In the last few years, Stripe and PayPal have risen to prominence as the two preferred methods of accepting online payments for goods and services. But which is better? We’ve compared the features, benefits, and drawbacks of each to help you decide which is the better option for your business.

Features

Stripe and PayPal each offer a variety of features which make them attractive to different types of businesses. Let’s take a look at their features and what they mean for you as a business owner.

Security

One of the main considerations when choosing a processing platform is security, and Stripe and PayPal each offer some impressive security features. As a business owner, you want to make sure that your customers’ sensitive financial information remains secure. Stripe offers multi-factor authentication for added security (2FA), two-step verification (2SS) and encrypted payments (PAPE). PayPal, on the other hand, offers security through its SSL certificate — the same kind of security used by banks and other large businesses.

Conversion Optimization

Another important consideration when choosing a payments platform is how easy it is to grow your business with the app. Ideally, you want to find a platform that is beginner-friendly and offers all the features you need without any extra costs or complex integrations.

Stripe and PayPal each provide excellent User Experience (UX) for their customers, which translates to you as a business owner. With the Stripe dashboard, you can view a complete history of each transaction, monitor your revenue and costs, and create beautiful, custom reports about your business. Once you’ve started using the Stripe app, you’ll find it easy to grow your business and take advantage of all the features offered — without needing any additional education or coding knowledge.

Customer Support

Last but certainly not least, let’s not forget about customer support. You want to find a partner that is available 24/7/365 as well as someone you can contact if you ever have an issue. After all, it’s not good customer support when one of your customers can’t make a payment due to insufficient funds — and that’s what would happen if you use a cash-only platform.

Rate Limitations

Both Stripe and PayPal have limitations on the amount of money that can be processed through their platforms. For example, Stripe restricts the amount to $20,000 per month for business accounts and $2,000 per month for individual accounts. PayPal also has limits in place but they are much higher, generally limited to a $1 million per month spending threshold for merchants and $500,000 per month for businesses. If your business’ sales exceed these limits, you’ll either need to upgrade your account to a Platinum or higher plan, or find someone who can cover your costs.

Additional Considerations

Aside from the four features we’ve discussed so far, there are a number of other important considerations to make when choosing a payments platform. These include:

  • Taxes
  • Fees
  • Future Of Online Payment Processing
  • Mobile
  • SSL
  • 2CHIP
  • Dedicated IP
  • Stripe vs PayPal: What Is the Difference?
  • ROI
  • Cost Of Ownership

Taxes

If you are selling a product that is subject to sales tax in your state (for example, Colorado where I live) then you’ll need to make sure that you are aware of all the taxes associated with the sale of that product. Taxes can vary by state and country so be sure to look into this ahead of time. In most cases, you’ll need to file a tax return and pay taxes on your sales.

While you’re at it, you might also want to research what sales are considered e-commerce sales and whether you’ll need to collect and pay taxes on those sales.

Fees

Just like with taxes, fees vary from country to country and state to state. However, there is one fee that almost all merchants will need to pay whether they use Stripe or PayPal — the transaction fee. This is the fee that you’ll have to pay each time a customer makes a purchase through your website. It’s usually around three percent of the total purchase amount.

If your average purchase is $500 then you’ll pay $15 to Stripe and $12 to PayPal, which makes the total $27 or $28, depending on the exchange rate at the time.

Future Of Online Payment Processing

As we’ve established, taxes and fees vary by country and state, and even by individual merchant accounts. As a result, you should expect some changes in the way you process payments in the future. Due to new tax laws and fees being charged by credit card companies, you may see a rise in cash-only transactions and anonymous online payments. This is all good news as more people are seeing the benefits of paying with cash instead of a credit card.

Mobile

If you’re reading this, I assume you’re either a business owner or a marketer who is thinking about implementing online payment processing for your business— or are soon going to do so. If that’s the case, you’ll want to find a solution that is compatible with mobile devices. Fortunately, both Stripe and PayPal offer mobile applications that allow you to quickly and easily accept payments on the go.

SSL

This one’s pretty self-explanatory. If your customers visit your site through an https connection, the data is encrypted and can’t be read by someone else. While this provides a certain level of security, it’s still better to use an SSL certificate than not to use one. If you decide not to use this feature, your customers will see a warning symbol in their web browser’s address bar — which some, notably Google Chrome, consider to be a scam alert.

2CHIP

In the past, most businesses had only one cash register, which meant only one set of hands handling the money as it was being processed. Today, with business owners handling more than one function (marketing, sales, and accounting) it’s important to ensure that all financial transactions are recorded accurately and in real-time. With 2CHIP, both parties (the seller and purchaser) have a shared digital wallet which ensures that the right information is shared between both machines at all times. This removes the possibility of human error and ensures that all transactions are recorded and accounted for — from the initial sale right up to the final settlement. Once implemented, you’ll wonder why you didn’t do this sooner!

Dedicated IP

This one gets a bit technical, but dedicated IPs provide a level of security and privacy that is not available through traditional virtual hosting or shared hosting. With a dedicated IP, all the web traffic is directed to a single IP address, which makes it far more difficult for others to disrupt your site by flooding it with false traffic.

Stripe vs PayPal: What Is the Difference?

Now that we’ve covered the basics about Stripe and PayPal, let’s take a look at their differences. As we’ve established, Stripe is the newer of the two platforms but also one of the more popular ones. It was founded in 2010 and gained major popularity after being acquired by eBay in 2016 for a whopping $13.4 billion.

PayPal, on the other hand, was founded in 1998 and grew quickly after entering the market as an online payment option for eBay members in 2000. Since then, it’s managed to grow to become the world’s largest online payment platform. In early 2018, PayPal announced that it had crossed the $1 trillion revenue mark.

So, which is better? That depends on what you’re looking for. If you’re looking for security, mobile functionality, and ease of use then you may want to go with Stripe. Otherwise, if your needs are a little more complex then PayPal might be the better option.