Stripe VS PayPal: Which Is Better For Your Business?
Both Stripe and PayPal offer reasonably-priced payment processing. PayPal is easy to use, while Stripe offers more bang for your buck.
Stripe and PayPal are popular ways of accepting payments for eCommerce; if you’ve bought something online, there’s a good chance your payment went through one of the two processors. For merchants, the choice of Stripe or PayPal comes down to a few core issues: what payment types and currencies you need to accept, how much customization you need, and whether you need in-person payments & POS support.
While PayPal and Stripe aren’t the only all-in-one payment processors around, both providers stand out in terms of the breadth and depth of their services. So in the Stripe vs. PayPal debate, which has the advantage? Let’s find out!
Table of Contents
- Stripe VS PayPal Comparison
- Stripe VS PayPal At A Glance
- What’s The Difference Between Stripe & PayPal?
- Stripe VS PayPal FAQs
- Stripe VS PayPal Fees, Rates & Pricing
- Stripe VS PayPal Features
- What Is Best For My Business Needs: PayPal Or Stripe?
- Don’t Like Stripe Or PayPal? Try These Alternatives
- Stripe VS PayPal Comparison: The Final Verdict
Stripe VS PayPal Comparison
Comparing Stripe vs. PayPal with any real nuance requires a close look at each company’s ready-made services and features as well as pricing.
Both PayPal and Stripe have plug-and-play eCommerce support. They also work on a global scale. And both companies 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.
|Online Payments Rate||2.9% + $0.30||2.59%-3.49% + $0.49 per transaction|
|Next Steps||Visit Site
Stripe VS PayPal At A Glance
Stripe and PayPal are eCommerce-friendly online payment processors that support invoicing and recurring billing. PayPal is a popular 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.
Benefits Of Stripe Payments
Stripe is an all-in-one payment processor combining 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 along with quality-of-life features that help you navigate VATs and exchange rates. Advanced features are usually paid for with 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
- Account stability issues typical of a third-party processor
- Needs technical skills to implement
- No virtual terminal
Benefits Of PayPal
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 take POS payments through 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.
PayPal offers some strong developer tools as well.
- 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
- Account stability issues typical of a third-party processor
- PayPal’s per-transaction pricing is complex and usually pricier than Stripe
- Inconsistent customer support
What’s The Difference Between Stripe & PayPal?
While Stripe and PayPal are third-party processors with much in common, the two also have some significant differences. Most of the differences between Stripe and PayPal spring from the fact that Stripe specializes in custom solutions for online merchants, while PayPal prioritizes low-volume merchants looking to start selling with a minimum of fuss.
Many sellers will be well-served by either PayPal or Stripe. However, your business’s needs and priorities may make one provider a better fit for your operation than the other. And as always, there are trade-offs to consider in the PayPal vs. Stripe debate. Do you need ACH support or a virtual terminal? Do you need the flexibility of customizable solutions or the simplicity of out-of-the-box tools?
But first, let’s establish the similarities between the two processors.
Both PayPal & Stripe Offer…
- Online and in-person payment processing
- Prebuilt and customizable checkouts
- Flat-rate pricing
- eCommerce integrations
- Support for multiple payment methods
- International commerce support
Only Stripe Offers…
- The lowest online processing rate
- Advanced customization at every turn
- ACH support
- The ability to process over 135 international currencies (PayPal accepts 25 currencies)
- Support for a wider variety of mobile wallet payments (including Apple Pay) and local payment methods used overseas
Only PayPal Offers…
- The ability to accept PayPal digital transactions
- The lowest in-person processing rate
- A virtual terminal
- Ease of use for non-techies
- The largest feature ecosystem
Stripe VS PayPal FAQs
Stripe VS PayPal Fees, Rates & Pricing
|Online Transaction Rates||2.9% + $0.30||2.59%-3.49% + $0.49|
|In-Person Transaction Rates||2.7% + $0.05 per transaction (Stripe Terminal)||2.29% + $0.09 per transaction (PayPal Zettle)|
|ACH Payments||0.8% per transaction (capped at $5)||N/A|
|Nonprofit Rate (Online Only)||2.2% + $0.30 per transaction||1.99% + $0.49 for nonprofits; 2.89% + $0.49 for donations|
|Invoices||0.4%-0.5% + transaction fees per paid invoice (25 free per month)||0% + 3.49% + $0.49 per paid invoice|
|Virtual Terminal||N/A||3.09% + $0.49 (+ $30/month)|
|Cross Border Fee||1%||1.5%|
|Currency Conversion Fee||1.5%||3%-4%|
|Next Steps||Sign Up With Stripe||Sign Up With PayPal|
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 $5/month and $30/month, respectively, for merchants seeking more advanced checkout options.
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. (Get started with Stripe Payments here.)
The fact that the fixed portion of PayPal’s online per-transaction fee is now $0.49 (compared to $0.30 with Stripe) 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.
I should add that 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), so I hesitate to emphasize them as you may well be disappointed if you attempt to qualify. Merchants with small average tickets should certainly ask their provider about the possibility, though.
Stripe VS PayPal Features
|Card Reader & Mobile POS||Stripe Terminal: $0/month, $59+ for card reader||PayPal Zettle: $0/month, $29+ for card reader|
|Invoices||Starter & Plus Plans||1 standard plan|
|Buy Now Pay Later Options||
|Marketplace Tools & Support||(Stripe Connect)||(PayPal Commerce)|
|Developer Tools & APIs|
|Funding Time||2 business days; immediately with Instant Payouts for 1%||Instantaneously in PayPal Wallet; immediately in a bank account for 1.5%|
|Next Steps||Choose Stripe Payments||Choose PayPal|
PayPal and Stripe Payments fill similar niches, so it should be no surprise that their feature sets closely resemble each other. Their bread and butter is online payment processing, and both competently deliver the goods by charging a flat-rate processing fee: 2.9% + $0.30 for Stripe and 2.59%-3.49% + $0.49 for PayPal. Both offer strong support for international commerce and the ability to customize your payment processes through code.
That said, the devil is in the details. These aren’t identical services going under a different name but two subtlely different ways to accomplish many of the same goals. And with PayPal now charging more for its services, you’ll want to know if it’s delivering the goods.
What Is Best For My Business Needs: 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 the ability to accept a wide variety of mobile wallet payments, including Apple Pay and Microsoft Pay
Don’t Like Stripe Or PayPal? Try These Alternatives
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. Let’s briefly discuss some popular alternatives. Don’t forget to check out our favorite Stripe alternatives and our preferred PayPal alternatives for more options!
Stripe VS PayPal Comparison: The Final Verdict
PayPal’s 2021 price hike greatly changes the math when it comes to the Stripe vs. PayPal matchup. While PayPal still offers convenience, brand recognition, and ease of use to eCommerce businesses, it now comes at one of the highest rates for a service of its type. PayPal is clearly counting on its reputation and unique features (such as its proprietary digital wallet) to help customers swallow the fee.
Unfortunately, it’s hard to see how that fee doesn’t cut deeply into the revenue of businesses doing more than an occasional transaction. This doesn’t apply to in-person sales, however, where PayPal has the cheaper rate.
This could be a great opportunity for Stripe Payments to grab market share so long as it can keep its prices under control. While not as convenient for very small businesses that lack developer support, it’s now able to market itself as a low-cost alternative to PayPal. It’s an incredibly powerful and feature-rich platform in its own right and a bit more customizable if you have the skill set. Of course, Stripe doesn’t offer a full POS app yet, so selling in-person with Stripe will take a good amount of legwork.
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. And if you want to broaden your research, read our comprehensive guide to the best small business credit card processors.
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!