Payment Security for Stripe vs. PayPal: Is One More Secure?

PayPal and Stripe are the two most popular payment processors but is one more secure than another?

Depending on the type of business you have (and your definition of security), PayPal or Stripe may be a better fit for you.

Intro

Security is top of mind for everyone, from businesses to consumers. There are more bad actors than ever before and there are more security threats from all directions than at any other time. On the other hand, convenience and speed are also crucial especially when you’re a merchant or business. No one wants to wait in line while your payment processor chugs along trying to contact the bank. Most importantly, you don’t want to wait for the payout of your sales - after all, you’re running a business.

Still, security probably reigns supreme so it begs the question, which platform offers the best security, Stripe or Paypal? Being the two most popular payment processors, you’d hope that both are relatively secure and, not surprisingly, you’d be right. But is there a clear favorite? Kind of and it very much depends on what you want and the kind of company you are. Let’s take a look at a few of the key similarities between the two and some of the differences so you can make a clear choice.

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Some Similarities

We should say here, it’s possible to have both options running instead of one or the other. Think of it like this: PayPal is like a wallet that holds funds, and Stripe can be a business’ main processor. When your business builds enough volume that fees and rates really compound, a choice can be made between the two. For example, a business could move over exclusively to PayPal.

There are always important differences between companies but when it comes to payment processing between Stripe and PayPal, there is one key similarity that can take the security question out of the picture for you: PCI compliance. 

PCI compliance - also known as Payment Card Industry Data Security Standard is a series of rules and regulations that serve as an information security standard for those companies and businesses that process credit cards and payments. The PCI is administered by the Payment Card Industry Security Standards Council and the idea was to increase credit card controls and reduce fraud. 

The good thing is that both Stripe and PayPal are PCI compliant and have robust controls over how they handle your customers’ payment information. The beauty of using one of these companies is that they are PCI compliant for you - you don’t have to worry about it. Taking a fairly robust privacy and security requirement off your plate means you can focus on other things, like building a successful business.

Stripe and PayPal also offer several more practical and understandable security features, including two-factor authentication, access control, and AES-256-bit encryption. Both companies are pretty buttoned up, so focusing on security specifically and exclusively doesn’t help too much. 

There are, however, several security adjacent aspects that make Stripe or PayPal a better choice for your business.

Some Differences

Security is one of the things that Stripe and PayPal share as positive. When you’re looking at security alone, you really can’t tell them apart. If you look at security in conjunction with a few other things, you may pick a clear favorite.

Company Size

Stripe and PayPal will serve as the payment processor for any size of business - they certainly don’t mind. However, one is slightly better for newer or smaller companies than another. Stripe allows for some very complex checkout options via backend coding that PayPal simply doesn’t offer. If you’re a more prominent brand or the aesthetics of your customer's experience is crucial to you, Stripe may be a better fit. While this doesn’t hit security specifically, it can make your customers feel more secure about doing business with you.

It’s also worth noting Stripe has multiple payment platforms to integrate, which may cause some security or card token questions for certain businesses. Stripe Connect is a feature with programmable APIs and other tools to integrate payments into existing software platforms.

If, however, you’re simply interested in getting and taking payments or primarily do most of your business via the internet, you might want to consider PayPal. The service does offer some general customization options and you can alter the checkout flow a bit. 

Folks Know PayPal

At the top of this article, we talked about the increase in security breaches and hacks. As much as they scare you, they scare the heck out of consumers too. They are more aware than ever before of fishy brands or sketchy-looking websites. This is a good thing, for sure, because it keeps consumers from getting fleeced out of their hard-earned cash. It can make it more difficult, however, to run a business and have it be perceived as a legitimate operation. To that end, many people know and are comfortable with PayPal. There were something like 426 million PayPal users in 2021; that’s a lot of folks who know and trust the brand and there are likely a lot of people who don’t have accounts that do as well.

Access

Similar to folks knowing PayPal, it’s available in a lot more countries - nearly 200 as of this writing - while stripe is only available in 40. This may not matter if you’re only doing business in one location, but it is a consideration if you choose to process payments and ship overseas.

Disputes

As a business owner, you hope it never happens but undoubtedly you will end up with a dispute over a charge or someone processing a chargeback with their card. It’s inevitable. How Stripe and PayPal handle those disputes are slightly different and they’ll charge you slightly differently too, on the order of $15 from Stripe and $20 from PayPal. 

A quick note from our industry experts: It's critical to keep these chargeback levels under 1% of the total volume of transactions. If it exceeds that level, your business could be flagged for account termination.

Customer Service

We’ve covered some of the technical aspects of security and how you want your customers to feel secure, but what about you? When you’re processing payments for your customers, you want to feel supported. Customer service is fairly key to that and the winner here is Stripe. With live chat, phone, and email support 24/7, it's fairly easy to get someone to help you with any issue you’re having. There’s far more setup involved with Stripe, so it's not surprising they offer this kind of service to their customers.

Wrapping Up

In the world of payments, you can’t get too much more secure than either PayPal or Stripe. Both offer PCI compliance, which is key to ensuring your customers’ data remains secure. Both also offer crucial security features that keep your information safe as it travels across the payment network. They differ, though, in some of those softer security definitions, like the perception of PayPal or the customization and customer service prowess that Stripe brings. Overall, you’ll have to determine what’s best for your business. Remember, Swipesum is there to help you navigate these confusing waters.

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