Stripe vs. Paypal: Which Is Right for Your Business?

Maddie Shepherd

Senior Staff Writer at Fundera
Maddie Shepherd is a senior staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!

As you go about the process of figuring out how to accept payments online through your small business’s website, two big names are likely to pop up: Stripe and PayPal. Although Stripe and PayPal are technically two different forms of online payment infrastructure, in practice, they’ll essentially do the same thing for your business—allow your customers to order your goods or services online.

But what’s the difference between Stripe vs. PayPal? And, if you’ve narrowed down your online payments options to Stripe or PayPal, how do you choose between the two?

We’ve compiled a guide to help you distinguish between Stripe vs. PayPal. Plus, if you’ve narrowed down your options to these two online payments companies, we’ll help you decide whether Stripe or PayPal—or another alternative—is the right choice for your business.

First, What Are Payment Gateways and Payment Service Providers?

Before we get to the details, we need to iron out some fundamental concepts that understanding Stripe vs. PayPal will require. Having an understanding of both payment gateways and payment service providers (PSPs for short) can seriously clarify your search for the right online payments solution for your business.

Payment gateways provide you with an ecommerce platform to authorize online payments—sort of like a middleman between a card network and your business’s merchant services. PayPal is a payment gateway, so you’ll need to set up your own merchant services account to fully process your customer’s payments.

On the other hand, payment service providers connect business owners with the technology and the merchant services accounts needed to fully process and receive customer payments. In the context of ecommerce, payment service providers provide both payment gateways and merchant services accounts for processing online payments. Stripe is a payment service provider, so it will provide this two-pronged online payments infrastructure.

Now that you’ve got a grasp on these two concepts crucial to the question of Stripe vs. PayPal, you can understand why these two online payments solutions differ, even though they might seem exactly the same in practice.

stripe vs. paypal

The Rundown on the Stripe Payments

To get an idea of how to choose between Stripe vs. PayPal, you’ll also need to know the details on the two options. First up, we’ll dig into what Stripe payments can offer your business.

Of all of the top PayPal alternatives to choose from, Stripe is one of the most trusted and widely used. Brands like Slack, Lyft, and Glossier trust Stripe with their online payments integrations. And for good reason—along with their unwavering compliance and security, Stripe offers remarkably comprehensive payments services.

Stripe will allow you to set up an online payment platform for your site in a single integration. But even after you get your Stripe checkout process ready to go, Stripe will keep working for your business: It will allow you to accept, process, settle, reconcile, and manage all of your business’s online transactions, all through your Stripe platform.

Plus, if you want to integrate other software with your Stripe account, this payment solution will also play nice with others when you need it to. Stripe supports third-party integrations with companies like Shopify, FreshBooks, and Wufoo. So, even if Stripe’s online payments platform doesn’t support a capability you need it to—like creating a store or invoicing customers—you can likely connect a software that does to your Stripe account.

All in, the Stripe’s payment services will cost your business 2.9% of each transaction value, plus $0.30 per transaction for their pay-as-you-go account structure. If you want access to the account management, migration assistance, volume discounts, and dedicated support that Stripe Enterprise offers, then you’ll have to contact their sales team for more info on pricing.

The Rundown on the PayPal Payment Gateway

On the other hand, by default, PayPal is merely be a payment gateway for online payments. So, if your business already has a merchant services account, then you’ll be able to attach your PayPal payment gateway to it. If you want to access a merchant services account through PayPal, however, you’ll need to go the extra step and secure it along with your online payment gateway—you won’t be able to get them in one tidy package like you would with Stripe.

PayPal payment gateways come in two forms: Payflow Link and Payflow Pro. The more basic version of PayPal’s payment gateway, Payflow Link, allows your customers to check out on your site using PayPal and PayPal credit through a PayPal-hosted template. Payflow Link will simply cost your business $0.10 per transaction.

Payflow Pro offers a more customizable checkout process. With this more advanced version of Payflow, you’ll be able to access PayPal but provide the checkout experience through your own checkout template. Payflow Pro will cost your business a $99 setup fee, plus an extra $25 a month on top of the same $0.10 per-transaction cost.

stripe vs. paypal

Where Stripe Wins in Stripe vs. PayPal

Having solidified what Stripe and PayPal have to offer in their own right, it’s time to consider them relative to each other to get to the bottom of Stripe vs. PayPal.

First, let’s take a moment to highlight what Stripe wins out when measured against PayPal. To start, when compared to Stripe, PayPal online payments are actually pretty basic technology—if you can believe it.  Because Stripe offers a fully integrated online payment service setup, it’s streamlined a bunch of previously disparate, low-tech processes into one, tech-enabled package.

Plus, Stripe is more developer-friendly than PayPal. That is, Stripe will always be customizable and engineer-facing, whereas PayPal won’t necessarily be customizable or geared toward tech professionals. As a result, Stripe will be ripe for branding—and can even be considered a white-label service. And you won’t have to pay a lofty fee for this white-label option like you would with PayPal’s Payflow Pro.

All in, if you’re a tech-forward company that has or can access engineering resources, Stripe will be a more streamlined, branded experience for your customers.

Where PayPal Wins in Stripe vs. PayPal

On the other side of the Stripe vs. PayPal, PayPal online payments also have a lot to offer small businesses. If you’re expanding your brick-and-mortar business into an online store, then we suggest you start your ecommerce presence with PayPal’s Payflow Link. This online payment option is one of the easiest to install and most affordable on the market. Unlike Stripe, PayPal Payflow Link won’t require a dedicated tech professional for setup. And a mere $0.10 per transaction is a price that is tough to beat.

That said, if you’re interested in branded checkout for your website, then we suggest you look to Stripe rather than PayPal Payflow Pro, as both will likely require a developer, and Stripe will come with no base fee or setup fee.

Finally, if you’re already working with a pre-existing merchant services account for your business—and you want to use that same account for your online payments processing—then PayPal will be a clear winner for you.

When you zoom out, PayPal will win in Stripe vs. PayPal for businesses that aren’t necessarily web-based. If you’re eager to offer your goods or services online—but you’re primarily a brick-and-mortar business—then PayPal’s online payment systems are a good match for your needs.

Alternatives Beyond Stripe and PayPal Payment Gateways

Not quite convinced that either Stripe or PayPal is the right online payments solution for your business’s needs? Not to worry—there’s a whole market full of online payments systems out there. So, even though these two options might be the biggest names to look into, you don’t by any means have to choose between Stripe vs. PayPal.

In fact, there are actually some other huge names in the online payments industry—you just might recognize them for their services other than their online payments infrastructure. Here are two more online payments solutions for you to consider if you haven’t found your perfect fit with Stripe vs. PayPal.

Amazon Pay

If you’re already a merchant on Amazon, then a top payment option to consider Amazon Pay, which will allow customers to use their stored Amazon payment information when they checkout on your website. Amazon Pay is a payment gateway, so it will require you to come to the table with your own merchant services account to fully process payments.

That said, it offers an API that will allow you to customize the checkout process so it can be both convenient and on-brand. Plus, it will simply cost your business 2.9% of every domestic transaction value or 3.9% of every international transaction value, plus $0.30 per transaction, with no setup or monthly fees at all.

Square

Finally, you’re likely familiar with Square thanks to their seemingly ubiquitous iPad POS systems. But did you know that they also offer online payment services? That’s right—Square is a full payments services provider, and they now offers ecommerce services through Weebly that start at just $8 a month. Plus, if you want to simply integrate a checkout experience into your pre-existing website, then you can opt for a Square API. Every payment that you process online via Square will cost your business 2.9% of the transaction value, plus $0.30 per transaction.

Stripe vs. PayPal: The Final Verdict

So, what’s the verdict on this Stripe vs. PayPal showdown? Well, that’s for you to decide, of course. You know your business better than anyone, and you should choose the online payments solution that best lends itself to what you’re imagining your business’s online checkout process to be. That said, if you’re looking for an affordable, entry-level online payment gateway, then PayPal’s Payflow Link will be an easy choice. However, if you want an easy-to-customize, white-label online experience, then Stripe could very well beat out PayPal.

Don’t forget that you have lots of options though—Stripe vs. PayPal is far from the end-all and be-all of online payments solution, so be sure to shop your options if you’re hesitant to move forward with either of these two options.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Maddie Shepherd

Senior Staff Writer at Fundera
Maddie Shepherd is a senior staff writer at Fundera. Beyond her deep knowledge of small business financing, Maddie's specialty is business credit cards—she'd love to help match your business with the credit card that benefits you most!

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