for documents and then asking for others. When told that those documents are not issued in this country, they revert back to boilerplates replies. Even when you get a chance to speak to one of their supervisors you get the same response. They are now refusing to release nearly USD$1500 because we cannot supply the forms requested because they are not available. And they never told us any of this when they opened the account and initially took the money. Sounds like PayPal and Stripe operate on the same principle.

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                                                                                George Aweanung

                                                                                PayPal sucks so much, I did business on eBay then out of nowhere the account was limited and all my customers were stuck with payments, I provided them with documents and they limited my account further, then I closed every business with them but they still have 300 bucks of mine laying there, now I am moving onto stripe.

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                                                                                  John

                                                                                  PayPal chooses what the rules are after the fact. Requiring documents after they have collected monies without upfront notification is in my view fraud. This is especially true when you trying to deal with people who are making the document demands without their understanding the documents they are asking for do not exist. They should require all the documents they require BEFORE they allow the account ot be opened and used.

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                                                                                    Tracy

                                                                                    Shannon, you provided some great information. Thanks!
                                                                                    I’m just getting started on creating a marketplace and doing research. Will stripe automatically split the payment between me and the seller? Is there just one fee for the payment processing or do I pay a fee for payment processing and a fee to transfer funds to the seller?

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                                                                                      Jessica Dinsmore

                                                                                      Hi Tracy,

                                                                                      We can’t definitively answer your questions since it will depend on how you set up your marketplace. We’d suggest you check out Stripe’s resources here, here, and here. Or contact them directly to ask your questions. Hope that helps!

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                                                                                        Soji

                                                                                        Did Stripe give working capital loan,base on your sales like PayPal and Square.

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                                                                                          Jessica Dinsmore

                                                                                          Hi Soji,

                                                                                          No, Stripe doesn’t operate that way. I think you’ll have better luck finding what you are looking for in our business loan category.

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                                                                                            Peter

                                                                                            Having just compared pricing for transactions with Paypal v Stripe, and stripe being nearly 50% less than Paypal, I’ve just deactivated Paypal! Will see what customer feedback I get as to whether this is a permanent fixture.

                                                                                            e.g. £17.98 transaction – 72p fee with Paypal, 45p with Stripe
                                                                                            £47.99 transaction – £1.59 with Paypal, 87p with Stripe.

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                                                                                              Gino nmn Fina

                                                                                              Thanks Melissa,,

                                                                                              Great research and terrific presentation.

                                                                                              Would a company that uses internal messaging and payments such as Airbnb benefit one way or another between Stripe & Pay Pal? Because my new company is similar in structure to Airbnb and based on trust, so I’m a fan of the trusted name and the credit card verification that Pay Pal offers, but my developer likes the functionality of Stripe. I’ve asked 10 people today if they’ve ever heard of Stripe, all said no. What is your opinion about the importance of the recognized Pay Pal brand as marketing goes to the baby boomer generation?

                                                                                              Gino

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                                                                                                Melissa Johnson

                                                                                                Hi, Gino —

                                                                                                PayPal has more of a household name status, but that doesn’t necessarily mean that Stripe is a nobody. Thanks to its partnerships with some major industry players (Shopify, for example), Stripe is massive, and handles an enormous load of credit and debit cards for processing. A 2016 Forbes article says 27% of Americans have made a purchase through Stripe; I’ve seen reports of much higher numbers. In fact, it’s most recent valuation puts it at $9.2 billion dollars.

                                                                                                And Stripe is definitely the most dev-friendly option out there. (That’s not to say PayPal and Square don’t have dev tools. They do.) I am not surprised your dev favors Stripe; the whole service is designed for developers first and foremost.

                                                                                                PayPal has such easy recognition in part because it’s both a consumer service and a business service. And it’s been around for over 20 years at this point. Stripe is a lot newer and tends to operate more behind the scenes, and it’s not a consumer service, either.

                                                                                                I unfortunately don’t have a lot of perspective on which one Boomers would be more likely to trust. I’m inclined to think it makes less of a difference to them so long as you can make them trust the site on the whole.

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                                                                                                  SenegalStyle

                                                                                                  Great info! U left off whether Stripe has an atm card with an electronic chip that will work in the rest of the world (paypal doesn’t) and that’s the one thing I wanted to know. Earlier this year I was unable to receive funds from paypal thru the atm outside of America because paypal, being CHEAP doesn’t want to send their customers, millions I’m thinking, new cards… that’s expensive. I get it but they make a lot of money and it’s the cost of doing business.

                                                                                                  Somehow they got yet ANOTHER extension from the EU banking systems on top of the one Prez Obama gave them the year before. I don’t know when they will finally join the rest of the world but if Apple is using Stripe, I assume they have international Mastercard/Visa.

                                                                                                  I’ll check it out on their site directly. Thanks for the info about Stripe vs Paypal. It’s good to know that the bottom line is 6 of 1 half a dozen of the other!

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                                                                                                    Jessica Dinsmore

                                                                                                    Thanks for your feedback! Unfortunately stripe does not yet offer an EMV chip card.

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                                                                                                      Bradford Cathey

                                                                                                      I’m a developer (client and server side) and have dealt a fair amount with both PayPal and Stripe support. My experience: PayPal is frustratingly slow and uninformed, not for developers; Stripe is fast, helpful, and knowledgeable. We bailed on PayPal because I couldn’t serve my clients with the lousy support I was getting. We are Stripe all the way.

                                                                                                      That said, you are correct: Stripe requires programming knowledge to get up an running. I’m experienced and had trouble with my first one (though Stripe support was amazing).

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                                                                                                        Alki

                                                                                                        Very nice article, exactly what I needed.
                                                                                                        One issue I had: I’m in the US and selling to companies in Europe (not individuals) is a nightmare of taxes and paperwork. Paypal and Stripe can’t help there. I found one company that does: Paddle. They charge more (5%+50c), but they take into account all taxes in Europe and Japan.

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                                                                                                          Uzer

                                                                                                          can Strip suppport Split payment? is there supported in Portugal and brazil.?

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                                                                                                            Chloe Bahal

                                                                                                            Hi Uzer,

                                                                                                            Stripe should be able to support split payments but access in Portugal and Brazil are still in Beta testing, but you can be notified when it launches here.

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                                                                                                              Uzer

                                                                                                              can Sprite Support Split payment? is there supported in brazil and portugal?

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                                                                                                                Chloe Bahal

                                                                                                                Yes, Stripe can support split payments but unfortunately at this time, access in Brazil and Portugal have not yet released and are still in beta testing.

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                                                                                                                  imogen

                                                                                                                  This review does not cover a huge issue for EU customers – data protection…
                                                                                                                  In general people in the EU do not trust the poor data protection in the US and the reselling of information that happens as a result. Paypal has been forced by EU law to warn all customers that if they use Paypal, their data is being transferred to the US. This leads to cart abandonment. I have a query into Stripe at the moment because even if you turn off Paypal on Shopify, you still get that warning. Not sure if it’s a Shopify or a Stripe function as yet but I’ll let you know if I find out.

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                                                                                                                    Kristen

                                                                                                                    Hi Imogen, did you ever find out how stripe handles the EU issue?

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                                                                                                                      Tom Rubens

                                                                                                                      Thank you so much for this review, Shannon! This was exactly what I was looking for, and I have no need to read another review. You nailed it!

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                                                                                                                        Rikke

                                                                                                                        Thanks Shannon for the article, great explanation! But isn’t it that most of the merchants are working on ecommerce features and simplified setup? I was thinking about these two options before, but since my business is in Europe, I have chosen Cardinity (https://cardinity.com/), not so well know brand as PayPal or Stripe, but service is good and price is lower. Sometimes it’s worth trying something new, not only most popular brands.

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                                                                                                                          Anna

                                                                                                                          Very informative Shannon. Thank you. Is it true that Stripe has the option of installment payments, while PayPal doesn’t. In other words, if I am offering my clients 2 options, pay now in full, or pay in 3 installments, then Stripe has an automated payment option for installments and PayPal cannot. That would bet an advantage for Stripe. Is that true?

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                                                                                                                            Andrew Walsh

                                                                                                                            Hi Shannon… thanks for an informative article – great job!

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                                                                                                                              Lin

                                                                                                                              Can anyone tell me if Stripe will allow payments via paypal adaptive inside their system?

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                                                                                                                                Judy

                                                                                                                                Hello, can you tell me if Stripe allows you to manually enter credit cards in the system? It is a pain the booty with PayPal

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                                                                                                                                  Chloe Bahal

                                                                                                                                  Hi Judy,

                                                                                                                                  Yes, you can manually enter credit card information with Stripe: https://support.stripe.com/questions/phone-orders

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                                                                                                                                    Allan

                                                                                                                                    Thank you for the comprehensive article. The information is very helpful for sellers who are undecided which payment method to choose between the two.

                                                                                                                                    Do you have any comparison of these two payment methods from the buyers’ experience? If a buyer is presented with these two payment options during checkout, which payment method would they prefer? What would the pie chart split between the two look like?

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                                                                                                                                      Tom DeSimone

                                                                                                                                      Hi Allan,

                                                                                                                                      It depends on how the business chooses to integrate the payment service – whether the merchant chooses to use the hosted payment page option or integrate with some other shopping cart or use one of the other options offered by both PayPal and Stripe. With both services, the merchant can have a lot of control over the appearance if they want to. But in terms of the easiest most basic integration options, I think Stripe tends be a little cleaner. Although of course PayPal’s payment processing makes it easier to accept PayPal payments.

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                                                                                                                                        Indrajeet

                                                                                                                                        Thanks Shannon !! really the best understanding I got through your precious arrangement of words.

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                                                                                                                                          Shannon George

                                                                                                                                          Terrific, thanks for reading! Glad I could be of help.

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                                                                                                                                            Jason

                                                                                                                                            Thanks Shannon – great write up!

                                                                                                                                            I have a question: I’ve narrowed my options between these two processors, but was wondering about Paypal’s tolerance for Marketplace websites. I’ve heard that, in general, payment processors don’t like Marketplaces because the site owner and the providers of goods/services are not the same and it is believed that it leads to more disputes/chargebacks/etc. Stripe Connect has specifically stated that it is made for this type of business, but I haven’t seen anything like that for Paypal Payments Pro (PPP). I’m hesitant to use PPP if there is a chance that they either won’t approve me or will close my account down at some point for this. Any insight into how Paypal views this?

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                                                                                                                                              Tom DeSimone

                                                                                                                                              Hi Jason,

                                                                                                                                              You are correct. Most marketplace businesses bring more risk to the table than conventional online sales. This is true no matter which company does the processing. With higher risk comes a greater chance of having funds withheld or, worst-case, the account terminated.

                                                                                                                                              It’s difficult to say whether Stripe or PayPal would be more prone to account instability for marketplaces. I’d say that PayPal (especially via PPP) is more stable overall, but I honestly haven’t heard from any marketplace-style sites using that platform. Have you considered Braintree? It’s a company owned by PayPal that offers marketplace solutions. It might be a good alternative for you.

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                                                                                                                                                Jason

                                                                                                                                                Thanks for the response, Tom.

                                                                                                                                                I actually called PayPal today and asked them flat out how they view marketplace sites and they said that their PPP product is not allowed to be used with that type of site. So, that is a no go. However, their Adaptive Payments product does allow it – unfortunately, they redirect to the PayPal domain during checkout which I don’t want.

                                                                                                                                                Stripe Connect is my leading option right now as it is specifically set up for marketplace sites. Good call on Braintree as well – I stumbled upon them earlier, but haven’t really researched what they offer, but they appear to be focused on marketplace sites as well. So, that seems like another solid option.

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                                                                                                                                                  Nathan Hanlon

                                                                                                                                                  Jason, I’d love to hear who you went with (Stripe Connect (standalone), Braintree or PayPal adaptive payments).

                                                                                                                                                  I’m looking into the same thing right now. I might be off with the following notes, please feel free (anyone) to advise on comments or your experience with these platforms.

                                                                                                                                                  Stripe Connect (Standalone accounts, not the managed accounts):
                                                                                                                                                  Pros: merchants communicate with Stripe for issues, my app is not routed anywhere for payments (seamless, great UX), split payments for my fee. I don’t have any web, cart, sales.
                                                                                                                                                  Cons: no credit card verification, very limited merchant support.

                                                                                                                                                  PayPal adaptive:
                                                                                                                                                  Pros: Merchant support, verified customers (using a pay pal account), split payments for my fee.
                                                                                                                                                  Cons: my app is routed to PalPal for verification & payments (not ideal), expensive due to monthly fees for me and my merchants.

                                                                                                                                                  PalPal Braintree:
                                                                                                                                                  Cons: I have to manage all merchants for refunds. deal killer…..

                                                                                                                                                  End.

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                                                                                                                                                    Oomair

                                                                                                                                                    I talked to Braintree and they only support marketplaces that are focused one aspect

                                                                                                                                                    For example if your website is a marketplace where sellers can sell electronics then you have to make sure all sellers are selling electronics, cannot sell other categories of items.

                                                                                                                                                    The best choice right now for a marketplace website is to use stripe connect standalone accounts, that way sellers are responsible for any chargebacks and bot the platform. I’m sure as long as any seller follows the stripe tos correctly, they wont get shutdown for no reason

                                                                                                                                                    A lot of complaints you see about stripe are from shopify users who do drop shipping when drop shipping is clearly not allowed according to stripe TOS, so shopify is really misleading a lot of merchants by marketing how great drop shipping is, but also don’t tell merchants that it is a high risk business according to stripe

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                                                                                                                                                      Umang

                                                                                                                                                      Very useful post!

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                                                                                                                                                        Sylvain

                                                                                                                                                        Thanks Shannon, really usefull.

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                                                                                                                                                          Gina

                                                                                                                                                          Thank you, Shannon! The clearest breakdown I’ve found.

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