PayPal vs Stripe In-Depth Comparison

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There are two very clear names that emerge when you begin looking for online payment processing solutions – PayPal and Stripe.

Both have seen incredible success since their inception, growing rapidly and carving themselves a strong position in the marketplace. PayPal with the consumer in particular, and Stripe with businesses.

Deciding between the two is no easy feat, however.  To help you make that decision let’s take a deep dive into both of their features, costs, and differences to see what might just tip the balance one way or the other.

Paypal vs Stripe

Before we dive into the weeds, let’s just get to grips with who these two companies are a little:

Paypal

PayPal we’ve all know and love for what feels like a very long time.  They are one of the biggest brands in the eCommerce market and offer a wide range of services, not just payment processing.

PayPal’s focus has always been online first, but that’s not to say they don’t have in-person payment solutions too.

Stripe

Stripe is the new kid on the block (relatively!) and also operates as a third-party processor and payment gateway, with a primary focus on the online eCommerce space.  Similar to Paypal they also have POS options for in-person sales, but these offerings are arguably rather basic.

Stripe has positioned itself as the developer’s payment processor of choice because of its customizations, integrations, and incredible API flexibility.  This is Stripe’s differentiator in the world of online payments.

Both being third-party processors you don’t get (or need) your own merchant account for transactions, and instead, the payments are taken by the platform and aggregated from all merchants in their one account.

This massively reduces cost and time to set up but does leave you a little open to account issues like freezes that aren’t that straightforward to solve.

Features

Given that both Stripe and PayPal are aiming to facilitate more or less the same market it’s no surprise that their feature offering is almost identical.  They have similar fee structures and integration capabilities for eCommerce transactions.

Both have strong support for international sales with local currencies, and both are customizable for your site’s needs.

There are some differences, however, so let’s have a look at them.

POS (point of sale)

As we’ve mentioned, both are firmly focused on the online space so their in-person POS solutions feel a little token, and if in-person is really what you’re after then you’re probably better off with someone like Square.

That being said, PayPal’s POS offerings are slightly more robust than Stripe through their PayPal Here service.  The based equipment and software is free, but if you want any additional functionality like inventory tracking then there are additional costs.

Stripe’s offering is even more paired down, and while they have some great hardware with their Stripe Terminal, the POS software on there is more of a plugin to make their Stripe payments work than a full-service POS system.

Of course, Stripe’s customizable API means you can put together something great if you have the time and the developer’s skills to do so, but that begs the question of why you would when there are other much better solutions already on the market.

ACH Transactions

For some companies, ACH transactions (which are your recurring payments like subscriptions) are very important.  In these cases your options just narrowed to one as Stripe offers ACH, PayPal does not!

Just a note to add complication, PayPal can accept ACH transactions through their other payment processing solution Braintree, just not through PayPal Commerce itself.

International Reach

Their reach and support are both very good and incredibly robust for international payments.

Stripe accepts payments in over 135 countries and in many local currencies.  In fact, we may be here forever listing the currencies they can accept so you can see the full list here.  Sufficed to say, their reach is extensive, and great if you sell internationally.

Both allow you to hold foreign currency in your account and convert it to your primary currency if you want.  Stripe go a step further and route your different currencies to a different account if you wanted.

In fact, the control Stripe offers over how your international payments are handled gives them the edge in our opinion.

Funding Deposit Time

A quick note on how long it takes each company to deposit funds is also worth looking at.

Stripe offers the very standard two business days for deposits to hit your account.

PayPal, on the other hand, gives you near-instant access to your funds from their online wallet, which you can use to make payments online.  Moving the funds to your bank is also relatively quick and usually only takes a day.

Developer Tools

This is where Stripe really starts to flex their muscles.  While PayPal does offer customization through their API, it pales in comparison to what you can do with Stripe’s API.

PayPal has been trying to fight back by offering more support and documentation, but Stripe’s reputation as the developer choice is well-founded.

Stripe has an extensive resource base of documentation and tutorials to support the multiple coding languages and the sheer volume of pre-built plugins and solutions they have on offer. 

You can even build code from the ground up with Stripe so you can really get into the nitty-gritty of making the platform do what you want and match your brand.

Extras – Capital

It’s a common theme now with many payment platforms, and our two in question are no different, to offer additional financial services including capital borrowing, or loans.

PayPal has been doing it longer than Stripe and their infrastructure is more developed and covers more bases than Stripe.

For businesses both loans work similarly, and they actually work more like a merchant cash advance as the funds are repaid from a percentage of your processed transactions and a flat fee.

This is a great little bonus to have access to if ever needed.

Price

PayPal and Stripe both offer a wide range of expandable services that can cost more or less depending on what you are wanting.

Their base prices, however, are exactly the same and are a flat rate.  They have no monthly cost, no setup cost, no monthly minimums, and no interchange costs. 

Both have the same flat rate for online transactions too at 2.9% plus 30 cents for any credit or debit card, even Amex. 

Other costs start to differentiate them a little – PayPal POS transactions fees are 2.7% and keyed-in transactions are 3.5% plus 15 cents vs Stripe’s POS fee of 2.7% plus 5 cents,

Stripes ACH transaction fees are 0.8% and capped at $5.

Ease of Use

From a practical point of view, both make it easy for customers to pay you.  From a setup side of things, however, PayPal is easier to set up.

This is because they are designed to be a fairly no-frills plugin and pretty much every eCommerce platform has integration included within their platform. 

Stripe also offers plugins and integrations with many major eCommerce platforms, but they are arguably more complicated to use, and purposefully so in some ways, as they are geared around developers to be able to take advantage of their flexibility.

If all you’re looking for is a simple payment processor solution plugin for your site then there’s very little reason to choose Stripe over PayPal.

Our Thoughts

Choosing between the two in many ways is quite easy, though depends entirely on what you are looking for.

If all you’re after is a simple payment processing solution for your eCommerce store then you really can’t go wrong with PayPal.  They are well trusted the world over, having incredible integration with customers, and are simple to use.

Stripe is the ideal solution if you are looking for, and importantly, have the development knowledge, to really create custom solutions to your eCommerce needs.  They are a very popular choice, but you should be confident you can really take advantage of their customizations if you are really going to make the most of what they offer.

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Kareena Maya

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Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.

Kareena Maya is a freelance writer focused on the personal finance and travel spaces. He frequently writes about credit cards, banking, student loans, insurance, travel rewards and more. His work has been featured in publications such as Forbes Advisor, Bankrate, Credit Karma, Finance Buzz, The Ascent and Student Loan Planner.