Stripe vs PayPal What Payment Gateway Should You Choose? (2022)

There is no issue more daunting than this one: How should you accept cash payments?

After you do your homework There are two clear contenders for your merchant buck: Stripe and PayPal. With similar features, making a decision between them is like picking from a bunch of apples... however, there are many more. That's where this piece can help you.

We'll look at the differences and similarities between these two payment gateways and finally get to the core of the Stripe and. PayPal debate.

Here's the itinerary:

•    What Does Stripe and PayPal Do?
•    Transaction Costs as well as Fees
•    Dispute and Chargeback Fees
•    Refund Fees
•    Global Access and supported currencies
•    Customer Service
•    Payment Plan Support
•    Accepted Credit Cards
•    Checkout Experience
•    eCommerce and CRM Integrations
•    Final Victory Final Victor

What Do Stripe and PayPal do?

Each of PayPal and Stripe (founded in 2011) and PayPal (founded 1998) are payment gateways acting as a conduit between merchants and the appropriate credit card networks/financial institutions for approving and accepting transactions.

The intricate nature of these connections can become pretty convoluted. An easy way to look at a payment gateway to think of it as an envoy, which carries information between banks and merchants.

Below is a diagram of how payment gateways are integrated into the web of ecommerce.

The payment gateway is not the solesolution for accepting payments online however it's an option that is easy to begin using.

Due to the fact that unlike payment processors gateways offer your financial data the armed safeguard it needs between credit card networks, your customer, as well as your business.

That is it is a good idea to use the gateway in all scenarios because it could help you take PCI compliance off your hands. When you do decide to go the gateway route then you'll encounter Stripe as well as Paypal time and time again. There are plenty of other payment gateways out there including Authorize.Net, 2Checkout, Braintree (owned by Paypal) however, Stripe and PayPal are by far two of the most user-friendly..

For good reason, too: they have a longstanding dominance over the marketplace. Based on information from Datanyze, PayPal is used by 64% of the market. Stripe is second, with an estimated 20%. Since September, Stripe is now v estimated at 20 billion!

However, their service is not usually considered a payment gateway, instead, it is an all-inclusive payment processing system which is therefore outside of the scope of this post.

Now that that is out of the way What are the payments gateways utilized for? The first and foremost the e-commerce sites make use of payment gateways. Under Armour is an example of a store that utilizes both Stripe as well as PayPal.

Do you need to use a single payment Gateway or Two?

The above raises the question that is obvious In the event that you are able to utilize both payment methods then why would you need to pick one?

Because unless you're as big as Under Armour, UNICEF, or have a tech-savvy background and have extra time to spare then you're creating more headaches.

Two payment gateways mean with twice the number of vendors with twice as many issues could go wrong andyou'll likely lose the volume-based discounts offered by the gateways. If you've got a custom back-end, or any other integrations, development around your products or services could make this something that is extremely complicated. It's not ideal or particularly tenable for small-scale businesses.

But, that all being stated. Sometimes having both payment options can benefit your business. In particular, in different countries. Not everyone has a credit card. A lot of consumers and bloggers use PayPal balances as a way to pay for every item.

Running with just one or two gateways very much will depend on your business and the products you're selling and what kind of clients that you've got.

After that is done now, let's get into our comparison Stripe vs PayPal.

Transaction Costs and fees

In the case of micropayments, PayPal is the clear victor, charging significantly less that Stripe per microtransaction. These are typically transactions under 10 dollars.

Paypal Micropayment Fees

• $1.00 5% of $1 equals 5C/ 5C/ + 5C/ = 10C*
• $5.00: 5% of $5 = 25C/ and 25C/ +5C/ = 30C/

Stripe Micropayment Fees

• $1.00: 2.9% of $1 = 2.9C+ 30C/. 2.9C/ + 30C+ 30C = 32.9C(/
• $5.00: 2.9% of $5 = 14.5C/ and 14.5C+30C( = 44.5C/

Standard Fees

However, if you're looking in more than micropayments, things get more complicated.

The current price charged by PayPal is 2.9 percent plus $0.30 for each transaction.

The fee schedule of Stripe is also 2.9 percent plus $0.30 per transaction.

As you can see, they have no transaction fee when you get beyond the "micro" threshold. What is the exact ratio their fees stay once you get into the finer details? It gets difficult.

PayPal charges 4.4 percent on transactions when the funds are sourced from outside the US:

Which means, regardless of whether the client is now US-based but uses international credit cards then you'll pay the same transaction fee.

Stripe is more gentle with its charges here with a cost of 3.9 percent as well as the $0.30 fixed fee.

Who wins in the war of transaction fees? If you're not processing microtransactions every day basis, the result is blissfully conclusive in this instance.

  Winner: Stripe  

But this is just an aspect of the total fee structure you have to be aware of. Also, we recommend looking into Flavio's even deeper dive into how to compare the fees of Stripe against Paypal.

Let's look at how these two titans stand up to charges for dispute and chargebacks.

Dispute and Chargeback Fees

Chargebacks can be painful for all who is. If a client is charged back it is possible to anticipate more than payment in limbo -- you're also going face additional costs.

Chargebacks from PayPal and the associated fees include unauthorized transactions, items not receiving complaints, and complaints about products that are significantly different from the description.

In the event that they make an order for a chargeback, the money will be refunded back to the user, and the credit card network tacks on the merchant up to the amount of $20.00 fee. (Fortunately, this fee is paid back if the court decides later to rule your case to your advantage.)

Stripe, on its own, has a far more straight-cut approach and classifies disputes as chargebacks within their documents.

  Winner the Stripe  

If you've not yet checked out Stripe's latest Radar options, then we highly urge you to try it.

However, will they be able to be able to keep their winning streak going with regards to accessibility and supported currencies?

Refund Fees

PayPal was once the winner for refunds since they would return your original processing cost. As of October 11 the 11th of October, 2019 this will no longer be the case.

PSA: Paypal will no longer charge processing charges (2.9 percent plus $0.30) for refunds to a customer starting November 11, 2019.

The decision was rescinded in May, due to anger, Paypal is now moving forward anyway and hoping you won't be able to tell.

Nail inside the coffin. Goodbye, @PayPal. pic.twitter.com/sAweMHxtLn

--- Sean McCabe (@seanwes) September 19, 2019,

You can find this in PayPal's guidelines.

If you decide to reimburse (partially or in full) an item to a buyer or a gift to a donor there will be no charges to refund the transaction, but the fees you originally paid as the seller will not be refunded to the buyer or donor.

Stripe already has this in the policy.

There is no cost to refund a charge, however, the charges from the original charge are not returned.

  Winner: None  

Global Access and supported Currencies

The time has come to look over where Stripe is and PayPal are accepted, along with currencies.

PayPal is accessible in more than 200 regions (Africa, Americas, Asia Pacific, and Europe) and supports 25 currencies. Some countries might not have access to all PayPal tools and features. PayPal is a simple process to open an account no matter where your business has been registered. You can open an account, and begin accepting payments right away.

Stripe, on the other hand is accessible in 26 different countries. It's a deal breaker for some businesses. However, Stripe does provide a workaround. In any country that you're in, you'll be able to use Atlas for easily incorporate the U.S. company create a U.S. banking account, and start accepting payments with Stripe.

Where Stripe beats PayPal is its currency support. Stripe offers support for over 135 currencies..

We have to give the slightly advantage to PayPal in this regard, as the countries it supports will be more important that currency support. A large part of it is the fact that PayPal has been around for a long time, whereas Stripe is playing catch up with regards to supporting emerging countries.

The winner is PayPal PayPal

If your company is headquartered in America, Stripe would easily take the prize.

Customer Support

When your livelihood depends on it, you need a payment system that will provide instant support.

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This is an impressive achievement for them. Based on the data of Invesp, 73% of users prefer live chat. We've also witnessed this personally. We offer live chat through our My dashboard.

Unfortunately, PayPal isn't currently beating or even meeting this level of support. At present the supported channels include telephone support, you can ask a question in their forum, or via email. Below are the available support channels.

Although they offer a forum, andoffer an online forum where users can be available at any time but it's not the exact equivalent to receiving official support, something they state in their disclaimer right from the beginning when you access the community page. So, the information you find there is to be read with caution. salt.

The hours of their phone support aren't like Stripe's 24 hour support.

Our victor emerges once more when it comes to customer support.

  Winner: Stripe  

Their reign could be in trouble for our next grouping.

Payment Plans

Items that are expensive have an intrinsic issue: they have a less affluent customer base.

Another way of avoiding that is to use the payment plan. These plans allow e-commerce doors for those who would like the products you sell, but might not be able to cover the cost in one swoop.

The online jewelry store Vrai & Oro demonstrated the power of payment plans by cutting their inventory back, allowed customers to pay for their purchases in installments as well as surpassed $2,000,000 in revenue per year.

Zulily makes use of both of these for its higher-priced products as, as shown in the KitchenAid Stand Mixer.

So payment plans are definitely a strength for a merchant who has inventory that is more expensive (or just wanting to move towards that sort of stock). The best part is that the payment gateway of the merchant makes it simple to setup.

PayPal does this natively and comes with tons of documentation on developing the checkout process and buttons for setting up an installment program.

Stripe, however, does have a problem with this. Setting up a payment plan via Stripe is a complicated process with the "subscription" system. It's a good idea, but not to being as easy or smooth. You'll most likely need an application or developer which supports this to function properly.

Although Stripe says they're working on implementing this feature but as of right now the company loses this battle by a sweep.

The winner is PayPal

When it comes to payments, your choice of gateway can significantly limit your customers the options to pay you. Which one has the lowest restrictions?

Accepted Payments

From the beginning, PayPal lets you accept every major credit card as well as any payment method PayPal users can store ( which includes eChecks) as well as PayPal Credit. That last point makes this metric a tough one to judge.

PayPal Credit, a virtual credit line that is offered through Synchrony Bank, is available to any person in the US with the PayPal account. (Additional stipulations require users to be over the age of 18, however, that's a an integral part of PayPal's policy for users, much to the disappointment of many entrepreneurs.)

PayPal hit the 244,000,000 active registered account mark in the second quarter of 2018 this means that you've got a lot of potential to connect with customers using a line of credit that's most likely exclusively available to PayPal.

It is something to keep in mind when comparing it with Stripe which accepts far greater payment methods. They accept each major credit and debit card along with the following wallets: Alipay, Amex Express Checkout, Apple Pay, Google Pay, Microsoft Pay, Masterpass by Mastercard, Visa Checkout, and WeChat.

Though all of these wallets (and other cards) merit a mention The most notable additions are Visa Checkout and MasterPass by Mastercard. Why are these so important? Visa and Mastercard claim a whopping 80.10 percentage of the network.

Working with their native wallets is definitelya major benefit for any eCommerce store. Case closed, right? Not quite.

  Winner: Tie  

Although the inclusion of wallets and other extended credit card networks may not be able to secure this victory in their favor, PayPal Credit can easily change the odds to the advantage of PayPal if your customer base is mostly from the US.

Check-out Experience

We're getting near the end of our comparison, but we've saved the best two for the final.

The checkout process at Stripe is easy. Your customer enters a credit card's number and hits submit, and then they're transferred to your thank you or follow-up page. The layout and the flow is entirely up to you.

PayPal is slightly more complex. Let me explain. Let's say we want to purchase this book at Barnes & Noble. After we have added it to our shopping cart, we bounce over to the checkout section.

Instead of going through the on-site checkout process, we click the PayPal button. It opens a lightbox display that we need to be patiently waiting for to sign in. I mention waiting as I tested this on a few different major retail sites, and several of them took more than 10 seconds to open the brand new page. Barnes & Noble was by far the fastest.

When the page is over the 3-second mark, your page views decrease. The additional time spent loading between pages can result in a decline in sales if you let it go on for long enough.

In our process, once it happens toload the process, we're required to logging in. You may skip this screen when the user decides to stay logged in permanently.

After that, we have be able to go through our payment options before clicking once more.

It's not over once you click"continue" "continue" button, though. Add another click to get to the "Agree & Continue" screen.

We end up backat the checkout page butnot finished with our purchase.

Overall, PayPal added five extra clicks to our process while taking us away from the checkout page. This can be different according to how PayPal set up and the type of payment you're accepting. PayPal offers additional options and integrations that allow you to accept credit cards directly from your own site.

Even though these steps are admittedly small even if they don't seem to mean too much, there's an abundance of evidence from science that indicates they could be hitting the bottom line.

Also known as Hick's law, research finds that the less factors customers have to think about when making a decision, the more likely they are to follow through with making the decision. This means that the more steps the customer needs to take and the higher chance to finish in a situation where your cart is abandoned.

More than 75% of carts abandon their carts across various fields, so whatever that you do in order to keep a cart is worth doing , or in this case, worth not doing.

While PayPal does offer checkout solutions for your site however, it is dependent on the type of the kind of payments you're accepting as well as which type of PayPal account you're using. Thus, Stripe has a slight competitive edge here as the Stripe checkout has been seamless and easy since day one.

  Winner the Stripe  

There's a final obstacle for the two payment options to pass, and for users of WordPress person, this is the most significant one.

Integrations

WordPress users appreciatea great plugin and this is no one to be a victim of this. First and foremost, let's speak about WooCommerce. Whichever payment processor you go with, you're covered.

Easy Digital Downloads is also home to all the well-known payments gateways extensions.

However, what are other software varieties? While your ecommerce software is your main concern, CRM software is just essential for running a successful company. In the end the CRM software could increase conversion rates by 300% and improve productivity by 50%.

Are you working with CRM? Absolutely going to give the weight of a payment gateway. Unfortunately, PayPal is not quite as good.

Stripe is, on the contrary side, is a shining product, with collaborations with HubSpot as well as Agile CRM, both of which regularly make the top five list as the top CRM tools for free available.

Given their much wider variety of suppliers -- for WordPress as well as CRMs and more -- we're led once further to a similar conclusion in this case.

  Winner: Stripe  

And where does this leave us in the grand scheme of things?

The Final Victor

Although both payment platforms offer retailers a wide range of options to grow, Stripe claimed consistently -- even if marginally won wins over PayPal due to its increased user-friendliness in checkout, assistance for customers, a more straightforward fee structure and integrations.

If you're stuck in a dilemma about the best route to take consider this:

• Are you planning to conduct a lot of small transactions (less than $10.00)? If yes, then you should consider PayPal.
• Do payment plans seem like a deal breaker for you? If so, you should choose PayPal and again.

If you happen to be located in a nation which isn't being supported by Stripe or PayPal (there are some of them), we recommend looking at 2Checkout.

Summary

Payment gateways are among the most important choices you'll have to make as an ecommerce owner. Although it is possible to operate several gateways, it's not advised for smaller companies. Because with twice the gateways is twice the risk of catastrophes. If you are able to then, better for you!

Therefore, if you're on the lower end of the scale then you must pick. PayPal or Stripe are the two biggest competitors for the marketplace. In terms of the transaction fee, PayPal trumps Stripe for microtransactions. However "average" transactions see that the two gateways are equally matched. But, Stripe takes the lead for international transactions, which gives them a slight edge on this measure.

The terms dispute and chargebacks can be difficult to discern between the two, as both PayPal and Stripe employ different terminology. Stripe was ultimately with the upper hand due to its simplicity.

Customer support hours were another consideration. Because of its latest addition of 24/7 live chat and telephone support, Stripe again claimed dominance. This trend continued for accepted transactions, checkout, and integration.

Overall, due to its simplicity, and the performance on our metrics We conclude that Stripe is the preferred payment processor of choice for an ecommerce company.

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