May30
PayPal vs Stripe, which one should your business use?

PayPal vs Stripe: Which one Should Your Business Use?

Posted by Neil Cumins

Ecommerce is big business nowadays. It’s been estimated that $1.91 trillion was spent globally last year, and over half the world’s internet users now buy online. Yet Census.gov figures suggest only eight per cent of American retail sales last year were made through websites.

While some companies deliberately focus on driving consumers into outlets and stores, others struggle to provide a satisfactory online retail experience. Websites often lack detail on products, registration forms can deter people from signing up, and the threat of fraud hangs heavy in the air. Every hacking story and lost-data scandal erodes public confidence in ecommerce a little further, which is why many online retailers are keen to offer digital payment methods like Stripe and PayPal.

The PayPal vs Stripe debate has raged throughout this decade. Both are online payment tools that have evolved into wider service providers, just as Amazon has grown from being an ecommerce store to a media service and web hosting platform. And while Amazon doesn’t accept PayPal or Stripe payments, millions of other websites do. Designed to reduce bank fraud and simplify online transactions, these payment gateways certainly make ecommerce easier for consumers.

PayPal is the oldest and best-known digital payment platform. Founded in 1998, it has survived endless Noughties phishing scams to provide a streamlined method of taking payments from a bank account without entering sort codes and account numbers. Despite being owned by eBay from its launch until July 2015, PayPal is now an independent company with 188 million users and an estimated value of almost $50 billion.

Stripe is a relative upstart, launched in 2011 with Y Combinator seed funding. Compatible with the controversial Bitcoin digital currency, Stripe is a PayPal clone in many of its processes and methods. Both are compatible with all the main programming languages including C#, Java and PHP.

But what can we learn from a PayPal vs Stripe comparison, and which one should your business be using?

The first comparison in any PayPal vs Stripe head-to-head involves transaction fees for accepting payments. For consumers, there are no charges. For retailers handling less than a million dollars a year, both firms take 2.9 per cent plus thirty cents per successful transaction. However, Stripe provides free services – such as recurring billing and fraud protection – that PayPal currently charges for. Stripe is the only platform compatible with Apple Pay, and PayPal levies premiums for American Express payments while Stripe maintains its basic rate.

From that perspective, any PayPal vs Stripe test clearly favors the latter. Yet PayPal’s thirteen-year head start brings its own advantages. Despite the Apple Pay tie-up, Stripe is less widely adopted and has fewer customer accounts. PayPal has greater public awareness, so offering it at a checkout will appeal to more people. It typically pays out within one business day, whereas Stripe can take two days in the States and up to a week in other countries. For firms reliant on quick payment receipts, this is a significant difference.

However, if you can live with these compromises, Stripe’s advantages begin to stack up. For instance, Stripe.js ensures credit card data is dispatched directly to Stripe without arriving on your server. That guarantees PCI compliance and means server breaches won’t reveal customer data. Stripe also offers PCI-compliant data portability for ecommerce platforms wishing to migrate elsewhere, yet PayPal refuses to release card data. Moving away from PayPal would require every single customer re-registering their details, which is worth bearing in mind before signing up with either company.

PayPal’s poor customer relations have become legendary, despite recent attempts to address historically unreliable email communications and a chronic lack of phone support. Stripe offers a far better support infrastructure, though that’s easier to achieve when a firm is small-time. If Stripe becomes as global as its rival, its own customer experience may begin to struggle. Nonetheless, the presence of an IRC channel is hugely advantageous, as is Stripe’s clean and reliable API. Despite laudable improvements to its own API, PayPal’s interface simply isn’t as intuitive or well-organized – one of many areas where PayPal vs Stripe comparisons favor the latter.

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