Stripe vs. PayPal

Non-cash payments are taking over the world. The value of online payments was over $5 trillion in 2020. They are especially popular for online shopping, considering that around 63% of all digital transactions come from it.

So, today we will go over two of the most popular payment options, PayPal and Stripe, and see which option is better for online stores and what are the strengths and weaknesses of each one.

PayPal is an online payment gateway that allows customers to make purchases online and receive and send money. PayPal is the most popular online gateway, with a market share of over 60%. It has over 390 million active users, and 1.6 million of them are websites.

PayPal is one of the most user-friendly and secure ways to send and receive money, and it offers excellent developer tools that make everything easy.

The way PayPal works is that you first need to sign up on the website, which is a simple and straightforward process. The sign-up is free, and you can choose to create a personal or a business account.

After signing up and giving the required information, PayPal gives you access to a digital wallet where you can send and receive funds. You also have the option to link your bank accounts and transfer money from the account to PayPal and vice versa.

PayPal also allows you to perform many additional services, like sending invoices, acquiring business loans, calculating taxes, etc.

Stripe is a financial services and SaaS company that primarily functions as a merchant services provider. It offers users an excellent point-of-sale or POS system and plugins for eCommerce tools that help businesses set up their payment functions.

Over 3 million active websites use Stripe, and it's valued at $94.4 billion. It is available in 46 countries, out of which five have limited access.

To access Stipe, you need to sign up on the website first. Then, you'll be asked to choose from a standard or a customized eCommerce package. Stripe also enables you to purchase tools and download eCommerce plugins to process payments, and it helps you accept these payments for a fee. After the payment is accepted, it is then deposited in a merchant account that Stripe provides. The payment is then transferred to your business checking account the following day.

Aside from payment processing, Stripe offers additional services like billing, invoicing, and identity protection.

• Does Stripe accept PayPal
  No, it does not. However, you can use both gateways separately and have them as payment options on your online store.

Of course, you can opt to use both options separately on your site if you have a big business with a dedicated IT department or are tech-savvy and have extra time to deal with everything. However, if you have a smaller business, it would be best for you to choose one of the two to avoid dealing with problems on both fronts.

Having the two options as a smaller business can cause you to miss out on volume-based discounts that Stripe and PayPal offer individually and can make integrations, product and service developments way more complicated.

Ultimately, whether you have one or both options available on your site depends on your industry, the products and services you sell, the countries you sell to, and your customers. It could be beneficial to have both options if you sell to multiple countries because Stripe is available for some countries where PayPal is not, and vice versa.

Both gateways are payment processing platforms that offer similar services for merchants. It's easy to start accepting payments, no contract is required by both, and you can stop using their services whenever you want.

Also, both offer additional services, are extremely secure, and protect your identity when you shop online.

1. Transaction Costs & monthly (regular) fees

Both Stripe and PayPal allow you to start selling with no monthly charges, meaning that if you don't sell anything, you don't pay anything. But let's break the fee structures down, starting with PayPal.

The base fee for PayPal in the US is 2.59% plus $0.49 for online credit and debit payments with no chargeback protection. For international sales, the transaction fees for PayPal are 4.4%, with variations depending on the currency used. PayPal has no monthly fee for its standard version, while the monthly fee for its PayPal Payments Pro version is $30.

The base fee for Stripe in the US is 2.9% plus $0.30. So, if you make a $100 sale, you pay $3.20 to Stipe. The fee is 3.9% for international sales, with variations depending on the currency used. The Standard version of Stripe does not have any monthly fees, while a custom version starts at $2 monthly per account.

So, the winner of this category is Stripe because it offers lower base, monthly, and international fees.

2. Payment methods accepted

PayPal supports Visa, Mastercard, JCB, AmericanExpress, and other major credit cards but lacks support for many others. It also has PayPal Credit, which is a virtual line of credit that Synchrony Bank offers to PayPal users in the US.

On the other hand, Stripe supports all major debit and credit cards and others that are not so popular. It also supports a wide range of e-wallets like Google Pay, Apple Pay, Alipay, Amex Express Checkout, Microsoft Pay, WeChat, Mastercard's Masterpass, etc.

I believe that this category is a tie because while Stripe supports more payment options and is better for international transactions, PayPal and its PayPal Credit is an excellent option for US-based customers and businesses.

3. Website and CMS Integrations

It's quite easy to integrate PayPal with your website. All you need to do is copy and paste some lines of code to your site, and you'll be able to pay with your PayPal account. You can also add other PayPal buttons to your website, like Buy Now, Subscribe, Add to Cart, etc.

PayPal supports and can be integrated with multiple CMSs like QuickBooks, SalesVu, WooCommerce, BigCommerce, etc. There is also a WordPress plugin available for PayPal called WordPress PayPal, which allows you to set up PayPal on your WordPress site.

Stripe supports a couple more CMSs than PayPal, like Drupal, PrestaShop, Magento, Shopware, WooCommerce, WordPress, etc. It is also easy to integrate Stripe on your website by using Stripe's API or their plugin for the CMS you want, like the Stripe Payments plugin that WordPress offers for integration with Stripe.

I'm going to declare a tie for this one since it's easy to integrate your website with both platforms, and there are plugins for most CMSs.

4. Refund, chargeback & dispute policies

A chargeback occurs when a customer contacts their bank and reports a transaction on their card that they disagree with or believe is fraudulent.

With PayPal, when a customer initiates a dispute, the amount goes to the customer, and PayPal takes up to $20 from the merchant's account as chargeback fees, alongside the disputed amount. However, if PayPal ruled in favor of the merchant, the fee is refunded to the merchant later on.

In the event of a dispute, Stripe levies a chargeback fee of $15 along with the disputed amount on the merchant for US users. However, Stripe's amazing and brand-new Stripe Radar functions enable merchants to avoid charge card fraud.

Where refunds are concerned, you won't get your processing fees returned from Stripe or PayPal if your customer gets a refund.

So, in this category, Stripe has the slight upper hand and is the winner because it charges smaller chargeback fees.

5. Supported currencies, regional availability

PayPal is currently available in over 200 countries and regions and supports around 25 currencies. PayPal makes it simple to set up an account and begin receiving payments right away, regardless of where your business is registered.

Stripe is the opposite of PayPal in this regard. It's available only in 47 countries but supports over 135 currencies. However, there is a way around this. You can use Stripe Atlas to effortlessly incorporate a US company, open a US bank account, and begin receiving Stripe payments no matter where you are located.

So, the winner here is PayPal because it is available in significantly more countries compared to Stripe.

6. Payment options

PayPal allows its users to buy something now and pay for it later. Merchants can enable customers to pay for a product or service in four separate installments. All you have to do as a customer is choose PayPal at the checkout, select Pay later, and then select Pay in 4. Each installment is due every two weeks, and no interest is charged. However, this is available for US users only.

Stripe also has a buy now pay later option, which is only available to customers and not businesses. The customer can pay with a buy now pay later option at checkout. The customer then creates or logs into a buy now, pay later account with the provider that is supported by Stripe, like Klarna. The customer then returns to the company's website after accepting or declining the repayment plan's terms.

For this category, the winner is Stripe, as it offers a buy now pay later to its international customers, whereas PayPal only offers it to US customers.

7. User's checkout experience and usability

PayPal has a bit of a complicated checkout process. You're redirected to the checkout section after putting your product in the cart. However, with PayPal, the checkout is not done on-site. Rather customers have to click on the PayPal option, which sometimes takes a lot of time to load. Then, they have to log in or skip this step if they're logged in permanently. After this, customers go through the payment methods and select the one they want. Once they've done this, another screen pops up with an Agree and Continue option. After all of this is done, the customer is redirected to the site they're buying from, where there are more steps to be taken, depending on the site. So, PayPal adds several extra steps, resulting in many customers giving up on the purchase because it takes too much time to complete.

With Stripe, the checkout is as simple as it gets. The customer inputs their credit card information, clicks submit and is directed to a thank you or follow-up page. You have control over the design and flow of your site's checkout page.

So, the winner here is Stripe, as it has a seamless and easy checkout process.

8. Customer support

PayPal offers support through live chat and emails. It also has a knowledge base and an online forum where you can ask questions. However, it does not provide phone support and does not have a blog.

Stripe offers more customer support options, including live chat, phone support, and email. It also has a knowledge base, a blog, and a forum. For more technical assistance, you can use the IRC channel to get instant help from Stripe experts. Stripe also has a Discord server where you can ask questions.

I have to declare Stripe the winner of this category because it offers superior customer support and more channels for communication compared to PayPal.

9. Ease of use and security

Both PayPal and Stripe have made it their mission to be accessible to as many people as possible and therefore are simple and easy to use. However, setting up an account with Stripe can require more technical skills to make certain features available.

Security-wise, however, both companies score high, as both are PCI Complaint and meet the rigorous standards of the Payment Card Industry. So, you can rest assured that your data is safe with both platforms.

Overall, I have to give the crown to PayPal, as it is easier to set up than Stripe.

10. Online invoicing

Both PayPal and Stripe offer customizable invoicing to their customers.

However, the difference is that with PayPal, this feature is completely free regardless of the amount of your bill.

With Stripe, on the other hand, the online invoicing feature is free up until your bill is $1 million. After surpassing that amount, you must pay to create invoicing through Stripe.

So, the winner here is PayPal because it offers online invoicing for free regardless of the amount of your bill.

So, judging by the number of wins from the categories we have gone through, Stripe takes the crown as it did better in most. However, this is not a decisive win since Stripe and PayPal have one major difference – each is built for a different type of business.

So, if you're new and need a simple payment gateway that will not require too much work on your end, then PayPal is the one for you.

But if you're looking for a highly customizable gateway that offers advanced tools, then you should choose Stripe.

Either way, both platforms have their respective advantages and disadvantages. You can always opt to use both if you have enough human resources and technical expertise to support this endeavor.