As far as I'm concerned, a card swiper is a card swiper—I'm not paying attention to the specific logo on the device when I'm making a purchase. But what might be a pretty inconsequential difference to consumers like me will have a big impact on sellers.
You need to make sure the processor you choose can integrate with your selling platform, that it supports the transaction types you use, and that it has the features you need. And when it comes to fees, choosing the wrong payment processor can cost you hundreds—or more, if you're selling at scale.
Stripe vs. PayPal at a glance
I'm just going to put the bottom line up front: Stripe is the better choice in most situations. Having said that, you can't put a price on the value of PayPal's universal brand recognition. Here's how those factors weigh against each other at a bird's-eye view.
PayPal has a seriously complicated fee schedule that adds up quickly, and even basics like a virtual terminal or a recurring payment tool require a subscription plan plus an added monthly fee. Also, many of the premium features PayPal charges for are either free with Stripe or come at a flat rate per transaction.
If your customer demographic skews a little less tech-forward, customers may be more willing to input financial information via a platform they're already familiar with, which is usually PayPal.
Keep in mind that I'm evaluating these platforms strictly as payment processors—not for personal money transfers or even for particularly large invoicing projects (though both platforms do have invoicing tools, which I'll get to later on).
Here's a comparison table with the main differences, but keep reading for details.
Ease of use
⭐⭐⭐ A little trickier to set up, since Stripe's checkout gateway must be integrated with your site
⭐⭐⭐⭐ Very easy off-page checkout setup; customizable gateways available with upgrades are just as tricky to integrate as Stripe
Costs and fees
⭐⭐⭐⭐⭐ Simple "% + fixed cost" fee schedule with uncomplicated pricing for add-ons like recurring payments and invoice management; offers a custom plan for bigger businesses
⭐⭐ Complicated pricing with different "% + fixed cost" fees for each type of transaction; difficult-to-parse fees for upgrade services that are required in order to access key features that can also cost an additional fee
⭐⭐⭐⭐⭐ Recurring payment setup is included at no extra charge; users can gain access to advanced billing tools like recurring invoices for a low additional per-transaction fee
⭐⭐⭐⭐ PayPal Business merchants can set up recurring payments with no additional monthly fee, but the per-transaction fee is higher than Stripe's
Pay later options
⭐⭐ Available via third-party integrations with high per-transaction fees
⭐⭐⭐⭐⭐ PayPal Pay option included with no additional fees
⭐⭐⭐⭐⭐ Simple, low-cost added fee for international transactions and currency conversions
⭐⭐ Higher added fee for international transactions and currency conversions, plus base "% + fixed cost" fees have different fixed costs for each country
⭐⭐⭐⭐ Fully customizable checkout gateway included at no extra cost
⭐⭐⭐ Customizable checkout gateway and on-site checkout options require Payments Pro ($30/month) or Payflow Pro ($25/month) accounts
Currencies/transfer types supported
⭐⭐⭐⭐ All major credit cards, 135 international currencies, crypto, and ACH debit and credit transfers; Venmo transfers not supported
⭐⭐⭐⭐ All major credit cards, 25 international currencies, Venmo transfers, crypto, and ACH
Trustworthiness and brand familiarity
⭐⭐⭐⭐ Stripe doesn't have PayPal's name recognition yet, but it has similar security and a growing market presence
⭐⭐⭐⭐⭐ PayPal stands as a very trusted payment processor with a high level of trust and security across demographics
What's not different?
If you're torn between Stripe and PayPal for your business, disregard these factors—they're (more or less) the same on both sides.
Credit cards accepted: Both Stripe and PayPal can accept all major credit cards.
Varied transaction types: Whichever app you choose, you'll be able to check out customers online, in person, or via manual credit card input (though both slightly upcharge for manually entered transactions).
Card reader costs: Terminals (the full-scale card processor you would see at any shop counter) cost $249 for both platforms. Stripe's handheld card readers cost $59, while PayPal charges $29 for your first reader and $79 for additional devices, which basically evens out for multiple readers.
Chargebacks: Both platforms' chargeback fees are pretty similar ($15 for Stripe, $20 for PayPal).
Security: You'll get similar security quality from either processor, including safeguards like data encryption, 2FA, fraud detection, etc., though the prices will vary (more on that later).
Report building: PayPal might be a tiny bit more capable of the two, but either will allow you to build simple reports from past transactions.
PayPal is easy to set up and use, but Stripe allows on-site checkouts that you can customize to your brand
If you've ever made a PayPal purchase before, you're familiar with the standard off-page checkout process that takes place on the PayPal site. It's absurdly easy for the buyer—and the brand name is enough for people to trust it—but it takes you off the page you were purchasing from.
Stripe is designed to be integrated directly with your shop, so that the customer remains on your website throughout the entire checkout process. It also allows you to customize the checkout gateway to match your shop's brand and aesthetic. PayPal users have to pay up for Payflow Pro to fully customize their checkout pages; otherwise, branding options are limited to just adding a logo.
But here's the rub: setting up an integrated checkout gateway is a little tricky in both cases, and requires some basic programming knowledge (or the patience and technological aptitude to follow a how-to video really, really closely). So if you don't care about having a branded on-page checkout page and just want something easy, PayPal has an option for that. Stripe Checkout implementation is described as "low-code," but it's still not quite as simple.
That said, you can hire a freelance programmer on Fiverr to set up a checkout gateway for as little as $20. So if you couldn't code your way out of a paper bag but you still want the nicer checkout experience, paying someone else to do it isn't going to bankrupt you.
Nearly every type of transaction is cheaper with Stripe (and you won't have to worry about hidden fees)
There's no other way to put this: PayPal's pricing structure is a nightmare. It took me, without exaggeration, hours to figure out PayPal's fees, and that was just so I could write this post. Not only is the percentage fee different for each type of transaction, but you need to consult a different table to find the fixed fee that applies to each different payment type as well.
The specificity of the payment types PayPal lists is bananas, and there's a different fee for almost every one.
Meanwhile, Stripe decided on a fee and mostly just sticks to it, charging 2.9% plus $0.30 for online sales (IRL sales drop to 2.7% plus $0.05). Sure, there are some separate fees for very specific scenarios, like ACH transfers and wire payments, but for the vast majority of sales, you'll know what fees to expect. In addition to its blissful simplicity, Stripe fees are also cheaper than most PayPal fees.
That said, PayPal does have two pricing advantages. First, it has a fee-free pay-later service (though the Pay Monthly option is subject to 9.99% to 29.99% APR for approved customers). Stripe doesn't offer a native pay-later option, but integrates with third-party platforms like Affirm, Afterpay, and Klarna instead—each of which charges its own fee of around 6% plus $0.30 per installment.
Second, PayPal charges only its standard transaction fees for invoicing. Invoicing with Stripe, however, costs an additional 0.4% per transaction for Starter and 0.5% for Plus plans per paid invoice. Given Stripe's typically lower transaction fees, that still may be cheaper than PayPal depending on the transaction type and amount.
PayPal's paid tiers are confusing and require users to pay extra for features that are included with Stripe
Stripe doesn't have tiers. It collects its fees primarily on a per-transaction basis, and those features that are considered "extras" cost a small additional per-transaction fee—usually a few cents or a few tenths of a percentage point. And for high-volume sellers that need a more dynamic pricing structure, Stripe does offer custom fee packages.
As I mentioned earlier, users who want to create a custom integrated checkout gateway with PayPal need to pay to be able to do so. The Payflow Pro plan allows merchants to fully customize their shopping flows, and costs $25/month plus an added $0.10 fee per transaction. Stripe offers this same service for free.
The other paid PayPal plan is Payments Pro ($30/month). This subscription allows eCommerce businesses to do things like offer custom financing, accept various credit card payments, enhance PCI compliance, and accept phone payments via virtual terminal—services which then may be subject to their own individual fees.
Rather than incurring monthly premiums for access to advanced features like these, Stripe charges a small per-transaction fee with no premium subscription required.
PayPal has more brand recognition, but that may be less impactful as its competition grows
Payment processors should be like the pipes in your house—completely unnoticed as they move things along.
For businesses whose customers may be a little more sensitive to name recognition when it comes to providing online payment information, PayPal has the advantage of being deeply entrenched as a trusted payment processor. If there's a chance your customers will be reluctant to finalize payment if they don't recognize the company handling your checkouts, there's always a chance they'll take their business elsewhere.
But this is becoming less common these days. Most of us have open accounts with a slew of companies, and one more isn't likely to scare many of us off. If people do think Stripe seems a little sus, a quick Google search will show it's becoming very trusted in online marketplaces. And with Amazon growing its partnership with Stripe, it seems likely we'll be seeing a lot more of the brand in the coming years.
Stripe or PayPal: Which makes sense for you?
To put it bluntly: you'll get essentially the same thing from each of these payment processors. But that doesn't mean they're totally equal. Here's how I'd summarize all the above into which I'd recommend:
If you want to leverage the more familiar brand with more built-in trustworthiness and more out-of-the-box simplicity—and don't mind higher fees and more complicated pricing—PayPal is the winner.
If you want to keep fees low at scale, are comfortable with light coding or outsourcing some implementation, and don't mind less ingrained brand recognition for your payment pathway, Stripe is the one.
If you're only making a handful of sales per month and you aren't selling big-ticket items, the fee difference for Stripe vs. PayPal will be manageably small. But once you start selling at scale, in almost all scenarios, PayPal is going to cost you a few hundred dollars more than Stripe per month—savings that will more than make up for hiring a freelancer to set up Stripe payments if needed.
Whichever solution you choose, remember that both integrate with Zapier to help you connect your checkout page to thousands of other apps. Here are some examples to get you started:
Search for or create Salesforce contacts and create new opportunities from PayPal sales
Zapier is a no-code automation tool that lets you connect your apps into automated workflows, so that every person and every business can move forward at growth speed. Learn more about how it works.
This article was originally published in August 2018 by Daniel Brame and has had contributions from Amanda Pell. The most recent update was in May 2023.