Do you have a small business? Are you planning to go online? Maybe you have a great plan for your business, but the online transaction thing has become a headache for you. How would you get the payments from your customer, for example? Is it convenient and secure?
Payment gateways came into play to make sure that the whole thing is quite convenient and secure. While PayPal (1998) is, arguably, the most popular payment gateway so far, other payment gateways are also rising to prominence. One such example is Stripe. Since its inception in 2011, Stripe has become a strong rival.
Whether you are a one-man startup, or a freelancer or just someone who has to make a lot of transactions online, you do need to use one of these payment gateways. You can use both, depending on the nature of your business. But if you have to choose one, this article will get you to the point where you would be able to make a decision.
So let’s get started without further due.
Stripe vs PayPal: A comparative study between them
Out of all the comparison factors, the transaction cost is the factor that everyone will look into right off the bat. In terms of micropayments – any payments less than $10, PayPal is considered better. For a transaction of less than $10, PayPal will charge 5%+5 cents, whereas Stripe will charge 2.9%+30cents.
Although it might seem that Stripe’s percentage is significantly lower than that of PayPal, the fixed charge (30 cents as opposed to 5 cents) coupled with the percentage gives PayPal the extra edge.
Now, what about payments larger than 10 dollars? Here come standard fees. Both PayPal and Stripe’s current fee per transaction is 2.9% + $0.30 within the boundaries of the USA. However, things get more complicated if the funds getting transferred is originated out of the USA. Whereas PayPal charges 4.4% plus the fixed fee ($0.30), Stripe charges 3.9% in addition to the fixed fee. So quite clearly, the winner here is Stripe.
Disputes and chargebacks
Chargeback takes place when a credit cardholder, for example, complains to the credit card authority about a particular transaction he thinks is a fraud, or he doesn’t agree with. If this happens with you, you are going to be charged an extra fee.
This practice exists to protect cardholders. But the con is that it can be utilized against you unfairly. You have to pay a certain fee for each chargeback.
PayPal charges $20 per chargeback. However, if PayPal rules it in favour of you later, they will refund you the whole amount.
Stripe, on the other hand, follows a straight cut approach, charging you $15. Although it doesn’t refund you anytime, the Stripe Radar feature claims to have the ability to prevent credit card fraud. So, I will consider Stripe to be the winner here.
What if you had to refund? As per PayPal policy, you don’t have to pay any fees if you refund a transaction to a buyer. But the fees once you paid as the seller will not be refunded to you. PayPal once used to refund the processing fee (2.9% + $0.30). But in 2019, they announced that they would no longer refund the transaction fee.
Here Stripe is also no different. They follow the exact same policy. There is no fee charged for refunding a transaction. Besides, you won’t be refunded the transaction fee incurred before. So quite obviously, there is no clear winner.
Whatever gateway you use one thing is clear that it’s all about your money. If any kind of problem takes place concerning your money, it’s going to be the biggest headache. What you want is immediate support from them.
This comparison factor is quite interesting. Reviews about customer support can vary from excellent to poor, regardless of whatever gateways you use. It’s an individual experience.
However, Stripe has the upper hand. Stripe communicates with its customers through multiple channels such as forums, live chat, social media, and email. The same goes for PayPal.
They also use more or less the same communication channel. What gives Stripe an upper-hand here is that they provide 24/7 chat and phone service, something which PayPal hasn’t been achieved yet.
So the winner here can be declared to be Stripe.
Countries and currencies
To understand what is better, you need to understand how far each of these can take you – the number of countries they operate in and the number of currencies.
PayPal, as one of the oldest in the industry, has reached users in 200 countries. Stripe, on the other hand, operates in 25 countries as of now. So clearly, PayPal is more available than Stripe.
However, in terms of the number of currencies, PayPal can process only 25 currencies, whereas Strip processes 135 currencies. So, Stripe has the upper-hand here.
Now, it won’t be right for me to judge which one is better based on this. It entirely depends on you – where you live in, which countries you do transact with, and the currencies you have to deal with regularly. So, I leave it for you to judge.
If you have just a simple business that needs a processing solution, then you should choose PayPal. PayPal’s minimal integrations will allow you to do just fine without any complexities. PayPal’s integrated platforms are such as Woo Commerce (e-commerce), QuickBooks (Accounting), and Salesforce(CRM). Maybe your business has only to do about these things only.
However, objectively speaking, PayPal has undoubtedly upper-hand here in terms of integrations. On Stripe, you can see categories dedicated to CRM, accounting, email marketing, referral marketing, fundraising, inventory management, form building, referral payment, etc.
So the winner here if of course Stripe if you want something beyond just a payment processing solution.
Although I am writing this now, you are probably more concerned about security than anything else. Your money and information are at stake. You are entrusting a third-party platform. Of course, you should be more concerned.
But the reason I am writing this now is that both the platforms come with the highest level of security. There is no clear winner or loser. Both PayPal and Stripe have PCI compliance, meeting the strict standards of the Payment Card Industry.
So now that you have quite a good understanding of the two of the best payment gateways I believe, you can make a judgment. Based on the comparison Stripe vs PayPal we have drawn, now it’s your time to choose whatever suits you and your business best. Payment gateways are a simple and easy solution. Time will come if you haven’t yet when you need to use a gateway.