• PayPal
• Stripe
• Credit Card Fees
• International Coverage
• Payouts
• Ease of Use
• Customer Support
• PCI Compliance
• User Reviews

Over the last 10 years, we’ve used both PayPal and Stripe as payment gateways for our small businesses. We’ve collected millions in online credit card payments using each payment processor and can confidently recommend which platform you should choose.

In this article, we’ll compare the two platforms and tell you the benefits and drawbacks of each. How they work, what the transaction and monthly fees are and how you, the business owner, can use these payment processors to grow your small business.

That’s not all though. We’ll also focus on which payment gateway can provide the most VALUE for your business. Because it’s not all about price when it comes to card payments.

PayPal

According to Statista, there are over 250 million registered PayPal accounts. So, yeah, it’s safe to say PayPal is a well-known brand.

And that’s what makes it such an attractive option to process payments. It’s trusted and a lot of people have heard of it. Chances are, some of your customers will already have a PayPal account with an “Express Checkout” option which allows them to checkout with the balance in their PayPal account (or to use PayPal Credit)

That’s what PayPal is banking on. That you’ll gravitate to them because they’re so well known. In fact, they claim that using PayPal will increase the numbers of visitors you’ll convert into paying customers.

Below we’ll dig into some of these claims and look at the whole picture.

Stripe

So, yes, both PayPay and Stripe are payment processors, or payment gateways. You can use either to collect credit card (or direct bank account) payments from your customers.

But that’s where the similarities stop. Stripe was founded with developers, not consumers in mind. It was founded to give to give developers the tools to create custom checkout experiences.

And to this day, it’s still very much that. A tool that those who know how to code can use to add payment processing to their applications.

But it’s also moved beyond that in the last few years. For one, it’s no longer just for developers. In 2014, when we added payment processing through Stripe to one of our businesses (having switched from Authorize.net, a traditional merchant account), it was a big undertaking. I don’t code, but I remember it took our developer at least a week to set things up and for us to begin accepting live payments.

That’s not for everyone. But in the last five years, Stripe has grown beyond that initial base of users to become more user-friendly (for everyone) and easier to integrate.

So let’s jump in and compare the two platforms in more detail.

International Coverage

Additionally, if you’re located in a country not supported by one of these services, you might also be out of luck.

For the most part, PayPal is available everywhere. It’s supported in 200+ countries. That’s definitely something it has going for it. So even if you’re running a businesses from Barbados, you can use PayPal.

That’s not true for Stripe. Stripe is mainly supported in the most developed countries in the world. Think the United States, Australia, etc. The full list for each region of the world is:

• Europe (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom, Italy, and Portugal)

• North/South America (Canada, United States)

• Asia (Australia, Hong Kong, Japan, New Zealand, Singapore)

Those are the main countries. But Stripe is also available in “beta” in the following countries:

• Europe (Estonia, Greece, Latvia, Lithuania, Poland)

• North/South America (Brazil, Mexico)

• Asia (Malaysia, India)

So what does “beta” mean? Well, you can request to create an account in one of those countries, but there is no guarantee you’ll be able to get one. In some countries, such as Mexico, Stripe goes through the waitlist much faster than in others. In others, like Estonia, the process is much slower.

You can email Stripe and ask them when a particular country will be out of the beta period, but they’ll give you a non-committal answer. In other words, who knows? I know for one that in countries like Estonia, Stripe is over-subscribed. They have more interest than space, and are give out invites slowly.

One other thing to mention about beta countries. Not all Stripe features are available in each country. For example, in Mexico, users can only accept payments in Mexican Pesos. No other currencies are currently supported. In India, no 3rd party services are currently supported and you can’t accept American Express cards.

So while you may be able to get a Stripe beta account, you may not be able to take full advantage of features available in fully-released countries.

PRO TIP

If you’re in a country that’s currently in beta, let us know. As a Stripe-verified partner, we can usually get a bit more info on when you can get off the waitlist (and, maybe, help you get an account). Contact us here.

If you’re not located in any Stripe-supported country, you can try Stripe Atlas. Atlas allows you to set up a limited liability company (LLC), in the US to begin accepting payments through Stripe. The set up also includes a US bank account. It costs $500, which is more expensive than setting up an LLC on your own, but worth it if don’t know how to do it on your own.

Keep in mind that if you’re not a U.S. citizen and set up an LLC in the U.S., you may be asked to pay personal taxes on company income.

SUMMARY

PayPal is supported in more countries, but Stripe is slowly catching up and should be soon available in its beta countries.

Transaction Fees

Both PayPal and Stripe charge similar transaction fees for online payments: 2.9% + $0.30 for credit card payments. Instead of going over every single price difference between PayPal and Stripe, however, let’s talk about value instead.

We could write a long post on chargeback fees, cross-border processing fees, refund fees, instant transfer fees, and currency conversion fees.

Let’s not complicate things, though, and instead focus on the main price differences between the two platforms. At the end of the day, little price differences will not matter if you’re getting enough value from either platform.

Here’s what you should know about Stripe vs PayPal pricing and supported payment methods:

1. Both platforms charge 2.9% + $0.30 for credit card or debit card payments (Mastercard, Visa), but PayPal charges you 0.6% (3.5% + $0.30) in additional fees for American Express card payments.

• Stripe does not. Amex payments are a pretty small part of all credit card transactions, but if you’re collecting large payments, that 0.6% will make a difference.

2. PayPal does not accept ACH payments.

• Stripe charges 0.8% to process ACH payments (capped at $5 per transaction). PayPal does not accept ACH payments, which are a great way to save money off of the regular credit card processing rate.
• PayPal also does not accept ApplePay or wire transfers.

3. PayPal charges you $10 in extra monthly fees for recurring billing.

• Stripe offers recurring payments for free. If you run a business that uses subscriptions, that $10/month fee (via PayPal Payments Pro, which is itself $30 per month) is a bit annoying.

4. PayPal charges you $30 in extra monthly fees if you want to design and host your own checkout page.

• If you want to embed something in your website or create a button to send people to a checkout page, you’ll have to pay for it. Stripe includes checkout pages, though not a virtual terminal, as PayPal does.

PRO TIP

Stripe gives high-volume for any merchant processing $1 million or more per year. That’s not a hard ceiling though and will depend a bit on what country you’re located in and how many Amex transactions you process. In the United States, we’ve seen accounts with rates as low as 2.2% per transaction.

Can you see where I’m going with this? Stripe gives you a lot of value – an all inclusive 2.9% + $0.30 rate, recurring billing, checkout pages, etc. – for the same basic rate. PayPal charges an extra $40/month to add those features.

SUMMARY

Both PayPal and Stripe have the same payment processing rates, but Stripe does not charge any monthly fees for extras.

Payouts

Ease of Use

Sure, PayPal is very easy to set up. It was designed with that in mind. If you know how to cut and paste, you can integrate PayPal into your website.

But these days Stripe can do that as well, and more. First, setting up an account and authorizing it for use is very straightforward. Second, connecting it to platforms such as WooCommerce, WordPress, Wix, Shopify, or Squarespace is a matter of pressing a button or cutting and pasting.

Where Stripe shines is in all the customization the platform offers. The Works with Stripe marketplace is a great way to extend the platform’s reach beyond simply payments.

Fomo, for example, allows you to display recent Stripe transactions on your website as social proof. ChargeKeep, our own tool, allows you to create custom payment forms.

PayPal’s developer tools do allow for customization, but they are clunky and a pain to work with. And PayPal’s marketplace tools are limited to merchants who apply to use them.

Customer Support

PayPal gets a whopping rating of 0.9/10 for its customer service experience. Wow, that’s bad.

Why? Well, first, it’s generally unavailable to its users – you can only call, email them, or ask a question in one of their forums. Second, they hold on to payments, makes onerous verification demands, and dispute resolution is slow.

You can read all the reviews on TrustPilot and make up your own mind.

On the other hand, Stripe doesn’t have wonderful reviews on TrustPilot either. It is rated 2/10.

But here’s the difference. The large majority of bad reviews for Stripe focus on them disabling or freezing accounts that are in violation of their terms. You see very few reviews that focus on bad customer service.

So, yes, if you’re running a business that is in the gray area between being ok and not ok according to Stripe’s permitted list of business, your account may be frozen. You may also encounter problems if you have a large number of disputed payments.

If, on the hand, you’re running a legitimate business with few disputes, you’ll have no issues.

Unlike PayPal, Stripe is easy to get a hold of online (via email or live chat) or you can always give them a call.

Security

Maybe even more importantly, both platforms are also ready for Strong Customer Authentication (SCA) which will come into force on September 14, 2019.

Data Portability

That was a huge pain in the butt, for us and our customers.

PayPal does the same thing. You can’t transfer your credit card data. They won’t give it to you.

Stripe, on the other hand, values data portability. If you decide to leave, they will transfer your credit card data to whatever new PCI-compliant payment processor you’ve chosen.

Fraud Protection

Unfortunately the PayPal plan only covers physical goods, not digital product or services. But to be honest, we’ve experienced very few fraudulent transactions with PayPal. We don’t see a lot of purchases with stolen credit cards. While there is little documentation on what PayPal uses to prevent these types of transactions, we can say that the PayPal fraud protection features are very solid.

Stripe Radar’s features are also good and I think have become better with time. Radar comes pre-packaged with rules meant to weed out fraud. One thing we really like is being able to customize those rules to our specific use case.

User Reviews

Here are the most common gripes you hear about PayPal:

1. The customer service is terrible
2. Funds get withheld or frozen
3. The checkout experience is clunky
4.  It’s not flexible enough
5. The fees are high

And here’s why users like PayPal:

1. It’s a brand that customers trust
2. It’s available in a lot of countries

So, basically, PayPal is an outdated product with not-so-great customer service, but it’s a brand that people are familiar with.

Stripe users, on the other hand, have these negative things to point out:

1. Payouts take 2-7 days
2. High-risk accounts are closed without much notice

The interesting things to point out here is that a lot of negative sentiments where made in 2018 or before. The most recent feedback is positive.

And speaking of that positive feedback, Stripe gets lauded for:

1. Great customer service
2. It’s flexible
3. It integrates with a lot of services
4. East set up
5. Well-documented developers tools and API

So with Stripe, you sacrifice some speed and can’t use it if your business is considered to be (or gets flagged) as high-risk. But in return you get lots of flexibility, lower fees, and easy set up.

At ChargeKeep (and in our other online businesses), we choose Stripe and we could not be happier with our decision. It’s made all our payment collection easier and the service and support we get from the Stripe team has been wonderful.