Deciding if you should use Stripe or PayPal

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Tim Brown

Ecommerce payment processorSo, you’ve opened your new online business and are trying to decide if you should use Stripe or PayPal as your merchant account aggregator. How do you know which is the best vehicle to deliver customer payments to your account? A look at some of the key features and benefits of Stripe vs PayPal should help to kick the tires, so to speak.

The most important benefit of running a business is to turn a profit. A major component of that is operating costs. While both Stripe and PayPal are ideal options for small businesses that bring in less than $10,000 a month in revenue, the fees and speed of payment vary between the two.

Online payment processing

Monthly Fees

Neither Stripe nor PayPal have a monthly fee for basic service. Although, PayPal—the older and more familiar of the two—does offer premium services with a monthly charge attached if you want to accept credit cards as an additional payment option.

The basic fee per transaction for both PayPal and Stripe is 2.9% + 30¢; but, PayPal offers discounts on the percentage as volume increases over $3,000 and $10,000 per month. At low revenue levels, the volume savings are offset by the premium service fees. However, after $5,000, PayPal starts to show a savings compared to Stripe.

Speed of Payment

Depending on your business’s volume, speed of payment may be a critical factor. Thanks to recent improvements, Stripe and PayPal both offer very fast payment processing terms. Stripe now offers transfers in two days (down from seven in the past) and PayPal allows access to funds within one business day. It should be noted, too, that Stripe is an Apple Pay preferred vendor, adding to ease of payment.


As with any online entity, security is a major concern. Both Stripe and PayPal have processes in place to keep customer credit card data secure; the companies just go about it in very different ways. PayPal stores customer data in a proprietary vault. The only downfall is that the data has to go through your server to get there. If the integrity of your server is compromised, so is the customers’ information. Stripe utilizes native credit card processing, which bypasses the need for data to enter your server, instead sending it directly to it.

If you created your store with an online e-commerce top website builder, you may have chosen to use that provider’s server for hosting your site and will need to factor that into your decision.

Ease of Use

Being able to plug and play may be an important factor while other small-business owners may want flexibility. Depending on your needs and experience, Stripe and PayPal each have appeal. Because of its super-fast setup, PayPal is ideal for business owners who are not too tech-savvy or who cannot afford a dedicated back-end staff. For businesses that possess some website development experience, Stripe offers the ability to customize the user interface to provide a greater number of features, resulting in a much less rigid experience.

Customer Reviews

Stripe and PayPal both are valid merchant account options and are generally well-received according to user reviews. Perhaps due to its large size, PayPal has been subject to negative feedback about customer service—most of it related to accounts being frozen as a result of fraudulent transactions. Stripe reviews are much more positive across the board, fairing expectedly higher in customer service as most newcomers to a game tend to do.


When comparing Stripe vs PayPal, there is no true right or wrong option. The needs of your business ultimately should be the driving force when deciding which model to take off the lot. PayPal may be the way to go if your business brings in between $5,000-$10,000 a month, needs a merchant account that is quick to set up, has a history of securing customer data, and delivers instant access to funds. On the other hand, if you are technologically inclined, want to provide more bells and whistles, prefer native credit card processing, have Apple-based relationships, and generate less than $5,000 a month in revenue, Stripe may be a good fit.

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