Stripe vs. PayPal: Which Payment Gateway is Better?

Payment collection is an extension of customer experiences. It is also the most sensitive touchpoint considering how you’ve spent time (and money) to convert prospects into customers. Any disruption at this stage can (and will) break relationships and directly impact revenue inflows. Over the years, major payment gateways have had to constantly change their wardrobes as the call for seamless and personalized payment experiences grows stronger.

Both PayPal and Stripe are highly acclaimed players in this field. Both have a pervasive brand amongst businesses and end-customers and are capable of handling nuances. But, as is with everything in the SaaS world – these nuances are different and appeal to different businesses. Let’s find out, which speaks to yours.

Table of Contents

• Stripe and Paypal: A Quick Overview
• What Are the Differences Between PayPal and Stripe?
• What Do Customers Have to Say About PayPal and Stripe? 
• Paypal and Stripe: Features 
• Paypal and Stripe: Fees 
• Experience of Using Paypal or Stripe
• What Kind of Business Should Choose Paypal or Stripe?
• Stripe or Paypal: Which is Better for Your Subscription and Recurring Billing Needs?
• FAQs About Stripe vs PayPal

Paypal and Stripe: A quick overview 

Source: Paypal pricing and Stripe pricing pages

PayPal overview

PayPal is one of the most popular online payment processors in the world. It allows businesses to accept payments from customers via credit card, debit card, bank transfer, and PayPal balance. Additionally, businesses can also use PayPal’s fraud protection and secure payment gateway to reduce the risk of fraud and chargebacks. Some of the benefits of using PayPal are ease of use, convenience, security, and support for international payments.

• Ease of use: Setting up an account is simple, with just an email address and password required. 
• Convenience: With PayPal, businesses can quickly receive payments from customers all over the world, and have easy access to their funds with the option to transfer to their bank account.
• Security: PayPal is one of the most secure online payment processors around. Your customers’ financial information is protected by PayPal’s sophisticated security measures, so you can rest assured that their data is safe.
• International Payments: PayPal allows you to accept payments from customers in hundreds of different countries, making it an excellent option for global businesses.

Stripe overview

Stripe is another online payment gateway that has grown in popularity in recent years. It offers a wide range of features and benefits, making it a great option for businesses looking to process online payments. Some of the advantages of using Stripe include:

• Ease of integration: Stripe can be easily integrated into various e-commerce platforms, such as Shopify, Magento, and WooCommerce, allowing businesses to accept payments on their website with minimal setup.
• Convenience: Stripe allows businesses to quickly and easily receive payments from customers worldwide. Plus, businesses can access their funds and transfer them to their bank account whenever they need them.
• Flexibility: Stripe allows you to create a checkout experience tailored to your brand.
• Lower fees: Stripe’s fees are generally lower than PayPal’s. This is particularly important for businesses at high risk for chargebacks or doing a high volume of international sales.

What are the differences between PayPal and Stripe?

As similar as the products seem, they have a few key differences. First, PayPal is an online payment platform with its own digital wallet, personal accounts, and credit services. It’s as much for individual users as it is for businesses. 

Stripe on the other hand, is a complete payments platform that’s exclusively built for merchants. While it takes a little longer to set up, businesses have a lot more control over the look, feel, and functionality of their payment stack. That’s because Stripe gives merchants the ability to customize their checkout  with code. This is perfect for businesses that want a completely unique checkout experience or need to integrate with other software.

PayPal is not designed to be as customizable. However, they do offer a separate service called Braintree which competes with Stripe more directly. Braintree and Stripe are targeted more toward high-volume merchants who have access to a developer. 

PayPal is available in 200+ countries, making it one of the most widely accepted payment gateway providers. Additionally, customers can pay using their PayPal digital wallets, which is a common way people like to pay online. Stripe doesn’t accept PayPal payments.

When it comes to key considerations like transaction fees, ease of use, and fraud protection, who comes out on top? Let’s take a look.

What do customers have to say about PayPal and Stripe? 

The ability to integrate Stripe with everything they need is a huge selling point for many customers. 

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Merchants who have used PayPal to process payments have given the service high marks for its ease of use. According to many customers, setting up an account and taking payments through PayPal is a straightforward process. And because PayPal is such a well-known and trusted brand, shoppers are more likely to complete a purchase if they see that option available.

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On Software Advice, PayPal has a rating of 4.67 / 5 stars based on 24,003 reviews, whereas Stripe Billing has a rating of 4.72 / 5 stars based on 99 reviews. This indicates a high level of satisfaction among users for both platforms, although PayPal has been reviewed by a larger number of users

Paypal and Stripe: Features

Invoice and billing 

Recurring payments 

• PayPal buttons can be used to create subscription-based products or services, and customers will be automatically billed at the interval you specify. Alternatively, PayPal Payment Standard can be used to set up recurring payments for things like membership dues or subscription services.
• Stripe’s API makes it easy to set up subscriptions and recurring payments. You can start collecting payments regularly with just a few lines of code.
• Each platform can handle recurring payments for SaaS businesses, which can be integrated with Chargebee. Using Chargebee for subscription management with either Stripe or PayPal allows you to automate your billing, invoicing, and collections processes.

Coverage 

• PayPal is available in more than 200 countries and accepts over 25 currencies, making it a convenient way to send and receive payments from anywhere in the world.
• Stripe is available in 46 countries and accepts over 135 currencies.

Compliance 

Both PayPal and Stripe are PCI compliant, meaning they meet the rigorous requirements of the Payment Card Industry Data Security Standard (PCI DSS).

Pricing and transaction fees

PayPal fees breakdown

PayPal’s fees are higher than the industry average. Fees are charged as a percentage of the transaction, plus a fixed fee. Depending on the payment type, the percentage will change. It lists all potential fees on the Merchant Fees page.

1. Transaction Fees:
   • The standard rate for domestic transactions varies depending on the payment type. For PayPal Checkout and PayPal Guest Checkout, the rate is 3.49% + a fixed fee. For standard credit and debit card payments, the rate is 2.99% + a fixed fee. QR code transactions have a rate of 2.29% + a fixed fee. The fixed fee for commercial transactions in USD is $0.49​.
   • For international transactions, an additional percentage-based fee of 1.5% is added to the domestic transaction fees​​.
2. Setup and Monthly Fees:
   • PayPal does not charge a setup or monthly fee, which aligns with the information provided.
3. Chargeback Fees:
   • PayPal typically assesses a $20 fee for successful chargebacks, which aligns with the information provided​.
4. International Transactions:
   • The information provided regarding an additional 1.5% charge for international transactions aligns with the official PayPal fee structure​¹​.
5. Currency Conversion Costs:
   • PayPal adds a markup fee of 3% – 4% to the conversion rate used for switching currencies during international transactions or shopping with an international retailer​. This aligns with the range of 3.5-4% provided, though the lower end of the range is slightly off.

Stripe fees breakdown

Stripe’s fees are generally lower than PayPal’s; however, some of its advanced features are behind a paywall. Although Stripe does not charge a setup or monthly fee. 

1. Transaction Fees:
   • Stripe charges a standard transaction fee of 2.9% + 30¢ per successful card charge, which aligns with the information provided​¹​.
2. Setup or Monthly Fees:
   • Stripe operates on a pay-as-you-go pricing model with no setup fees, monthly fees, or hidden fees, which aligns with the information provided​¹​.
3. International Transactions:
   • For international card transactions, Stripe charges a fee of 4.4% + 30¢​²​. This is higher than the 1% additional charge mentioned.
4. Currency Conversion:
   • The currency conversion fee information was not found in the provided sources. The claim of a flat 1.5% rate could not be verified.
5. Chargebacks:
   • The chargeback fee information was not found in the provided sources. The claim of a $15 fee for every instance could not be verified.
6. Stripe Radar:
   • Stripe Radar charges $0.05 per screened transaction for standard artificial intelligence-based fraud screening, and $0.07 per screened transaction for advanced fraud screening, which is slightly different from the 5¢ – 7¢ per screened transaction range provided​³​.
7. Stripe Atlas, Stripe Sigma, Stripe Identity, Stripe Billing:
   • The pricing for Stripe Atlas, Stripe Sigma, Stripe Identity, and Stripe Billing was not found in the provided sources, hence the claims regarding their pricing could not be verified.

Experience of using PayPal and Stripe

Ease of use

• PayPal is as easy as it comes in terms of signing up and adding the service to your website. Whether using PayPal buttons or PayPal Payments Standard, getting set up is simple and efficient.
• Stripe is more customizable than PayPal and is better suited to developers. The benefit here is that Stripe can be molded to suit your needs, while PayPal is offered as an out-of-the-box solution.

Integrations

• PayPal can be integrated with a range of other popular apps, including Chargebee, Quickbooks, Shopify, and Wix.
• Stripe is built to work with an entire ecosystem of apps. Stripe has their own native add-ons, but its API can be used to integrate with your choice of application.

Technical support

• PayPal technical support can be found at its Merchant Technical Support Center. Customers can find FAQs and contact support by filling out a form detailing their issues.

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• Stripe’s technical support is managed through a Discord chat. Stripe’s developers are available in the chat room to discuss any problems.

Customer service

• Paypal’s team is contactable by email, phone support, or live chat. 
• Stripe customer support can be contacted through email or live chat, or you can request a call back from them. They do not allow inbound calling but aim to call back promptly.

Security

• PayPal has secured high levels of trust thanks to its buyer and seller protection. The company is PCI-compliant and is committed to preventing fraud.
• Stripe has the highest level of PCI compliance certification and has partnered with HackerOne to reward ethical hackers for finding weaknesses in their defense. 

Developer tools

• PayPal has additional developer tools which can be accessed through the Payment API. However, PayPal is more limited in what it can offer. Payments API can’t accept credit card payments, which may prevent some customers from shopping.

• Stripe’s customizable API means businesses can create a solution that fits their specific needs rather than trying to make do with an off-the-shelf product. For example, a company with a global customer base can use the API to process payments in multiple currencies.

What kind of business should choose Paypal or Stripe?

PayPal

1. New or Small Businesses:
   • PayPal’s user-friendly interface and easy setup process make it a good choice for new or small businesses that are just starting out and may not have the technical expertise to manage a more complex payment processing system​.
2. Businesses with Lower Sales Volumes:
   • PayPal is often preferred by businesses with lower sales volumes due to its straightforward fee structure and recognizable brand name which can instill trust in customers​.
3. Businesses Prioritizing Customer Recognition:
   • PayPal, being a widely recognized and trusted name, can be beneficial for businesses looking to leverage this trust to reassure customers.
4. Nonprofits and Charities:
   • PayPal offers discounted transaction rates for confirmed 501(c)(3) charities and other nonprofits, which could make it a more cost-effective choice for these organizations​.
5. Businesses focusing on in-person sales:
   • PayPal offers Point-of-sale (POS) hardware options, although it is noted to have fewer POS features​.

Stripe

1. Larger Businesses:
   • Larger businesses or those with higher sales volumes may prefer Stripe as it offers a high degree of payment customization and extensive developer options for integrating payment processing into existing systems or creating bespoke payment experiences​.
2. International Sellers:
   • Stripe supports over 135 currencies and offers international payment options, making it a suitable choice for businesses with a global customer base or those looking to expand internationally​.
3. Tech-Savvy Businesses:
   • Businesses with the technical expertise to leverage Stripe’s extensive developer options and integrations may find Stripe to be a more flexible and customizable solution​.
4. Businesses Requiring Customized Payment Experiences:
   • Stripe allows for a customized customer checkout experience, which can be advantageous for businesses looking to tailor the payment process to their brand or specific customer needs.
5. Nonprofits with a High Percentage of Donations:
   • Stripe offers a discounted processing fee for nonprofits if 80% or more of donations come through the service, which might benefit certain nonprofit organizations​.

Smaller or newer businesses, nonprofits, and those prioritizing ease of use and customer recognition might find PayPal more suited to their needs. On the other hand, larger, internationally-focused, or technically adept businesses requiring a high degree of customization and integration may find Stripe to be a more fitting choice.

Stripe or Paypal: Which is better for your subscription and recurring billing needs?

PayPal and Stripe are two of the most well-known names in payment processing.PayPal is an excellent option if you’re a small business owner seeking for an online payment processor for your firm. It doesn’t require a contract, is simple to set up, and has no start-up costs. Since PayPal is one of the more well-known brands in e-commerce, clients will feel secure making purchases from you.

If you have an established business and want to customize your shopping cart checkout process so that it is integrated with your brand—and you have the developer skills—Stripe is a better choice.

FAQs About Stripe vs PayPal

What’s worth knowing about Stripe?

Stripe caters to companies of all sizes, enabling them to manage business finances and accept electronic payments. It’s known for its e-commerce-centered API that offers a high degree of customizability and development tools, even for those without coding experience.

Despite being newer than PayPal, Stripe has gained significant traction in the e-commerce space and is valued highly in the venture-backed private sector, with prominent customers like Amazon, Google, Lyft, Zoom, and Shopify​​.

How does PayPal compare at first glance?

PayPal, while less developer-focused with fewer technical features, provides personal accounts in addition to business accounts, unlike Stripe which is exclusively for companies. PayPal also offers a variety of e-commerce solutions and boasts over 400 million active users with notable clients like Hulu, Spotify, and the Red Cross​​.

Can businesses use both payment gateways?

Yes, businesses can use both Stripe and PayPal. For instance, the World Wildlife Fund (WWF) utilizes both platforms to accept donations. Employing more than one payment gateway can be beneficial, especially for international transactions. However, it might introduce additional complexities and is not recommended for smaller entities or those with limited resources​​.

Which platform is better for fees?

The basic plans for both Stripe and PayPal are free, with no monthly fees or minimums. However, transaction fees do apply. PayPal’s transaction fees are somewhat higher and more varied compared to Stripe’s simpler fee structure of 2.9% + $0.30 for all standard payments. Stripe tends to be more competitive in this aspect due to its straightforward fee structure and generally lower rates​.

Who has lower chargeback fees?

Stripe has lower chargeback fees ($15) compared to PayPal ($20). Moreover, if a dispute is resolved in favor of the merchant, Stripe refunds the chargeback fee, which is an added advantage. Stripe also offers free fraud prevention features through its Stripe Radar service for accounts with standard pricing, which could potentially help reduce the occurrence of chargebacks​​.

Which gateway has the fastest payouts?

PayPal generally provides faster payouts, offering free local transfers to bank accounts within one business day, whereas Stripe has a two-day rolling basis for payouts in standard, low-risk industries in the U.S​​.

What types of payments do Stripe and PayPal accept?

Both platforms accept major credit and debit cards. However, Stripe supports a broader range of payment methods including international cards, various digital wallets like Apple Pay and Google Pay, and even Automated Clearing House (ACH) and Single Euro Payments Area (SEPA) direct debits. This wider array of payment acceptance can be particularly beneficial for businesses with a global customer base​​.

Which platform is better suited for what type of business?

PayPal is often recommended for small or newly established businesses, or those with lower sales volumes, while Stripe is favored by larger businesses or those requiring a high degree of payment customization, especially international sellers​​.

Are both platforms equally good for managing payments or donations?

Both Stripe and PayPal are robust payment processing platforms suitable for managing payments or donations. However, the right fit depends on the specific needs of a business, including the level of payment customization required, the business’s size, and its operational scale​​.