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Recently updated! August 2021
It's becoming more and more of Stripe, the hottest new payment processor on the block. But what about PayPal? It is a reputable company and an extensive history of processing payments on the web.
Let's do a thorough review of Stripe vs PayPal. We'll evaluate each of the payment processors across five main categories: Transaction and service charges, security API, Data Portability, the Customer Support. The final decision will not be made until we have a winner, but we'll point out some important differences, which should assist you in making an well-informed decision.
Transaction and service fees
Stripe takes a simple approach. It charges you a flat rate of 2.9 percent plus 30Cper for each successful charge, as long as you're doing under one million dollars of volume each year. The rate is different from country to nation, however, it's always flat. There are no specific prices for high volumes.
PayPal recently increased their base cost from 2.9 percent + 30C(or) to 3.49 percent plus 49C/. PayPal adds other service fees, which add a bit of complex. Let's look at the differences between Stripe as well as PayPal's costs:
| Service | PayPal | Stripe |
|---|---|---|
| Transfer fees (#1) | 3.49% + 49C/ | 2.9% + 30C/ |
| Credit cards on your site | $30 per month. [2] | Free |
| Chargeback | $20 | $15 |
| American Express | 3.5% [3] | Same flat price |
| Micropayments (less than 10 dollars) | 5% + .05C/ | Same flat price |
| Refund | Fixed fee returned only [4] | Fees are not refunded |
| International cards | 1% [5] | Free [6] |
| Authorize card | 30C/ [7] | Free |
| Recurring Billing | Ten dollars per month | Free |
| Advanced Fraud Protection | A month of $10 [8] | Free [99!] |
| Accept Apple Pay (c) | Not available | Free |
- United States transaction fees. Stripe and Paypal transaction fees vary by the country.
- PayPal Payments Pro allows you to provide a fully personalized checkout experience for your website and comes with a Virtual Terminal.
- American Express fee is only applicable to PayPal Payments Pro, PayPal Payments Advanced, as well as Virtual Terminal, which is required to use certain options (see note 2).
- Fixed fee is a portion of the transaction fee (for example, the return fee is $0.30 for domestic payments).
- PayPal fee for crossing borders.
- International cards are completely free, but currency conversion costs 2%. Example: Connect an account in a British bank to Stripe and charge it in USD. Stripe will instantly transform your cash into GBP (for the cost of 2percent fee) and transfer them to the GBP savings account. If instead you charged the amount in GBP (or connected to a USD bank with Stripe) this would be absolutely free.
- PayPal will charge 30C/ transaction for uncaptured authorizations and cards that require verification.
- $10 monthly + $0.05 for each transaction. This excludes Express Checkout transactions.
- Look for Stripe Radar.
You'll notice you'll notice that PayPal fees are far more nuanced and complex. For example, they only charge extra to use American Express when you're on one of the plans that are paid this is a little odd. In almost all cases, Stripe is the cheaper choice due to its less service charges (unless the transaction is solely micropayments).
When will I be paid?
PayPal typically pays you in one business day. Stripe has rolling 2 day transfer options for both the United States and Australia, and 7 day rolling transfer in many other countries (see below for Stripe automatic transfer schedules). If you need to access your money is essential and you're outside from the United or Australia be sure to keep this in your mind.
Security
Both Stripe as well as PayPal take security seriously. In the end, they're both extremely secure and stable platforms. Let's discuss how they're different, and how Stripe intrinsically promotes security.
The most popular feature of Stripe the moment they launched it was Stripe.js. When you employ Stripe.js on your website the data from your credit card entered into your payment form is not transferred directly to the server. Instead, the data is transmitted directly to Stripe. What's the reason this is so crucial?
- Fully PCI-compliant since you don't handle any sensitive information about credit cards through your servers.
- Securer because any breach to your server won't result in any stolen credit card data.
- It's not recommended to save information about credit cards on your servers, which you really shouldn't be doing unless you're a big business and are willing to invest in PCI security.
If you follow the normal procedure when using Stripe, you'll just instantly store your card data in their vault. It's impossible to access sensitive information. This encourages secure data.
PayPal now has a method of storing cards in a vault However, it's not quite the same as Stripe.js. The sensitive card data still must be processed by your server , which means it puts a huge security obligation (see PCI compliance above) on the software's developer or customer.
In the end, Stripe.js encourages good developer security procedures, whereas PayPal allows developers to make poor choices. They've recently taken steps to provide better options, but these options still not as safe as Stripe.js.
API
When Stripe was first introduced to the people in the early days, the Stripe API was a difference maker. It's well-documented, clean and very simple to make use of. The APIs for payment processors of the past were buggy unreliable, inconsistent, and badly documented. Actually, PayPal was one of the biggest offenders.
In a way, Stripe has made it necessary for PayPal to improve its performance. Documentation and organization for their newly developed RESTful API is greatly improved and modeled after Stripe (coincidentally). It is a good example of competition benefiting the customers. Stripe is setting a new standard for a clean and well-documented API while other companies (including PayPal) is rushing to keep up.
Data Portability
This is an area where PayPal is unable to stand in its own face. Imagine that you've created a highly popular membership website over the years, and you powered it with PayPal subscriptions. If you'd like to switch to a different processor for payments (like Stripe), you can't transfer that credit card data. PayPal will not give it to you. Your existing customers will have to sign up again and you'd probably be losing some customers in the procedure.
However, Stripe prefers the ability to transfer data. If you decide to leave Stripe they'll aid you migrate your credit card information in a secure and PCI-Compliant way. The tolerant stance they take on the transfer of data is worthwhile to be noted. It's refreshing to know you can choose, and won't be locked in for ever.
Customer Service
The last time we used PayPal for a while, therefore we don't have any current information about their customer service. When we used PayPal, email support was slow and unreliable It was also almost impossible to reach anyone on the line. We had a running joke because PayPal's phone system was constantly hanging up on us before we could ever speak to anyone. The problem continued for months. Additionally, there are numerous horror stories about PayPal blocking funds without reason.
Stripe has open channels for help via email, and they also have an IRC channel (#stripe on Freenode) in which developers are able to chat with and receive live assistance by real engineers. This is invaluable if you're working through a tough problem or need help live. Stripe has also launched live chat with 24/7 hours and telephone support, which should further enhance the experience for customers.
It's fair to say that PayPal has been afflicted by scale, age, and the bureaucracy. Stripe is brand new and is competing for market share. They're working hard to differentiate through great customer support. The real test will be as time goes by. Stripe will find it more and harder to deliver top notch customer service when they grow larger and larger. I hope we're still talking about their service to customers in five years' time.