What Are The Differences Between Stripe & PayPal?

Stripe and PayPal are two of the most recognizable payment service providers. What sets their tools apart, and which one is best for your business?

Stripe and PayPal are among the most popular methods for merchants to accept online payments. While not the main focus of either company, they also support in-person transactions. These two payment industry giants also provide reporting and many more services related to payments.

Both companies are well-established in the field and have generally positive reputations. Although we won’t say they’re perfect — some companies have issues with one or both. But there are also many differences between the services and support that Stripe and PayPal offer their customers.

Transaction fees and other costs should be taken into account as well. Finding the best option for your business means considering costs, and Stripe vs. PayPal fees is a good place to start.

Let’s set the stage by taking a closer look at Stripe and PayPal. Then, we’ll highlight the differences between the two and how they might help or hinder your business.

What is PayPal?

PayPal is a financial technology company that offers digital wallets, online payments systems, virtual terminals, and much more. It offers effective tools and support for accepting many payment methods, in person and digitally. Merchants can complete international transactions with PayPal, allowing them to expand their reach into new markets.

One major asset for PayPal is its high level of visibility and recognition among consumers. Many prospects and current customers already have PayPal accounts and feel familiar with that brand. That means a higher degree of trust. And an easier time making payments without having to take additional steps.

PayPal has a broad customer base, ranging from one-person companies and small businesses to larger organizations. Individuals paying one another (to split a dinner bill, for example) is also a significant part of its operations. So are a variety of other personal financial services.

PayPal certainly works for businesses accepting payments, whether that’s 

What is Stripe?

Stripe is also a financial technology company. However, it doesn’t focus on all of the same areas of payments technology, processing, and services as PayPal. The company is dedicated to serving businesses generally, as opposed to PayPal. It prioritizes supporting merchant payment processing virtually and, although not the main focus of the business, at brick-and-mortar locations.

Stripe offers tools that allow companies to issue gift cards. Additionally, Businesses can apply for credit cards and loans with Stripe. Recurring payments, tax calculation services, and much more are also possible when working with this company.

Stripe provides standardized and customizable payment processing software for its customers. It also features hardware, like card readers, which are crucial for companies with a physical presence.

A customer makes a purchase on a smartphone.


Stripe and PayPal: Key Differences

Stripe and PayPal can seem pretty similar. That’s especially true if you don’t have direct experience using each to manage your company’s transactions. And with both offering robust payment processing options, it’s clear that they have a lot in common with each other.

However, there are important differences between the two. Recognizing them can help you make an informed and effective decision for your business. Getting the most value possible out of your relationship with a payment processor is crucial.

Strategic Business Differences Between Stripe and PayPal

Stripe’s emphasis on businesses, as opposed to the broader user base of PayPal, is a key distinction.

Customizability is a valuable option for all companies, but it tends to become more important as organizations grow larger. A higher level of control is valuable. That’s true for aligning payments with internal operations. And to present a customer payment experience that fits into a business’s larger brand.

Stripe offers significantly more in terms of customization than does PayPal. Businesses can develop their own payment forms for different platforms, build custom reporting, and much more. With Stripe, it’s easier for companies to focus on their own branding as opposed to that of their payment processors. PayPal simply doesn’t offer that same type of flexibility.

For smaller businesses, PayPal’s focus on quick and easy setup makes it hard to beat. The customizability of Stripe isn’t nearly as attractive for businesses that don’t have their own developers on staff. At the same time, ease of implementation (although Stripe is by no means difficult to set up, either) becomes more important.

Stripe Vs. PayPal: Fees

Cost isn’t the only consideration when it comes to payment services, but it’s certainly an important one.

Stripe and PayPal don’t have major differences in terms of security. They’re also both easy enough for very small businesses to install and use. However, they aren’t totally equivalent — we think PayPal is a little simpler. That makes the cost even more important.

Stripe and PayPal do not charge monthly fees for their standard suite of payment tools, although they do offer premium versions.

When it comes to processing costs and transaction fees, the two companies have relatively similar but distinct approaches.

PayPal charges a variety of fees based on the specific type of transaction. The most common charge placed on merchants is 3.49% of the transaction value, plus a fixed additional cost (49 cents). However, credit and debit card payments only include a 2.99% charge and that same fixed additional cost.

Stripe, meanwhile, has a somewhat simpler approach. It charges 2.9% of the transaction cost, along with a fixed 30-cent fee, for all cards and digital wallets. Certain additional factors, like manually entering cards, international cards, and currency conversions, can increase that per-transaction percentage charge by 0.5% or 1%.

Stripe and PayPal: Making a Decision for Your Business

We believe that Stripe and PayPal are both reliable, effective, and useful for a wide range of businesses. However, key differences can make one more valuable than the other for your business in particular.

In general, larger companies stand to benefit from the business focus of Stripe. Additionally, and perhaps most importantly, they’re more likely to have the resources needed to take advantage of the platform’s advanced customizability.

PayPal is a good choice for less technologically savvy organizations as well as smaller businesses. It’s just about the easiest payment processing option in terms of setup and initial use.

We’re excited to help you make the best possible choice for your business’s payment processing needs: Book A Free Consultation!

Michael Seaman

Michael Seaman

Michael is the co-founder and CEO of Swipesum. A veteran of the payments industry, Michael and his brother Stephen have led Swipesum since its inception in 2016. In his free time, Michael enjoyes time with his three children.

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