Stripe vs PayPal (Comparison for 2024)

Trying to decide between Stripe and PayPal for processing payments? Check out this detailed report for the ultimate comparison between the two.

Together, PayPal and Stripe hold 63.6% of the payment processing market share as the two leading processors.

And even though they share lots of similar features, there are some major differences between them that may suit different companies better.

In this report, we’ll check out some of these key differences between Stripe and PayPal, go through both of their pros and cons, and help you decide which payment processor is the right fit for your business.

Let’s dive in!

Stripe Overview

Before we get into the key differences, let’s check out a quick overview of both platforms.

What is Stripe?

Stripe is an online payment processing platform designed to handle online and in-person transactions for businesses of all sizes. 

Founded in 2010, it offers a suite of tools to manage payments, billing, and financial operations, making it a go-to solution for e-commerce companies, subscription services, and marketplaces.

Stripe Key Features:

Stripe’s key features include:

• Powerful API that allows for seamless integration and customization, supporting various payment methods like credit cards, debit cards, and digital wallets
• Advanced fraud detection through Stripe Radar
• Subscription management payment tools
• Detailed financial reporting
• Supports global payments
• Robust security measures, including PCI compliance and encryption

When to Use Stripe?

Stripe is ideal for online businesses that deal with international customers and high transaction volumes. Its robust API and extensive customization options make it perfect for tech-savvy startups and growing e-commerce platforms that require tailored payment solutions.

PayPal Overview

Next, let’s get into the PayPal overview:

What is PayPal?

PayPal is a widely used online payment service platform that processes secure financial transactions between individuals and businesses. 

Founded in 1998, PayPal supports payments via credit cards, debit cards, and bank accounts, offering a simple, user-friendly interface.

PayPal Key Features

PayPal offers a range of features, including:

• Buy Now, Pay Later (BNPL) options
• AI-powered personalized recommendations
• Advanced fraud protection
• Robust tools for merchants such as streamlined checkout processes and marketing through personalized offers

When to Use PayPal

PayPal is ideal for small to medium-sized businesses, freelancers, and those without extensive technical expertise due to its straightforward setup and user-friendly interface.

Stripe vs. PayPal: Key Differences

As the two biggest names and payment processors in the industry, Stripe and PayPal share lots of similarities – but there are some key differences among them when we look at the major areas. 

Below, we’ll go through these differences and see how they compare in various areas:

Fees and Pricing

Stripe offers a straightforward pricing model, charging 2.9% plus $0.30 per transaction for online credit card payments. There are no setup or monthly subscription fees, making it simpler for businesses to predict costs. For in-person transactions via Stripe Terminal, the fee is 2.7% plus $0.05 per transaction. Stripe also provides discounted rates for non-profits at 2.2% plus $0.30 per transaction.

PayPal, on the other hand, has a more complex fee structure. Online transactions range from 2.59% to 3.49% plus $0.49, depending on the payment method and volume. For in-person transactions using PayPal Zettle, the fee is lower at 2.29% plus $0.09 per transaction. PayPal also charges additional fees for currency conversion (3%-4%) and cross-border transactions (1.5%).

Both platforms charge for chargebacks, with Stripe charging $15 and PayPal $20. 

Although, PayPal has options for premium plans at $5 and $30 per month, which provide advanced checkout features and a virtual terminal, something Stripe doesn’t offer.

Overall, Stripe is generally more cost-effective for an online business, especially those with higher volumes or international card transactions due to lower cross-border fees.

Supported Payment Types

Stripe supports a wide range of payment methods, including credit and debit cards, ACH transfers, local payment methods like Alipay and SEPA Direct Debit, and even cryptocurrencies.

PayPal, while also supporting major credit and debit cards, excels in its integration of digital wallets, including its own PayPal Wallet, Venmo, and PayPal Credit.

Stripe is particularly strong in handling subscriptions and recurring billing, supporting various billing intervals and complex pricing models. PayPal also supports these features but may require additional steps or third-party integrations.

Security Features

Stripe uses advanced encryption methods, such as AES-256-bit encryption, and is fully PCI DSS compliant, providing a secure framework for handling payment data. Additionally, Stripe’s machine learning-based fraud detection tool, Stripe Radar, actively monitors transactions to detect and prevent fraudulent activity.

PayPal also follows PCI DSS standards and uses similar encryption techniques to protect transaction data. Its security measures include Transport Layer Security (TLS) and machine-learning fraud detection to safeguard user information.

PayPal simplifies security management by handling compliance and fraud protection internally, which can be particularly advantageous for smaller businesses or those without dedicated IT security teams.

Overall, PayPal provides more ease of use with comprehensive built-in protection.

International Transactions

Stripe supports 135+ currencies and provides an easy currency conversion process. The platform can adapt to various markets and provides localized payment options and increasing conversion rates for global transactions.

PayPal, on the other hand, is available in more than 200 countries, offering a more extensive international reach. However, PayPal’s currency conversion fees can be higher compared to Stripe.

Overall, PayPal’s broader geographical reach makes it a solid choice for businesses aiming for a bigger international presence.

Integrations

Stripe has a developer-friendly approach, providing over 610 integrations including popular tools like HubSpot, Slack, Zapier, and Google Drive. This long list allows businesses to create highly customized workflows, making Stripe a better fit for companies that want tailored integrations​.

PayPal, while slightly less extensive with over 500 integrations, covers all essential bases for most businesses. It integrates smoothly with major e-commerce platforms like Shopify, WooCommerce, and GoDaddy, ensuring that even less tech-savvy users can set up and run their payment systems efficiently.

Overall, Stripe offers more extensive and customizable integrations suitable for tech-savvy businesses, while PayPal provides user-friendly options ideal for smaller or less technical enterprises.

Ease of Use

Stripe is more developer-friendly, offering clear APIs and extensive documentation. This makes it an excellent choice for businesses with technical expertise or in-house developers who can leverage customization features. The initial setup can be complex for non-technical users, requiring some coding skills to fully integrate the platform.

PayPal, on the other hand, is known for its user-friendly interface, making it easy for anyone to set up and start accepting payments.

Overall, PayPal stands out for its simplicity, making it ideal for those seeking a hassle-free setup. Stripe offers more in-depth customization, which can be highly beneficial for business owners who have the technical resources to implement it effectively.

Customer Support

Stripe has significantly improved its customer support in recent years, now providing 24/7 assistance through phone, chat, and email.

PayPal, while reliable, does not quite match Stripe’s round-the-clock availability. PayPal offers customer support through phone, email, and community forums. However, their phone support is not available 24/7, which can be a limitation for business owners needing immediate assistance outside of regular business hours.

The community forums provide a platform for users to seek help, but the responses are not always as timely or official as direct support from PayPal’s customer service team.

Overall, Stripe’s 24/7 support provides a more robust support system compared to PayPal’s limited hours and reliance on community forums.

Stripe vs. PayPal: Pros & Cons

Now, let’s check out the pros and cons of both Stripe and PayPal:

Stripe Pros & Cons

Stripe Pros:

• Transparent flat-rate pricing model that makes it easy for businesses to predict costs
• Extensive integration options
• Supports over 135 currencies and numerous local payment methods
• Developer-friendly with a robust API for extensive customization
• Comprehensive fraud detection through Stripe Radar
• 24/7 customer service via phone, chat, and email
• Advanced reporting tools like Stripe Sigma

Stripe Cons:

• Initial setup can be challenging for non-technical users, requiring some coding knowledge
• Transaction fees are not refunded when a customer gets a refund​
• Lacks a built-in POS app, requiring additional development for in-person sales​
• Stripe charges a standard $15 fee for chargebacks, which can add up​
• Not ideal for micropayments due to its flat-rate fee structure​

PayPal Pros & Cons

PayPal Pros:

• The platform is user-friendly and easy to set up, even for those who are not tech-savvy​
• Provides buyer protection programs that can help recover funds if purchases don’t go through​
• Offers buy now, pay later services and PayPal Credit for flexible payment options
• Automatically handles currency conversion for cross-border payments
• Businesses can accept payments without needing a separate merchant account
• Allows for quick PayPal-to-PayPal transfers using just an email or phone number

PayPal Cons: 

• International and cross-border transactions can come with bigger fees​
• Accounts can be frozen or limited if it comes to any disputes
• Varied and sometimes confusing fee schedules for different types of transactions​
• Withdrawing funds from a bank account can take several days unless you pay an additional fee for an instant transfer​

Which is Best?

When deciding between Stripe and PayPal for your business, you need to consider your specific needs.

Stripe is best for tech-savvy businesses that need extensive customization and handle high volumes of online transactions. Its developer-friendly platform supports complex integrations and offers competitive pricing for online sales.

PayPal, on the other hand, is ideal for small businesses and startups looking for an easy-to-use solution with wide customer acceptance and a user-friendly interface.