Paypal is the elder statesman of payment gateways, but there’s a new kid on the block who’s starting to turn heads. Founded in 2010, Stripe was valued at $3.5 billion in 2014. According to builtwith.com, Paypal and Stripe (link) were the two most popular payment processors this past quarter by a wide margin. While Paypal is still a checkout giant with name recognition across the globe, more and more people are starting to look into Stripe as the solution to their payment processing needs.
Both are excellent choices for payment gateways, and it is very likely that you will be able to implement both on your eCommerce website. However, there are some significant differences between the two that may be make-or-break for business owners. We break down how Stripe and Paypal are similar and different here:
Both Stripe and Paypal charge the same base fee. Stripe charges this amount up until you are processing $80,000 worth of transactions each month, at which point they will negotiate a price with you personally. Paypal will give you a discount once you process $3,000 per month and $10,000 per month. They will give you further discounts past $100,000 per month but they are unpublished. Check out the table below for a full breakdown.
|$3,000 per month||2.5%+$0.30||2.9%+$0.30|
|$10,000 per month||2.2%+$0.30||2.9%+$0.30|
|$80,000 per month||Contact to negotiate fee||2.9%+$0.30|
|$100,000 per month||Contact to negotiate fee||Contact to negotiate fee|
Please note: Stripe has partnered with Shopify to produce the Stripe-powered “Shopify Payments” system. If you have a Shopify store and use this option, you will not be charged per transaction.
Stripe does not charge you a monthly fee to use their service. Paypal has a free option, but shoppers will be redirected from your website to Paypal’s to enter their payment information. You can have it natively integrate with your ecommerce store if you pay a monthly fee, either $5 or $30 per month for Paypal Advanced or Paypal Pro.
Both Paypal and Stripe have extra fees associated with them. See the chart below for a full breakdown. Overall, Stripe has fewer extra fees and they are easier to figure out than Paypal’s.
|Convert Foreign Currency||Free||2%|
|Bitcoin Transactions||Not Recommended||0.5%|
|American Express||3.5%*||Same as base rate|
|International Cards||1%+cross border fees||Free|
|Credit Card Verification||$0.30||Free|
*Only on Paypal Advance and Paypal Pro
Stripe makes security a little bit easier than Paypal. With Stripe.js, credit card information is sent directly to Stripe’s servers. This means that even if your servers are victims of a security breach, your customer’s payment information is safe. Paypal also offers a way to have payment information sent to their servers, but it will still be bounced off your servers. While Paypal is not inherently unsafe, it does put the burden of cyber security on business owners and web developers. With Stripe, you don’t have to worry about complicated and pricey PCI compliance.
One of the biggest draws to Stripe when it was first released was how easy the API was to use. Paypal quickly took notice and updated their API to be more like Stripe’s. In the past, proponents of Stripe boasted its API as one of the main reasons to switch, but today they are more or less the same. If you are competent with one you could transfer over to the other without too much trouble.
According to data collected during May 2015 by Spreedly and Shopify, Stripe was slightly more reliable than Paypal during this period. Paypal processed 80% of payments successfully while Stripe processed 88% successfully. Stripe comes out slightly ahead, but both perform better than many other payment gateway options.
Unfortunately, Paypal has developed a bit of a reputation for unfairly freezing accounts. Just Googling “paypal frozen account” and “stripe frozen account” clearly shows how many more people experience this problem with Paypal than with Stripe.
“Paypal frozen account” returns over double the amount of results that “stripe frozen account” does. It’s also worth noting that many of the top results for “stripe frozen account” talk about switching to Stripe after their Paypal account was frozen.
Both companies offer multiple ways to contact them for support. Paypal and Stripe are both available for support by e-mail. Paypal also has a phone number you can call to discuss your problems with someone. Stripe doesn’t offer phone support, but they do manage an IRC channel populated by Stripe engineers that can help you with your problem.
Paypal and Stripe may be the two most-recognized names in the world of payment gateways today, and it’s obvious why. Paypal has been around since the beginning and has served people for years, while Stripe is new and exciting and forcing the industry to evolve along with it. Both can be integrated with all of the eCommerce platforms we develop for. Stripe’s fees are much more straightforward than Paypal’s and their security system makes life a little easier for you, but some people get frustrated when they can’t talk to an actual person for customer service. Both are great payment gateways and will serve you well, it’s just a matter of what you value most.
- Joe Chilson
- November 5, 2015