Stripe vs. Paypal

Stripe and PayPal are undoubtedly the two most popular online payment solutions. Most people who run their business online ended up asking this question at some point in their life: Should I choose Stripe or PayPal? In this article, we compare these two payment solutions, so you can decide which one suits your needs better.

What is Stripe?

Stripe is an online payment solution that enables its users to accept and send money over the internet, and its popularity among eCommerce retailers has been growing rapidly. It’s an all-in-one payment processor, combining the functionalities of a third-party payment processor and payment gateway. Stripe is very popular thanks to its security, reliability, and customizable development tools. Stripe provides excellent support for various currencies, payment methods, and powerful features that help users deal with taxes and exchange rates.

What is PayPal?

PayPal is a well-known online payment service that is widely used around the globe, with services ranging from digital wallets, loans, merchant’s payment processing, among others. It is known to be very user-friendly, enabling merchants to set it up hassle-free.

Stripe VS PayPal

Stripe and PayPal have very similar pricing. Both charge 2.9% + $0.30 per online transaction and they both support invoicing and recurring billing. PayPal is trusted and well-known by many, while Stripe offers a deeper feature-set.

Fees

Both online payment solutions offer numerous optional features you can purchase to expand their functionality. But now, let’s look at their basic pricing. Please note that the following prices are in USD.

Stripe Standard Fees

If you decide to go with Stripe, the good news is that you will not have to pay any monthly fees, monthly minimums, or early termination fees to use its services.

  • Online Credit Card Transactions: 2.9% + $0.30
  • ACH Transactions: 0.8% (capped at $5)
  • Stripe Terminal (POS) Transactions: 2.7% + $0.5
  • Billing: Stripe offers two plans for billing: Starter and Scale. The Starter plan is free for the first million in recurring transactions. If you go over that threshold, Stripe charges 0.4% per transaction. On the other hand, the Scale plan charges 0.7% per transaction, however, you will get free access to Stripe Stigma (which is a paid service), and you can enjoy discounts on wire transfers and ACH credits.

Stripe Micropayment Fees

  • $1.00: 2.9% of $1 = $0.029 and $0.029 + $0.30 = $0.329
  • $5.00: 2.9% of $5 = $0.145 and $0.145 + $0.30 = $0.445

PayPal Standard Fees

  • 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
  • In the case of international business, PayPal charges at least 4.2% between any other combination of countries
  • PayPal offers discount for online payment processing (2.2% + $0.30) and micropayment options for low-value transactions (5% + $0.05)
  • PayPal’s optional Payments Pro service offers a virtual terminal and a hosted payment page for $30/month, and recurring billing for $10/month

Paypal Micropayment Fees

  • $1.00: 5% of $1 = $0.05 and $0.05 + $0.05 = $0.10
  • $5.00: 5% of $5 = $0.25 and $0.25 + $0.05 = $0.30

Usability

Customers can pay merchants easily with both Stripe and PayPal. However, as a merchant, you might want to consider your options when it comes to functionalities. Although PayPal offers tools for developers, it’s mostly designed for anyone with no coding experience. On the other hand, Stripe’s customizable development tools offer more than PayPal, you would need some programming knowledge to unlock its advanced features.

Chargebacks / Refunds

A chargeback is a charge reversal that occurs when someone reports a transaction to the bank which they don’t agree with or think is a fraud. It is a form of refund but shouldn’t be mixed up with the traditional refund.

Stripe charges $15 for a chargeback, while PayPal’s chargeback fee is $20.

Customer Support

You can reach out to Stripe via their help center, chat support, social media, phone, and email. PayPal offers a community forum, a help center, email, chat, phone, and social media support.

Stripe has 24/7 access to both phone and chat support while PayPal’s support still goes dark for some time during the day.

Security

Both Stripe and PayPal are PCI Compliant, which means that your payment information is stored securely, and both services meet the strict requirements of the Payment Card Industry standard.

Stripe Payments Processing

For online transaction processing, you will need a payment gateway and a payment processor. In practice, the payment gateway securely captures and forwards credit card information to the processor which processes the transaction. Stripe effectively combines gateway functionality and payment processing, providing a safe and convenient service to merchants. Moreover, Stripe is a developer-friendly solution, offering impressive developer resources and, unlike its competitors, they are public so anyone can see the work involved in setting it up.

Summary

It is clear that both payment gateways offer merchants many opportunities for expansion, great features, and flexibility. Eventually, your choice should depend on careful consideration of your business needs.

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