Payment Gateway Comparison: Stripe vs PayPal

As a business owner, you have a few options for selecting a payment gateway. When you first start your research you might notice two brands standing out: Stripe and PayPal.  A smart comparison of stripe vs paypal is necessary in order to understand which process is better for the people. Both seem similar, but when you compare Stripe vs PayPal you’ll notice that each has their own defining pros and cons. It is important to note, however, that these differences are what make each provider unique — and as a business owner you need a unique solution that suits your company’s needs.

stripe vs paypal

PayPal Basics

PayPal is a worldwide payment gateway that was originally founded in 1998. This service allows online shoppers to send money, pay for online shopping, and receive money without actually sharing their financial information. In 2013, PayPal processed $20 billion in mobile payments alone.

paypal

Stripe is also a payment gateway that operates similar to PayPal by allowing companies and individuals to accept payments or send money online. Stripe is much newer than PayPal, only starting up just a few years ago. But, even though this company is new to the industry, it’s a competitor to PayPal all the same.

stripe

Customer Experiences

It’s important when comparing Stripe vs PayPal to see how a customer would experience buying through one of these payment gateways. If you integrate one of these providers into your ecommerce website, the customer will then be redirected to your provider and pays through their system.

Stripe has a simple, streamlined process and all customer address and additional info fields are optional. When checking out, the collection screen works as part of your own checkout page. Most browsers are supported with Stripe, except Opera. Your customers don’t need a Stripe account to checkout through them.

PayPal has a more complex process when it comes to checking out. Users are redirected to the PayPal screen, which means you have a higher risk of cart abandonment at this point. Customers don’t, however, need a PayPal account to check out. Also, because PayPal is a better known payment gateway, customers are more likely to recognize and feel secure checking out with PayPal than Stripe.

Business Experiences

You work with your payment gateway closely and rely on it to deliver funds to you. Therefore, comparing your business experience with Stripe vs PayPal is crucial.

PayPal works with all major financial institutions and you can withdrawal funds when you want to — so you could wait for your balance to reach a certain point before withdrawing. You can send invoices, track payments, transfer funds and the reporting feature is clear and simple to use — making it easier for tax time.

Stripe credits your commercial account as transactions are processed, which can make it difficult for tracking. Also, Stripes reports are harder to recover, don’t integrate well into Excel or other accounting programs.

Fees

Fees can make or break your profit margin, especially if you’re just starting out. When comparing Stripe vs. PayPal, the fees look similar until you break it down further. For United States transactions Stripe charges 2.5 percent plus $0.30 per transaction, while PayPal charges 2.2 percent and $0.30 per transaction. If you accept an international payment Stripe stays the same while PayPal moves up to 3.2 percent and $0.30 per transaction. If you want to use PayPal Pro, you’ll also have to pay a $30 per month membership.

PayPal does, however, scale down the fees as your sales volume increases. As monthly sales hit markers like $3,000, $10,000 and $100,000 you can be eligible for a discounted transaction fee.

Picking between Stripe vs PayPal comes down to how much you want to pay, how you want to integrate the program and what you want your customers’ checkout experiences to be like. By comparing from all sides you can get a better idea which payment gateway will work best for you.