So, you're ready to start taking payments online. You've secured your inventory, put a supply chain in place, and built a beautiful website to boot. Now, all you need to do is... well, start sellingth rough it!
In other words, you're ready to choose an online payment processor to take your business to the next level. So what do you do? You pull out your laptop, start Googling, and then - you hit a wall, stumped by that all-important question:
"Which online payment provider should I choose?"
Well, we can tell you what two of the first names to pop up in the search results will be: Stripe and PayPal.
Amongst a sea of names drenching the shores of ecommerce, it's this duo that stands out. PayPal, for one, is a household name - it's dominated the competition since it burst onto the scene in 1998. But, of all the online payment providers that have come and gone in the two decades since, only Stripe has ever posed a risk of dethroning PayPal.
So, is Stripe really better than PayPal? Which provider offers more for price, customizability, and customer service? Should you stick with the older, more established brand name... or would your business be better served by the challenger?
We're putting Stripe and PayPal toe to toe over six metrics to find out.
1. Pricing
In terms of costs, there's little to separate these two ecommerce behemoths. Both providers charge a rate of 2.9% + 30 cents on each transaction you take, and both offer a discounted rate of 2.2% + 30 cents for nonprofits.
PayPal's chargeback fee of $20 is higher than Stripe's $15, while the former also has a higher rate for micropayments (those that are less than $10), at 5% + 0.5 cents. However, PayPal offers its most basic mobile card reader (for face-to-face payments) for free, while Stripe's models always come at a cost. We'll have to call this one a draw.
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Verdict? Stripe and PayPal have the same processing rates, and PayPal's higher incidental fees cancel out Stripe's costlier in-person payment options (Stripe 1-1 PayPal) |
Customizability
When it comes to having ultimate control over your online payment processing solution, Stripe wins hands down. Designed with the tech-savvy in mind, Its API (application programming interface) allows you to accept payments from all around the world - including Alipay and Giropay - with just a single integration.
Stripe also offers a custom UI (user interface) toolkit, which allows you to build your own payment form. As well as uninhibited creative dexterity over all aspects of the payment process, you'll get a payment solution consistent with the look and feel of the rest of your site.
If all of this has your head spinning, though (and you don't have a small army of software developers at your disposal), you'll want to opt for PayPal.
PayPal offers a simpler solution than Stripe. That's not to say it won't do everything you need it to (with advanced fraud protection, buyer authentication, and recurring billing, it most certainly will) - it's just that all that stuff goes on behind the scenes.
Whereas Stripe's inherently more engineer-friendly, developer-facing setup empowers you to tinker with your payment processing solution until it's your own, PayPal provides just what you need to accept credit card payments - plain and simple.
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Verdict? For customizability, choose Stripe. For simplicity, it's PayPal all day. (Stripe 1-2 PayPal) |
User Experience
So, what are the benefits of Stripe's customizability? Well, let's take the opposite example of PayPal's hosted payment gateway - and its potentially negative impact on your customers' journey.
Your customer finds your website. They browse your catalogue, select a product, and pull out their card, preparing to pay. But then - hold the phone - they're redirected to another site (hosted, in this instance, by PayPal) to pay. They'll have to entire their payment details there, before being redirected back to your site to complete the transaction.
Sure, having the well-recognised and widely-trusted PayPal branding present during the checkout process could be considered a bonus. However, that doesn't make it consistent with the look and feel of your site. At best, it's a jarring user experience. At worst, it could result in (gulp!) basket abandonment.
Think of PayPal's payment gateway as like being on a car journey, and noticing that there are works up ahead. The road is blocked, so a guy in a fluorescent jacket reroutes you down a winding country lane. You trust him - and five minutes later you're back on the road - but that doesn't make the lane any less bumpy, or any less inconvenient (and it doesn't stop the kids complaining!).
Stripe's payment gateway, on the other hand, can be integrated into your website. You can customize it to reflect your own brand's logo and colors, and your customer will remain on your site throughout the entire purchase. They get to their destination faster, and the whole experience is smooth, speedy, and secure.
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Verdict? Stripe's payment gateway allows you to accept online transactions with ease, while building your own brand (Stripe 2-2 PayPal) |
Customer Service
Let's take a step back from the software itself for a second, and take a look at something that (for small businesses, anyway) is equally important - the level of customer support included.
And it's good news - both Stripe and PayPal do the basics well. As well as email and live chat support, both companies have extensive online knowledge centers, packed full of articles to answer your questions.
The only point of difference? Phone support. Unlike PayPal, Stripe's support team is available 24/7. So, if you trade outside conventional hours - and thus will require some form of round-the-clock support, in case you get stuck - you should make Stripe your selection.
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Verdict? Stripe's 24/7 phone support means it edges PayPal for customer service. (Stripe 3-2 PayPal) |
Accepting Payments In-Store
Stripe and PayPal both started life as platforms for accepting online payments only. Neither was all too concerned with empowering merchants to take card payments directly at the point of sale.
Yet that changed in 2012 with the introduction of PayPal Here - a credit card reader that allows merchants to benefit from accepting face-to-face payments. The Stripe terminal came along in 2018 to do a similar thing. But which one does it better?
Well, both card readers sport a sleek, stripped back design. Both solutions are fully mobile, and can work either on a countertop (for retail businesses), or as a way for tradespeople or micro-merchants to take payments on-the-go.
However, PayPal Here is better for small businesses - for two reasons.
Firstly, pay out times. PayPal deposits funds instantly into your PayPal account. Stripe, on the other hand, can take up to a week to pay out to your business bank account. That's a long time to wait for your own money, right?
Secondly, usability. While both card readers come with an app, PayPal's is more simple to get to grips with - and can help you turn your iPad into a fully-functioning (albeit rather basic) POS system.
Conversely, the Stripe terminal can't be integrated into your existing POS system. So, while Stripe works for merchants who are fresh to the world of accepting card payments, it's not suited to sellers with some existing payments infrastructure already in place.
What it all boils down to is that the Stripe terminal is hamstrung by the same issues that make its online solution unsuitable for small merchants; it sacrifices simplicity for customizability, and user-friendliness for developer-friendliness.
Oh, and if you're reading this from outside North America, forget about it - the Stripe terminal is only available in the US and Canada.
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Verdict: PayPal's mobile card reader is a safer, more straightforward pick for businesses looking to accept in-person payments (Stripe 3-3 PayPal) |
International Reach
PayPal is currently available to merchants in more than 200 countries around the world. Stripe is getting there, sure, but is still only available in a comparatively paltry 36 countries.
Find out if Stripe supports your country here, or just choose PayPal.
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Verdict: When it comes to international reach, PayPal wins by a landslide. (Stripe 3-4 PayPal) |
Final Verdict
If you've been keeping up with our live score updates, you'll have seen that PayPal has just edged it. It was a close-run thing, sure. But, while Stripe excels in customizability and customer support, PayPal shades this contest for the simplicity, accessibility, and low fees it brings to both online and face-to-face payments.
So, to answer our original question, is Stripe better than PayPal? No... but it's not that simple.
Because, though these two online payment service providers have been duking it out in the same niche for eight years, in a way they're actually like apples and oranges.
PayPal is well-suited to small businesses. It's easier to set up, offers quicker payouts, and boasts a powerful brand name that gives your payment process added authority. Its mobile card reader integrates with your existing POS system without hassle, and is a simple way to supercharge your countertop.
Stripe is better for large businesses. It's versatile, and customizable to the extent that it's basically a white label solution. That makes it a blank canvas, the likes of which your developers will have a field day splashing with the unique colors and styles of your burgeoning brand. The 24/7 customer support? That's just a bonus.
Remember, it's not any single metric - whether that's cost, customer service, or versatility - that should decide which provider you choose. You'll need to take into account your business' type, size, location, sales volume, and average transaction value to get the best deal for your business.
Whether that's Stripe, PayPal, or one of the plethora of payment providers popping up across the country? That's for you to decide.