Stripe Vs PayPal – Which should you choose?
Recently, you’ve probably been hearing a lot about this “new” payment gateway Stripe. We say “new” but we’ve been working with it for the past 5 years and it was founded in 2010. Stripe has been hailed as the hottest new payment gateway and process on the block. With an estimated value of $9 billion and over 337,914 active monthly business users, Stripe is starting to become a healthy contender for the more widely known PayPal.
But what about PayPal? They have a trusted brand and a long history of processing payments on the web. So as a business, which one of these is best for you?
Who are they for?
Despite the fact that Stripe and PayPal are actually pretty different in the way they are set up to work, the two brands dominate much of the online conversation. Stripe aims it efforts towards developers, larger business and subscriptions. It is designed to be flexible, adaptable and able to be employed in a variety of different business models seamlessly.
PayPal is built for smaller businesses, who require simple integration and businesses who deal with micro one-off payments. As a classic example of how Paypal was set up to work, you need look no further than its first big partnership deal with eBay. Simple, one-off transactions on a mass scale.
What are the costs implications for my business?
It is important to remember both a free to set up and both have an API for developers to work with. This means that both options are viable in the short term.
If you are a UK business dealing with UK only transactions, Stripe is a much cheaper option. Stripe’s pay as you go plan cost 1.4% + 20p per transaction for European cards and 2.9% + 20p per transaction for non-European cards.
PayPal’s pricing is a little more complex, if you’re processing under £1,200 per month you could see prices 3.4% + 20p per transaction. For £1,200+ prices drop to 2.9% + 20p per transaction, all the way to 1.9% + 20p per transaction for total processing of larger than £15,000 per month. There are also different fees and rules governing non-domestic payments.
For a full up to date list of Stripe and PayPal’s fees, please visit their websites:
When do they pay out?
PayPal usually pays within 1 business day. Stripe has a longer payment period of around 7 days.
What about security?
Both Stripe and PayPal take security seriously. They have to! At the core, they are both very stable and secure platforms, but they both work quite differently when it comes to security.
One of Stripe’s best features when they first launched was Stripe.js. When you use Stripe.js on your website, the credit card data entered into your payment form is never sent to your server. Instead, the data is sent directly to Stripe.
Why is this so important?
This means that you are automatically PCI compliant because you are not handling or holding any sensitive card data on your own servers. If your servers are ever breached, it will never result in customer bank or card details being stolen.
PayPal now has a way to store cards in a vault, but it is not quite the same as Stripe.js. The sensitive card data still has to go through your server first, and this puts a big security burden on you and your company.
In summary, Stripe.js encourages good developer security practices, while PayPal opens the doors for possible security issues now and in the future. We are sure this will improve over time and they have already taken steps to provide better security options throughout 2017. However, in our opinion PayPal are still not as secure as Stripe.js.
What if I am already with one of these providers and I want to switch?
This is an area where PayPal fails in epic proportion. Imagine you have built a successful membership site over the years, and you powered it with PayPal subscriptions. If you want to move to another payment processor (like Stripe), you simply cannot transfer your data. PayPal will not allow you to have that data. All existing customers would have to sign up again.
Stripe on the other hand values data transferability. If you decide to leave Stripe they will help you migrate your bank and card data in a secure and PCI-Compliant way.
Who has the better API?
When Stripe first launched to the public, the Stripe API was a complete game changer. In fact, they built the entire system API-First so the system hinges off the API. It is clean, well-documented, extremely easy to use and a developer’s dream. Payment gateway APIs of the past have been known to be extremely buggy, inconsistent, and poorly documented. In fact, PayPal was one of the worst offenders.
Stripe has forced PayPal to up its game. The documentation and organisation of PayPal’s new RESTful PayPal API is vastly improved and looks surprisingly familiar to Stripe’s. This is a prime example of how opening up a market place to new competition has benefited customers and consumers. Stripe has set a new standard for clean and well documented API, and the rest of the industry (including PayPal) is now having to play catch up.
Both Stripe and PayPal have their positives and negatives, but here at Dragonfire Marketing we would always recommend Stripe for businesses. We have dealt with a number of clients who needed to migrate away from other expensive payment gateway providers and have been able to streamline their businesses easily and cost effectively with custom built Stripe dashboards and payment portals. If your business is dealing with anything but one-off micro payments, we would definitely recommend looking at Stripe as your payment gateway provider.