Two of the biggest names in the online payment sector are Stripe and PayPal.
Despite the fact that Stripe and PayPal are actually going after pretty different business demographics, the two brands dominate much of the online conversation.
(For those who are interested, Stripe goes after developers and techier business owners, whereas PayPal is built for smaller businesses, simple integration and, ultimately, for ease of use.)
In this article, I’ll run each option through a few different test categories to pick apart where their strengths and weaknesses lie.
By the end, you should hopefully have a better grasp on what each processor has to offer and which, if either, is best for you and your business. Let’s get started.
What does it do?
PayPal and Stripe are both payment processors, which basically means they allow merchants to accept payment from their customers.
Here’s how each company describes their product.
Whether you’re looking for a payment gateway or want to add PayPal as an additional and more secure payment method on your website, we can help you get set up.
Stripe is the best software platform for running an internet business. We handle billions of dollars every year for forward-thinking businesses around the world.
Now, with PayPal it can be a little unclear as to what we’re talking about. For simplicity’s sake, we’re dealing exclusively with PayPal’s Payments Pro package.
PayPal does offer a cheaper service called Payments Standard but it’s pretty underpowered and it’d be unfair to put it up against super techy Stripe.
Is it easy to use?
When a payment processor does a good job, you don’t even notice that it’s there. So, how easy to use are our two payment processors?
PayPal is incredibly easy to use. I mean, its whole business is built on providing a simpler way to get paid online. It’s probably the simplest payment processor to integrate into a website and is well within the remit of even severely un-technical business owners.
Stripe, on the other hand, was designed and built to appeal to developers. As a result, it’s a little bit techier.
It’s not as easy to use and if you’re looking for a super simple plug-and-play payment processor, it’s probably not a great option. In fairness, though, that’s not what it’s trying to be.
How flexible is it?
For the vast majority of us, we won’t need a flexible payment processor. Most of us are running normal businesses with normal payment structures.
However, if you want to do something a little more unusual, you’ll need a payment processor that’s both flexible and functional.
Right from day one, Stripe has carved out a reputation as a super flexible service. Its API is one of (if not the) best in the industry and it’s driving the industry standard upwards.
Stripes API is super simple, super clean, super well documented and super easy to use. There’s comprehensive libraries available in Ruby, Python, PHP, Java, Node.js and a handful of other programming languages, meaning that you can use Stripe in virtually all web projects.
Stripe’s API was built from the ground up for developers and it really pays dividends in highly technical projects.
Any company dealing with money has to take security incredibly seriously and these two are no different.
The good news is that both Stripe and PayPal are robust, stable and secure platforms. Both will allow you to power eCommerce businesses and accept other online payments with complete peace of mind.
However, there are some differences in how they approach security. Let’s have a look at how each service deals with the issue of security.
Stripe was pretty innovative from the get-go, releasing a brilliant bit of kit called Stripe.js.
When a merchant uses Stripe.js on a website, a user’s payment details are never sent to your own server. Instead, all sensitive data is sent directly to Stripe.
This shifts a huge amount of responsibility from you to Stripe. With Stripe.js you don’t have to worry about PCI compliance and data security because you’re not actually storing it.
PayPal does offer something similar to this but payment information has to come through your website first, which means you take on a lot of the data security burden.
In summary, Stripe.js encourages good developer security practices, while PayPal gives developers room to make bad decisions. They’ve recently taken steps to provide better options, but these options still aren’t as secure as Stripe.js.
How much does it cost?
Functionality, support, flexibility and security are great but if a payment processor is charging exorbitant fees, it can eat away at your bottom line.
Here’s how the two services charge users for their service.
|Transaction Fees||1.4% + 20p||1.9% + 20p|
|Example £10 Transaction||£0.34||£0.39|
|Example £100 Transaction||£1.60||£2.10|
As you can see, Stripe comes out the clear winner, boasting processing fees 23 percent lower than PayPal in our £100 mock transaction. It’s also worth noting that both services have volume related pricing. In other words, the more you process, the cheaper your processing fees get.
Our comparison uses the top tier pricing, which gives each service the best chance possible. Unfortunately, for smaller merchants with a lower monthly turnover, PayPal is even more expensive.
If it’s a question of money, Stripe comes out well on top.
We’re almost at the end of the article so it must be about time for a conclusion, right?
Well, unfortunately not.
All businesses have unique payment processing demands, unique payment method breakdowns, unique business models and unique in-house skillsets. With so much variation between businesses, it’s impossible for me to say, with any sort of confidence, that Stripe is better than PayPal or PayPal is better than Stripe.
However, with the information above, you should be able to judge which is the better fit for your business.
Also, it’s worth remembering that neither Stripe nor PayPal is the cheapest payment processor. To discover the cheapest payment processing option, check out our blog post here.