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Stripe vs. PayPal: Which Payment Processor Reigns Supreme?
July 21, 2022

Stripe vs. PayPal: Which Payment Processor Reigns Supreme?

PayPal vs. Stripe: which is best for your eCommerce business?

This question has never been more important. 

In 2020, 55% of US consumers used a credit card to pay for an online transaction, so businesses that don't support popular online payment options are losing a lot of money. While every eCommerce store takes online payments, many business owners wonder which payment processor is the best for them. 

Which brings us back to Stripe and PayPal

Both offer a variety of features and options for merchants to create a seamless payment process. 

But which is best for your eCommerce business? 

Keep reading for a comprehensive comparison between Stripe and PayPal. This guide will help you discover the best option for your eCommerce store. 

PayPal vs Stripe

Stripe vs. PayPal: A Quick Comparison

Before we dive into a ton of details about these two popular payment processors, let’s take a quick glance at both Stripe and PayPal.

A Quick Breakdown of Stripe

Stripe is a payment processor designed to combine the functionality of a third-party payment processor with a payment gateway – creating a true all-in-one solution. At the same time, you can’t buy Stripe’s gateway or processing services by themselves. They come as a package deal.

So, you have to combine Stripe with another system. It does offer the option for point-of-sale (POS) transactions, but that's not the platform’s main focus. It offers a suite of tools to enhance the payment features for eCommerce sites. 

Going global?

Stripe can help with that, too.

It offers support for numerous currencies and payment methods. You can even navigate VATs and exchange rates with ease when using Stripe. 

A Quick Breakdown of PayPal

PayPal is one of the biggest and most popular payment service providers in the world. It offers a variety of services for eCommerce stores, such as digital wallets and business loans. Companies can, of course, use it for processing payments, too. 

PayPal Commerce, previously PayPal for Business, focuses on eCommerce payments. It does have the functionality to process point-of-sale payments through PayPal Zettle. You can also use it through a third-party partner. 

PayPal is user-friendly and offers a wide variety of developer tools. PayPal does have another service that offers individual merchant accounts, too, called Braintree

So What’s the Difference Between Stripe and PayPal? 7 Points to Consider

Alright, so we’ve established that both PayPal and Stripe are designed as eCommerce solutions for processing online payments.

And we’ve covered that both companies offer a variety of tools for businesses to make operations easier.

With all that being said, while both Stripe and PayPal are fantastic payment processors, they do have some key differences, including:

1. Cost Per Transaction

Each company charges vendors a per-transaction fee.

We’ll get into the specifics below, but PayPal's fees are higher than Stripe's. 

That being said, most merchants seem to agree that those higher fees are worth it because of all PayPal has to offer - especially its GIGANTIC user base, which exceeds 392 people throughout the world.

2. Point of Sale Transactions

Point-of-sale transactions are not the focus of either processor. PayPal does off more options with a better processing rate for these transactions, though. 

3. ACH Support

You have ACH support with Stripe.

PayPal does offer some ACH support, but companies must meet certain requirements (e.g., be based in the US, transact in USD, utilize PayPal’s Braintree Direct, etc.)

4. Customization

Stripe is easily customized if you are an experienced developer or have one on your team.

The same goes for PayPal, but the company also offers a number of developer tools to make it easier for business owners to create necessary customizations. Working with a developer may still help, but all of these resources should make it fairly easy for them to carry out whatever changes you want for your checkout page.

5. User-Friendliness

Given that last paragraph, it shouldn’t come as too much of a surprise that PayPal is also much more user-friendly than Stripe. The platform is easy to navigate and use for business professionals of all levels.

Stripe is less user-friendly, especially if you need those aforementioned customizations. Unless you’re experienced with coding, there will be a bit of a learning curve.

6. Combined Services

If you compare Stripe and PayPal by looking at them both as a suite of services, PayPal wins handily. It simply offers way more features – many of which we’ll cover momentarily.

Fortunately, Stripe is very customizable, so you might be able to create the kinds of features you need even though the platform doesn’t offer nearly as many services.  

7. PayPal’s Digital Wallet

Speaking of unique features, PayPal has a signature service: its digital wallet. This feature makes managing money online even easier. 

At this time, Stripe does not have a service to compete with the digital wallet.

PayPal’s Digital Wallet

Stripe vs. PayPal: Costs and Fees

As promised, let’s now compare how much it will cost to use PayPal vs. Stripe.

With both eCommerce payment processors, you have the option to purchase additional features. And both offer a large number of these features to expand the functionality of their core offerings (though, as we just mentioned, PayPal offers more). If you are using the basic version of either, you can expect predictable and flat-rate pricing. 

PayPal only ever charges business owners a normal rate when a customer pays their invoice. 

With Stripe, you’ll receive a certain number of transactions you can carry out for free before a fee kicks in.

Let’s now take a look at what these fees are for both platforms.  

PayPal Costs and Fees at a Glance

If you decide to use PayPal for your eCommerce site, you’ll be charged the following fees

  • Advanced credit and debit card payments: 2.59% + $0.49 per transaction
  • Chargeback protection: 0.40% per transaction
  • Effortless chargeback protection: 0.60% per transaction 
  • PayPal QR code transactions below $10: 2.4% + $0.05 
  • PayPal QR code transactions above $10: 1.9% + $0.10 
  • Payflow Gateway (without PayPal Checkout): $25/month

Fortunately, you can reduce your PayPal fees by opting into the Advanced Credit and Debit Card Payments option. 

All you need to do is submit additional business information and get approved before using it. 

PayPal also allows you to use their gateway service separately from other functionalities. The same cannot be said for Stripe. This service is free with PayPal if you use the $25 a month checkout option, allowing you to completely customize it. 

For an additional $5 a month, you can also use the PayPal Payments Advanced service and have hosted checkout pages. For an additional $30 a month, you can sign up for Payments Pro. This offers hosted payment pages and a virtual terminal. 

For businesses using recurring billing, it’s an additional $10 a month fee. 

Stripe Costs and Fees at a Glance

Stripe also has a unique fee structure you’ll want to consider before making a decision for your eCommerce business:

  • Chargeback protection: 0.4% per transaction
  • Starter billing:  free for the first $1 million in recurring transactions and 0.4% per transaction after $1 million with additional processing charges
  • Plus billing: 0.7% per transaction with a discount on ACH credits and wire transfers and access to Stripe Sigma

If you choose any advanced features, Stripe will add a fee to each transaction cost. The system gets complicated when you add multiple advanced features, so you need to monitor which features you use and when you use them to make sure you’re not spending more than you had planned. 

So, Which Is Cheaper?

On paper, Stripe wins in the cheapest payment processor race. 

Most merchants who use PayPal are paying more per transaction since the new pricing structure rolled out in 2021.

Of course, there’s a reason PayPal remains the most popular payment processor on the planet (supporting a mind-boggling $19 billion in sales in 2021). As we’ve already covered a couple of times now, countless merchants all over the world are happy to pay extra for each transaction if it means getting access to hundreds-of-millions of PayPal users, user-friendly customizability, and a wide array of extra features. 

So, while Stripe is technically cheaper, using it over PayPal may come with some unintended costs.

PayPal vs. Stripe: Integrations

Both options have numerous integrations available to help you expand their functionality. These range from shopping carts and accounting software to email marketing services. 

Stripe is often pre-integrated into eCommerce shopping carts. This is actually a great way to get Stripe without having to work with a developer, but PayPal also has a reputation for being extremely user-friendly when it comes to integrating. 

In this sense, it’s probably a tie. 

PayPal vs. Stripe: Ease of Use

For most merchants, PayPal is easier to use. 

Both make getting paid by customers easy, but being a merchant is more complicated than that. For example, setting up your payment processing will be different depending on which you choose. 

PayPal offers developer tools that make this a lot easier. It is also designed in a way that allows anyone to set it up and start taking payments in no time at all. If you are happy with the basic PayPal functions and can literally just paste code into your site. This option is about as easy as it gets (especially when you consider everything you’ll get in return). 

Stripe offers many plugins for eCommerce platforms for easy integration. If this is all you need from a payment processor, PayPal or another payment processor may be a better option. If not, you'll either need to understand code or hire a developer to create your Stripe functionality. For many business owners, this is a major drawback.

PayPal vs. Stripe: Customer Support

You can expect the same type of support from both providers. 

They offer a variety of options for you to contact them. There are some differences in the level of support, but not enough to sway one provider over the other. 

Reviews make it clear that both companies generally do pretty well in this regard. 

If you’re still wondering which option is best for your business, we’ve included a comprehensive breakdown of each platform’s features in this final section.

Customer Support

A Complete Comparison of PayPal and Stripe Features

PayPal and Stripe are very similar in terms of the features and services they offer. Unsurprisingly, they both focus on online payment processing. And both deliver this service for a flat-rate processing fee. 

As we covered, for PayPal, you’ll pay between 2.59% and 3.49% with an additional $0.49 fee. 

With Stripe, you can expect a 2.9% fee with $0.30 added. 

You can sell globally and customize your payment processes with customized code with both providers. The providers are not identical and have clear differences, but they both accomplish the same goals. You need to research both providers to determine which is the best option for your business. 

If all you’re thinking about is your budget, it might seem like the answer is already clear: Stripe.

But that may not necessarily be the case. As you’ve probably heard, “You get what you pay for”, so let’s now take a closer look at what each platform provides for its price tag.

1. Business Accounts 

With PayPal, business owners have a few options for what type of service they want. The company offers three plans: 

PayPal Checkout

PayPal Checkout is an additional option you can add to your existing payment page. You can do this if you accept credit cards through a different processor or if you integrate it with an eCommerce platform. 

With this, your customers will have the option to check out with PayPal. They can also use PayPal Credit or Venmo depending on what user data is available. 

This option is great for customers who have to comply with PCI standards. When PayPal redirects customers to their site to complete transactions, the PCI compliance requirement is no longer your responsibility.  

PayPal Payments Advanced

For businesses that don't use another payment processor, you establish PayPal as your primary one with their Payments Advanced plan. With this option, you can build your payment buttons and then copy and paste the code into your website to enable PayPal as your shopping cart. 

This option also offers hosted checkout templates. This means customers stay on your website to complete purchases instead of being routed to PayPal's site. For $5 a month, you can customize this plan with minimal technical knowledge. 

PayPal Payments Pro

For just $30 more a month, you get the Pro Plan. It includes the standard features and hosted checkout pages. You can also use a virtual terminal for a monthly fee and processing costs. 

For customers with PCI requirements, it's important to remember that keeping the customer on your site leaves the compliance burden on your organization. PayPal does offer tools to make PCI compliance easier to manage, though. 

PayPal’s Other Services 

PayPal offers a wide range of other POS services, too. These include:

For businesses that sell in-person, PayPal has several integrations with leading point-of-sale systems. When using these for retail or food businesses, you will have predictable and flat-rate pricing. 

Stripe’s Payment Processing Tools

Stripe doesn't offer service plans the same way that PayPal does. Instead, your Stripe access stays the same no matter which features and tools you use. 

Again, this helps explain why PayPal costs a little bit more - you get what you pay for.

Still, let’s take a look at what Stripe brings to the table.

Stripe will give you access to the following tools for your eCommerce website:

  • Support for in-app and online checkouts
  • Support for ACH, credit cards, and localized payment methods
  • An embeddable checkout form that comes prebuilt or the option to either create a checkout page from scratch or use other prebuilt components (Elements) to build a customized version
  • Invoicing, subscription, and recurring billing tools

Instead of service plans, Stripe offers users a number of optional features you can tack onto your service à la carte. One popular example is Stripe Billing, which includes Stripe’s invoicing, recurring billing, and subscription tools.

Additional Noteworthy Stripe Features Include:

  • Stripe Radar: fraud management tools that leverage machine learning
  • Stripe Sigma: SQL-based data analysis tools
  • Stripe Connect: programmable APIs for building marketplaces and platforms
  • Stripe Issuing: create, manage, and circulate virtual and physical cards and set spending controls  


2. Online Checkout Options

Both Stripe and PayPal will give you prebuilt, standardized checkout experiences. These are great options for business owners who don't want to deal with coding. These checkout options provide the basics you need to begin accepting payments from customers under either company’s branded label. 

However, you can also choose to use PayPal or Stripe with your own company’s branding.

With PayPal, you can make some changes to the checkout experience to alter its look. You can also make having a PayPal account optional for your customers or request additional information from them. After checkout, PayPal will automatically return customers to your website if you use your own code, too (note: if you do this, make sure you turn off PayPal as a referral source in Google Analytics or your conversion rate for other channels will drop).

With Stripe, you’ll have to settle for fewer options. Developers can change the look of your checkout page to reflect your brand. You can also provide policies and contact information for your company. This option allows for customization to enable one-button purchases and location changes with supported languages, too. 


3. Invoicing and Billing

As we discussed above, PayPal and Stripe approach invoicing a little differently.

Stripe Invoicing

With Stripe, you have two invoicing plans available. You also get 25 free monthly invoices. 

After those 25 are used, you are charged 0.4% per paid invoice. With the Plus billing plan, you can automate invoices and have advanced collection features for an additional 0.5% per invoice. 

PayPal Invoicing

PayPal doesn't limit the number of invoices you can send. The drawback of this is each invoice has the standard online transaction fee of 3.49% + $0.49 per paid invoice. 

Stripe Recurring Billing

For businesses with recurring billing, you can use Stripe Billing. The feature charges 0.5% per recurring charge. There is also a plan to connect to NetSuite and offers customers a quote before they start a subscription for 0.8% per recurring charge. 

PayPal Recurring Billing

PayPal allows you to do recurring billing without an additional charge. You can design and enable subscription pricing in your dashboard. If you have large volumes, you can contact each company for custom pricing. 


4. Developer Tools

As we mentioned earlier, you can customize both Stripe and PayPal.

Most payment processors offer this option, so it's common in the industry. 

But PayPal offers sound developer tools for businesses to use.

Whereas Stripe is basically a developer tool. Unless you are using another service, such as Shopify, then you have to know how to code in order to customize it (or pay someone to do it for you).  

PayPal has created an extensive library of resources for developers. You can search for documents according to the type of business you are coding for. Tutorials are available for small businesses, marketplace platforms, and large enterprises. 

For enterprises, PayPal will generally recommend one of its subsidiary services. These include Braintree, Hyperwallet, and Simility. Braintree is a direct competitor with Stripe as the payment platform is operated in a very similar way. 

Braintree offers more comprehensive support for developers. If you only need tutorials to guide you, PayPal is a great option. They also offer a JavaScript SDK. 

Stripe has a RESTful API that uses API keys to authenticate requests. If you need help, Stripe has official libraries for programming languages and mobile platforms. 

With these guides, you can code from scratch or follow a detailed guide. You even have the option of cloning an existing project and building a new one from that. 


5. Point-of-Sale

Though neither company is designed for point-of-sale, PayPal does offer Zettle for point-of-sale transactions. It isn't as comprehensive as others out there, but it does allow you to take the occasional card transaction in person. You can even get the basics for free. 

If you want to include inventory tracking, you'll pay a monthly fee of $39 to $49. Each swiped card transaction has a fee of 2.29% + $0.09. 

Stripe has released a beta version of Stripe Terminal. This is an SDK allowing you to build your existing payment processing into a point-of-sale application to use on mobile platforms or the web. 

Stripe Terminal comes with precertified hardware and additional features to make for a seamless integration process. This does require some coding to get set up. The transaction fee for each card swipe is 2.7% + $0.05, which works out to be more than what PayPal charges. 


6. International Support

Both companies have a robust international support system in place. Whether you are currently selling globally or want to in the future, PayPal and Stripe will both support your plans. 

With Stripe, you get a variety of payment methods in 135+ currencies. They break down the payment methods into two categories, universal and local.

Local payments are restricted to specific locations. Those include: 

  • ACH
  • Bancontact
  • EPS
  • Giropay
  • iDEAL
  • Klarna
  • Multibanco
  • P24
  • SEPA Direct Debit
  • SOFORT

Stripe has many, many options to support 135+ currencies, so it's best to research this a bit. Stripe allows businesses to avoid exchange fees by selecting "presentment" currencies when you set it up. This tells Stripe to accumulate separate balances for each currency you are paid with. 

You can route the different payments to different bank accounts. Stripe automatically converts currency differently from the presentment for a 1% fee. For consistency, Stripe also requires coding abilities to set this up. 

PayPal has a different method for international transactions. To enable international payments, you toggle the feature in your account and specify whether or not you want the foreign sales to automatically convert to US dollars. 

PayPal also allows you to hold foreign currencies until you are ready to convert them. It supports 100+ currencies. This even includes local options like:

  • Bancontact
  • BLIK
  • EPS
  • Giropay
  • iDEAL
  • MyBank
  • P24
  • SOFORT

In the end, both Stripe and PayPal offer robust support for a wide range of currency types. If you want the utmost in options, Stripe gets the nod, but plenty of business owners will be very happy with what PayPal has to offer – and how easy it is to take full advantage of those options.


An Alternative to Stripe and (Just) PayPal

https://www.youtube.com/watch?v=3cVqNN1WSSw&feature=emb_logo

While Stripe and PayPal are both great options for handling your online store’s payments, you still need to consider your actual checkout – arguably the most important page on any eCommerce website.

This is where Dominate comes in.

Dominate is a cloud-based checkout solution that you can install within a matter of minutes. And yet, Dominate has proven to boost conversions while dropping cart abandonment rates.

The checkout solution is completely mobile-friendly, too. You can even decide to create a completely unique design for shoppers who visit your site from a mobile device.

And while we’re proud of all of these revenue-driving features, we didn’t neglect security. Our solution is 100% PCI compliant, meets the highest standards for online security, and uses 3D Secure for all credit and debit card transactions.

Dominate Is Backed by PayPal Commerce

Thanks to the power of PayPal, Dominate will also give you access to more than 280 million shoppers from all over the world. Your online store will be able to accept 100+ different currencies.

PayPal’s Pay in 4 option has also proven to be effective at improving conversion rates and average order values. In short, this powerful feature will allow your shoppers to choose to pay for their purchase in four payments. You still receive the total amount right away, while your customers can afford to spend more because they don’t need to pay for all of it right away.

And, of course, PayPal is known for amazing fraud protection.

Accept Payments Through Venmo, Too

Dominate can accept payments from customers using Venmo, too.

By the end of 2021, Venmo had reached 40 million users, making it more important than ever to make sure your eCommerce website can accept payments from this extremely popular app.

And while Venmo is usually thought of as the easiest way to pay via mobile devices, Dominate can let your customers use the app right from their desktop – a feature unique to our solution.

Accept Payments Through Venmo


Improve Your Checkout Experience Today 

Though Stripe and PayPal are both very similar, there are distinctive differences in how they process payments and the fees charged. Depending on what you value most, either could be said to have the edge.

However, for the vast majority of business owners out there, PayPal is still the best option. All of its options combined with its huge base of users means it will probably remain the king of payment processors for years to come. 

And don’t forget Dominate.

Our checkout extension will become your eCommerce store’s competitive edge. It’s 100% customizable and 100% free, too. 

Download Dominate today to start increasing your conversions ASAP.

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