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Stripe vs. PayPal: Which One Is For You?

In 2021, more than four in five Americans (82%) used some form of digital payments, according to McKinsey’s 2021 Digital Payments Consumer Survey. Online payments aren’t showing any sign of slowing down. In fact, the industry is going from strength to strength. 

Is your business using digital payments to boost revenue and increase customer satisfaction? Are you struggling to decide which payment gateway works best for your company?

In this article, we’ll compare and review the two most prominent online payment platforms in today’s market: Stripe vs. PayPal. We’ve gathered all of the details on what each platform offers and what to expect in the digital payment processing industry.  

Stripe and PayPal: What are they? 

Both Stripe and Paypal are payment gateway providers which enable businesses to receive payments from customers. A payment gateway validates your customer’s bank details to make sure you get paid correctly and securely. Below is a visual workflow illustrating how a payment gateway provider works: 

Image source: Course Maker 

Stripe vs. PayPal: 4 key factors to consider 

1. Business size 

Generally, if your business is rather small-scale, PayPal is a better fit as it’s really simple to use. For example, to set up, you’ll only need to copy and paste a line of code or integrate a plug-in with your current shopping cart. Either option should only take 15 minutes, according to PayPal’s website. 

On the other hand, Stripe is a better option for larger companies as it provides many options to customize your payment process, however, it’s more complicated to set up. You or your staff will need a certain level of technical knowledge to install Stripe to accept payments. 

See more: Stripe Recurring Payment 5 Simple Basic Must-Know.

Key takeaway: If you’re looking for a standard and simple-to-use payment gateway, PayPal is the one. Otherwise, Stripe is better with a business that has higher volumes of sales and wants customization. However, that doesn’t mean Stripe can’t work well for small businesses and vice versa. Bear in mind this is only one small aspect to consider and determine which one works best for your company. 

2. Transaction costs and fees 

Stripe vs. PayPal are both very clear and transparent about transactional costs and other fees on their websites. This might be one of the reasons why they’re the two most trusted online financial services in the world. 

Micropayment fees (for transactions less than $10)

  • Stripe: 5% + $0.05 per successful transaction (if the payment fails, for example, because your customer’s card expired, you’ll still be charged $0.05 as radar fee)
  • Paypal: 5% + $0.05

Standard fees

This price only applies in the United States as it varies internationally, with different rates for each country and currency. 

  • Stripe: 2.9% + $0.3  
  • PayPal: 2.9% + $0.3

Once your business hits a certain level of sales, you might be eligible for discounted pricing. Also, if your business has a unique model or has a large payment volume, you should contact Stripe or PayPal directly to seek specific benefits or to get a customized pricing plan.   

Stripe vs. PayPal chargeback and refund fees 

A chargeback happens when someone contacts their bank and reports a transaction on their card that they don’t agree with or think is fraudulent. In this case, as a merchant, you will still need to pay a processing fee. Stripe has a chargeback fee of $15, while PayPal’s is $20.

Additionally, neither PayPal nor Stripe will return the original process fees to you when your customer gets a refund. On the bright side, you won’t be charged anything for the refund. 

Key takeaway: Fees can vary, depending on many factors like your sales volumes or your base of business. We suggest you should ask for their support if your business model is complicated.

International accessibility

PayPal is currently available in more than 200 countries/regions including Africa, The Americas, Asia Pacific, and Europe – though some countries may have limited access to all PayPal tools and features. In general, PayPal makes it simple to set up an account and start taking payments right away, regardless of where your business is registered.

Meanwhile, Stripe is only available in 26 countries at the moment. It may sound much less impressive when compared to PayPal, but Stripe has another bonus feature that is super beneficial for international businesses: Stripe Atlas. With Atlas, you can easily incorporate a U.S. company, open a U.S. bank account, and start accepting payments with Stripe no matter where you are. It’s a great deal for anyone around the world that wants to register an American company. 

Key takeaway: PayPal is easy to set up and use from most places globally. Stripe is better for non-US residents who want to base their businesses in the U.S. 

Payment plans 

The payment plan is an incredibly important factor to take into account if your products’ prices are relatively high. This is because payment plans allow your customers to divide their payments up into smaller amounts. You can think of it as online installments. This can help your business increase revenue, encouraging customers to buy without worrying about a high upfront cost.

PayPal has done a lot of research on this feature and has worked to develop a seamless checkout experience that is very simple to set up. On the other hand, Stripe has been left behind a bit in this area, as you need to work through their subscription system to install a payment plan through Stripe. That means you’d most likely need high-level technical help to make it work properly.

Key takeaway: If your business prioritizes and needs an easy-to-use installment pricing plan, PayPal won’t let you down.    

Final verdict 

Stripe vs. PayPal – both are the biggest names in the online payment processing industry. However, that doesn’t mean either will fit your business’s model and nature perfectly. But they are the best places to start looking for your online payment solution.

Hopefully, the information above has helped you gain some insight into the strengths and weaknesses of both Stripe vs. PayPal.

If you are choosing Stripe – consider taking your business to the next level with AccountDock! AccountDock is a powerful billing history integration for Stripe-powered businesses. AccountDock provides your customers with clear, well-organized billing history, which they can access, check and manage at any time, from anywhere, with any device. This will help increase customer satisfaction, as well as give your business a huge plus compared with your competitors.

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