Stripe vs. PayPal 2020: 9-Factor Comparison to Help You Choose Correctly

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Stripe vs. PayPal 2020: 9-Factor Comparison to Help You Choose Correctly
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To start, I want to clarify who this post is for because, let’s face it, every business has a unique way of running its operations and, thus, collecting payments. Specifically, this post is for anyone that intends on selling something online and is curious about which payment processor they should use:

Stripe

Stripe

or PayPal.

PayPal

For example:

Our team at WP Buffs implements payment gateways for website owners, agency partners and freelancer partners. Whether you need us to manage 1 website or support 1000 client sites, we’ve got your back.

Basically, from the one-man startup to the booming enterprise trying to get paid, this discussion of whether Stripe or PayPal is the best way to accept payments for business is for you.

Full Transparency: You Can Use Both

If you don’t want to have to choose between which payment processor you use, accepting payment using both is always an option. Both WooCommerce and Easy Digital Downloads allow you to accept payment via Stripe or PayPal; your customers select the way they want to pay when they check out.

paypal stripe select payment method

💸 The advantage to accepting both @stripe and @PayPal is you'll be able to cater to your entire customer base no matter what payment medium they want to use. #WordPress Click To Tweet

That being said, there are functional advantages and disadvantages to accepting payment using just one instead of both.

Stripe vs. PayPal: How Different Can These Payment Processors Be?

As the web becomes a more secure place in which to conduct business and website owners take more care to improve site speed and user experience, we’re seeing more and more consumers feeling comfortable enough to make purchases online. If you want your business’s website to be one of those spots where customers trust that payments will be handled securely, then you need to use a payment processor. But not just any payment processor will do.

At the top of the heap of payment processor tools stands PayPal and Stripe. While consumers are much more familiar with a platform like PayPal, Stripe has made a name for itself behind the scenes, too. But just because customers might instantly spring up at the sight of the PayPal logo at checkout, does that make it any more worthy of a contender when choosing between the two payment processors? It might.

There are many factors to consider when choosing a payment processing method for your WordPress site. If you haven’t taken the time to think them through, you may find yourself having to start all over again with another platform after watching sales dip.

It can be difficult sifting through all the information included on their respective websites, and so I want to do a quick rundown of the advantages and disadvantages of each platform. To get the most out of this information, we’re going to pit Stripe’s and PayPal’s features side-by-side–at least the ones that matter most to you as a merchant.

1. Transaction Fees

The first thing you consider before adding any new software or service to your business is how much will it cost. According to Christine Choi at FitSmallBusiness.com, transaction fees can be best described as a fee charged per purchase.  As luck would have it, however, both PayPal and Stripe are free to use–at least the basic plans are. So, signup is easy. Just enter account details and get started. There’s nothing to pay to initiate any services, no monthly fees assessed, and so on.

That said, there are fee structures that dictate how you will be charged as you begin to collect payments. For the most part, pricing is similar for both platforms.

💰 Both @PayPal and @stripe charge the same base fee per transaction (within the United States): 2.9% + $0.30 per transaction. #WordPress Click To Tweet

PayPal does, however, go into a more thorough breakdown of fees based on factors like:

PayPal prices

  • U.S. or international
  • Larger or micropayments
  • Online, mobile, or in-store
  • Profit or non-profit
  • Virtual Terminal to collect payments by phone
  • Hosted, embedded, or customized checkout

In addition, PayPal also assesses fees for the following:

  • Recurring billing
  • Currency conversion
  • Chargebacks
  • Refunds
  • American Express payments
  • Mobile card reader transactions
  • And much more

Stripe, on the other hand, has its fee structure much more simplified. Outside of the standard fee charged per transaction, Stripe has fees associated with:

Stripe pricing

  • Processing international credit card payments.
  • Converting currencies.
  • Processing payment disputes.
  • Billing (invoicing) services.
  • And refunds cost you the original fee assessed.

The Winner: Stripe

If you’re worried about the headache of having to track what kinds of fees you’ll be hit with based on where purchases come from or a high frequency of returns or chargebacks, Stripe is going to end up being the best option for you.

2. Payment Types Accepted

This is a big one to pay attention to.

Currently, PayPal accepts payments through the following methods:

  • PayPal
  • PayPal Credit
  • Credit cards
  • Debit cards
  • Pay by phone

Some payment types are only available based on the pricing tier chosen, so pay close attention to that before signing up. For instance, you can only get pay-by-phone virtual terminal payments with the Payments Pro plan.

If that restriction in payment types worries you, then you may prefer using Stripe that accepts a vast array of payment types, including:

  • Credit cards
  • Debit cards
  • International cards
  • AmEx Checkout
  • Masterpass by MasterCard
  • Visa Checkout
  • WeChat Pay
  • AliPay
  • Apple Pay
  • Google Pay
  • ACH credit and debit
  • SEPA direct debit
  • And more

The Winner: Stripe

While PayPal customers may like to see the PayPal logo on your site, demonstrating that you can accept payments from a whole host of recognizable and trusted financial institutions evens the playing field. In my opinion, Stripe’s list of accepted payments is the most appealing option, especially for businesses collecting payments from customers around the world.

3. Countries and Currencies

On a related note, we need to look at how far and wide PayPal and Stripe will allow you to conduct business and accept payments.

Here is where it gets interesting:

  • PayPal accepts payments from users in over 200 countries. Stripe only accepts payments from users in 25 countries.
  • PayPal can only process 25 currencies whereas Stripe processes over 135.

The Winner: Tie

This one boils down to what’s most important to you. Do you service customers in countless countries, but find that they typically only pay in one of a couple dozen currency options? Or are your customers more localized, wherein it won’t matter if you can only process payments from 25 countries? You’ll need to review your company’s data to make this decision.

4. Advanced Billing Options

This is where the type of business you run will come into the decision-making process. Here’s why I say that:

PayPal isn’t just in the business of helping companies accept one-time payments online. The payment processor offers a number of other options, too:

Multichannel – Payments can be taken on the PayPal website, from your website, on a mobile app, in store, and by phone. Of course, mobile and in-store options require that you buy extra hardware and sign up for PayPal Here, and paying by phone also comes with additional fees. If your business expands beyond the boundaries of your website, this would be nice to have.

Subscriptions – Recurring and automated payments can be generated using PayPal.

Marketplace compatibility – PayPal for Marketplaces is a solution designed for websites that involve multiple parties in the transactional process. Think of something like Envato as an example. You have Envato, the theme or plugin developer/seller, and the customer that funds need to go between.

PayPal invoicing

Invoicing – You can also use PayPal to create and send invoices to customers, which is particularly helpful for those of you offering freelance services that vary in price, from month to month.

In contrast, Stripe is solely focused on the e-commerce space, so you won’t find options for mobile chip readers or POS integration. That said, Stripe offers other types of advanced billing options:

Subscriptions – If you’re building a recurring revenue business or running a membership or subscription program, then know that Stripe has your back. Not only can you automate and schedule these types of payments, but Stripe offers features like:

  • Contacting credit card companies to retrieve new information when a credit card is about to expire.
  • Easier management for adding new customers, changing subscription details, and handling cancellations.

Stripe Connect – Stripe has a marketplace solution as well.

Stripe Connect

With this one, however, you have a choice of configuration. Do you need transactions to take place on a one-to-one basis? How about a one-to-many basis? Or even many-to-many? In addition, Stripe will help you account for the more complicated matters that come into play with these transactions, like international fees, taxes, and transmission licenses.

Invoicing – Unlike PayPal which only allows you to customize the logo and fields of the invoice, there’s much more you can do with Stripe Billing (which is brand new, by the way).

Stripe Invoicing

Of course, you’re able to accept payments from the full list of providers Stripe works with. You can also fully customize your invoices, create different types, and then choose whether or not to make them a one-time thing or set them to automatically recur.

Just be aware that billing over $1 million will result in additional transaction fees.

Mobile – Stripe has taken great care to help customers accept payments from both mobile websites and mobile apps. Stripe has designed UI components that optimize the payment workflow for mobile. Of course, it’s yours to customize, but it’s nice to know the option to speed up this process is there.

The Winner: Tie

This is one that depends on how you intend on selling your services or products. If you want to have the ability to seamlessly sell in person and online, then PayPal is the winner. If you’re only selling online and you want deeper customization capabilities, use Stripe.

5. Third-Party Integrations

There’s actually no contest in this category. Stripe takes it.

If you’re just in need of a simple payment processing solution, PayPal’s minimal integrations might be all that you need. Specifically, PayPal integrates with platforms like WooCommerce, QuickBooks, and Salesforce. E-commerce, accounting, and CRM–that’s really all some businesses may need.

Stripe, however, goes way above and beyond in terms of its integrations. It has entire categories dedicated to:

Stripe Integrations

  • CRM
  • Customer Support
  • eCommerce
  • Email Marketing
  • Form Building
  • Fundraising
  • Inventory Management
  • Recurring Payments
  • Referral Marketing
  • And more

The Winner: Stripe

If you like the idea of being able to extend your payment processing technology so that it talks to your other applications and makes life easier for you, Stripe is the way to go.

6. Hosting

This kind of “hosting” pertains to how and where your payments are handled with these platforms.

PayPal’s pricing plans give customers three options to choose from:

  1. Express Checkout places a button on your website, which then directs customers to PayPal to complete their purchase.
  2. Payments Standard allows you to embed a Payflow Link payment gateway on your website. This means it’s still branded to and managed by PayPal.
  3. Payments Pro gives you the option to host a checkout page from your website using the Payflow Pro payment gateway.

PayPal hosting

Stripe has one option and one option only: the checkout process resides on your website. However, Stripe securely handles the transaction from its end. You do have the choice though of fully customizing the look of it to match your brand.

The Winner: PayPal

One of the main reasons to choose PayPal over Stripe is name-brand recognition. Realistically, any of those three options would be welcomed by customers who most likely already have a PayPal account. It’ll boost their trust in your brand since you have a vendor like PayPal handling payments and it’ll also streamline the process as they’re already familiar with PayPal’s checkout process.

7. Security

Part of the reason you’re entrusting payment processing to a third party is to relieve yourself of the responsibility of having to securely handle that data, right? While your site is already well-secured, payments require a whole new level of eCommerce security you might not be prepared for or have the time to tackle. So, it’s good to know that both PayPal and Stripe have you covered in the way of PCI compliance.

Stripe also has taken measures to be compliant with international standards.

The Winner: Tie

I don’t think either platform would be winning as many accolades as they do if they weren’t fully PCI compliant.

8. Getting Paid

Okay, so I’ve talked a lot about the various types of payments you can collect and how you go about doing it on your website. However, we need to talk about how to get you paid now.

Neither Stripe nor PayPal requires its customers to have a merchant account. All you need to do is have an active bank account that you can connect to the platform. PayPal will also deposit payments into a debit card, but you have to pay a fee for those transfers.

With PayPal, payments are transferred to you within one business day (typically), so there isn’t much of a wait time. With Stripe, it can take about two days to get your payments transferred. You can also automate the process and have Stripe deposit funds into your account on a weekly or monthly schedule.

The Winner: PayPal

PayPal wins this one just for being one day faster.

9. User Friendliness

Finally, let’s talk about the user-friendliness aspect of these platforms. If you’ve ever made a payment through PayPal or Stripe before, then you know how easy they are to user from the customer side of things. That’s not what we’re debating right now. What you need to know is how user-friendly Stripe and PayPal will be for you as a website owner or developer.

In general, PayPal is the payment processor if you don’t want to do a lot of work.

PayPal dashboard

If you’re a business owner, marketer, or someone who would rather stay away from technical configurations, PayPal is a fantastic choice. Simply register your account, determine how you want to accept payments through your site, and get going.

💲@stripe is the developer’s platform. It was actually built with the web developer in mind, which is why it has such a robust set of documentation, extensive third-party integrations, and allows for greater customization than PayPal.… Click To Tweet

Stripe Developer's Dashboard

While it’s not impossible to use Stripe as a non-developer, it’s really not recommended.

The Winner: Tie

Although I think PayPal is indeed the easiest of the processors to get up and running on a website, I don’t necessarily think it’s the best choice in terms of user-friendliness. For websites that would benefit from a highly customized checkout, you shouldn’t compromise, and that’s really only something you can get with Stripe.

BONUS: Text to Sell

If you’d like to use an even more personal touch, have you thought about selling via SMS? If you want to find SMS leads to sell your product or service, why not give this strategy a try and see how efficient it is for your audience.

Wrapping Up

Having reviewed the pros and cons of using Stripe and PayPal, it almost seems like businesses would benefit from just having both on their websites, doesn’t it? While that might seem like the most sensical solution since both platforms bring their own unique strengths to the table, and you don’t have to pay to get started with them, this option would require you to manage finances from two different platforms. That can get complicated.

As a general rule, here are the business types that should consider using PayPal, Stripe, or both:

PayPal

  • Freelancers
  • Startups
  • Non-profits
  • Smaller businesses
  • Companies with a diverse set of international customers
  • Companies that want to conduct business through a brick-and-mortar shop as well as online

Stripe

  • Medium-sized businesses on the verge of scaling
  • Enterprises
  • Companies with a stronger development team
  • Businesses with a more localized customer base
  • Companies only selling online

Both

  • eCommerce companies
  • Marketplaces
  • WordPress agencies

Want to give your feedback or join the conversation? Add your comments 🐦 on Twitter.

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