Stripe vs. PayPal: Which Is Right for Your Business?

Stripe and PayPal make the checkout process seamless, but cost and customization level are big differentiators.
Tina OremSep 28, 2021

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Stripe and PayPal are payment service providers, or PSPs, that help small businesses accept payments online. PayPal may be better for small businesses looking for a simple online payments system that integrates into their e-commerce platforms. But if customization is a priority for you, consider Stripe instead.

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Here's how these options stack up.

Payment service providers, or PSPs, give small businesses a way to accept online payments through a payment gateway and a merchant account. Here are some things to keep in mind as you shop for a PSP:

  • What kind of pricing structure you want: interchange plus, flat rate or tiered. Your industry, sales volume and priorities will influence your answer.

  • Whether you need an integrated POS system. If you’re selling online, this may be less important.

  • What industry you’re in. That may influence your pricing and options.

Stripe pros and cons

Pros

  • Transparent pricing. Stripe charges a flat 2.9% plus 30 cents for online transactions. Prices for other features are also findable on the website, though pricing is quote-based for its custom Connect plan.

  • International. Stripe accepts a wide range of currencies (over 135).

  • Customizable. Stripe has tools to help small businesses create customized checkout experiences, such as Stripe Elements, which is for designing custom payments forms.

  • Customer support. Stripe offers 24/7 live chat and phone support, which can help address concerns in real time. You can also get support through email and chat.

Cons

  • Developer-focused. If you’re not a tech-savvy business owner, you may have trouble using Stripe’s application programming interface, or API, and tools.

  • Complexity. Stripe has a variety of products — each with its own fees, integrations and customization capabilities — which may overwhelm time-constrained small business shoppers.

PayPal pros and cons

Pros

  • Transparent pricing. PayPal’s prices are findable on its website.

  • Relative ease of use. Small-business owners who want something simple to set up may prefer PayPal Payments Standard, as it’s designed specifically to make integration simple for non-programmers.

  • International. PayPal accepts about two dozen currencies.

  • Customer support. PayPal has phone support from 8 a.m. to 8 p.m. Central time Monday through Friday. It also has text support, an online community and a resolution center for transaction or account issues.

Cons

  • Relative cost. PayPal can be more expensive than Stripe on a per-transaction basis.

  • Less customization. Small businesses that are keen on detailed customization might find PayPal’s cut-and-paste implementation approach a detraction.

Stripe features overview

Stripe is a popular payment service provider that allows small businesses to accept credit cards, mobile wallets, ACH payments and more. There are a lot of ways to implement Stripe into your e-commerce site because it’s built with developers in mind. It also provides a payment terminal for in-person card transactions if you have a brick-and-mortar store.

Stripe supports global transactions, can process over 135 currencies and supports multiple languages — including Chinese, Spanish, French, Dutch and Italian — which can be valuable for small businesses that want to expand overseas. Stripe’s services work with major e-commerce platforms such as BigCommerce, WooCommerce and Magento.

Stripe has two primary payment processing products.

Stripe Connect

Stripe Connect can process over 135 currencies and complete transactions in over 30 countries. Connect is highly customizable, letting small businesses control sign-up, onboarding and payout timing, and get financial reporting. Pre-made user interface components exist, or you can customize everything using the Stripe API.

Stripe Checkout

Stripe Checkout streamlines checkout on mobile through an API that creates a Stripe-hosted payment page. It works across desktop and mobile, as well as with Apple Pay and Google Pay, and you can customize the buttons and background color. Discounts, sales tax and email receipts are also supported. It works in over 25 languages.

PayPal features overview

PayPal lets small businesses accept and process payments in person and online. It offers two payment gateway services: PayPal Payments Standard and PayPal Payments Pro. PayPal’s services work with major e-commerce platforms such as BigCommerce, Wix and Shopify.

PayPal Payments Standard

This product may be best if you don’t have coding experience or a developer on your team since you’ll simply need to copy and paste a line of code or integrate a plug-in with your existing shopping cart. Either option should only take 15 minutes to implement, according to PayPal’s website.

PayPal Payments Pro

This is a customizable checkout solution that also provides access to a virtual terminal so you can accept credit cards online, through mobile or with devices that don’t have an external card reader. You can also accept payments in 25 currencies from 200 countries, accept phone payments and get simplified PCI compliance.

Pricing: Stripe vs. PayPal

Both providers have monthly fees and transaction fees. Here’s how they compare.

PayPal

Stripe

Monthly fees

  • PayPal Payments Standard has no monthly fee.

  • PayPal Payments Pro is $30 per month.

  • The Standard version of Stripe Connect has no platform-specific fees, but a custom version starts at $2 per account per month.

Transaction fees

  • PayPal charges 2.99% plus 49 cents per transaction if the funds are from a U.S. account. Nonprofit organizations get a discounted rate.

  • For American Express cards, the transaction fee is 3.5%. International transactions in other currencies have different fees.

  • Stripe charges 2.9% plus 30 cents for each online transaction. Stripe Connect charges 0.25% on payout volume and 25 cents per payout.

  • ACH direct debits cost 0.8% with a $5 cap.

  • International transactions in other currencies have different fees.

Other fees

  • Optional recurring billing services cost $10 per month.

  • Optional advanced Fraud Protection Services are $10 per month plus 5 cents per transaction.

  • Other fees, including chargeback fees and mobile card reader fees, are on PayPal’s merchant fees page.

  • There’s a 1% upcharge for international cards and a 1% upcharge if currency conversion is required.

  • Disputed charges incur a $15 fee.

  • Small businesses can also design custom packages. Rates vary depending on volume discounts, multiproduct discounts and country-specific rates. Pricing is also quote-based for the custom Connect plan.

Stripe vs. PayPal: Which PSP is right for your business?

Stripe may be your best option if you want customizable software at a relatively low price. But if a simple setup is more important, you may want to go with PayPal.