Which one should you choose? This question can only be answered by analyzing your needs and making a decision. We will be focusing on transaction fees as they are the most prominent aspect of online payment processing for current business owners and those just starting a blog or building an eCommerce site.
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- Let’s start with a brief overview of the two companies.
- Background Information
- More about PayPal
PayPal is the first choice for online payment companies. This applies to both business owners and people who just started a blog. PayPal, a San Jose, California-based company, was founded in 1998. It had 152 million accounts by mid-2014 and was a market leader in terms of transaction volume. PayPal is a flexible payment option because it has twenty-six (26) different currencies.
About Stripe
Although Stripe, a San Francisco-based payment processing company, can be considered a newcomer in the field of payment processing, it is also a formidable competitor to PayPal. It was founded in 2010 by Sequoia Capital, three PayPal co-founders (Peter Thiel and Elon Musk) and has grown to become a multi-billion-dollar transaction hub for anyone looking for other payment options than PayPal.
Transaction fees
The base rate for both companies is 2.9% plus 30c per transaction. However, there are some additional details. Stripe will offer a lower rate for transactions exceeding $80,000 per month (or $1 million annually). However, you’ll need to contact Stripe via email to start negotiations. There are no monthly fees or refund fees and there are no hidden fees (e.g. There are no setup fees or card storage fees.
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- Stripe allows you to transfer your money on a rolling basis for two days.
- PayPal offers a range of transaction pricing levels. It starts at $3,000 USD per month (2.5% plus 30cs), then $10,000 per month (2.2% plus 30cs), and finally, $100,000 per month (undisclosed).
- PayPal is the clear winner, right? It is not, unless you consider its various fees. Take, for example:
- Charge cards on websites $10 per Month (Paypal Advanced); $35/month (Paypal Pro).
- Chargebacks $20.
- American Express Credit Card: 3.5%
- Refunds for Standard Transaction Fee
- International Cards 1% above and beyond regular transaction rates
- Authorize Card 30c for uncaptured authorizations or card verification transactions
Stripe charges $15 for chargebacks. If necessary, a 2% currency conversion fee is added. Other services are free of charge.
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Is Stripe better than Paypal?
Each business has a unique transaction history. However, if your business does five-thousand or more business per month, standard PayPal transactions will be less expensive than Stripe transactions. This assumes that there are few international transactions and customers only use American Express credit cards. If your business is international-oriented, PayPal Pro may not be a viable option. You should also consider other factors.
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PayPal’s microtransaction pricing policies kick in as we reduce the average transaction. PayPal’s micropayment rate, 0.5% + 5C/ transaction, gives it the advantage (note that Stripe doesn’t have a micro policy at this time). If you sign up to PayPal, make sure you have it.