Stripe and PayPal are credit card processing providers that process your customers’ payments. Stripe is primarily a merchant services provider that allows you to customize its solutions for online or brick-and-mortar sales. PayPal is mainly a digital wallet.
If your business engages in a high volume of sales – either in person or online – and you want the ability to accept many forms of payment, then Stripe is the better option. However, PayPal may be a better choice if you already use the platform to send invoices and receive payments for your small business.
Stripe may benefit your business by accepting multiple payment forms for your high volume of sales, while PayPal may better suit your company if you already use the platform.
|Best for||High-volume e-commerce business with web development resources|
Small business with low sales volume
Consultants and companies that invoice clients
|Online transaction costs||2.9% + $0.30 per transaction||3.49% + $0.49 per transaction|
|Payment methods||Credit and debit cards, ACH payments, Google Pay, Apple Pay, Microsoft Pay, various foreign payment methods||Credit and debit cards, ACH payments, Pay in 4, Venmo, Google Pay|
|E-commerce payment processing||Yes||Yes|
|Billing and invoicing||Yes||Yes|
|Business financing||Merchant cash advances|
Business lines of credit
Stripe is a financial services company that functions primarily as a merchant services provider. The company sells a leading point-of-sale (POS) system and has plugins for e-commerce tools that equip your business to receive payments from customers.
As a payment processing company, Stripe can aid your business to accept payments through many different methods – for a fee. Payments are then deposited into a merchant account, which Stripe supplies, and are automatically transferred into your business checking account as soon as the next day.
When you sign up with Stripe, you can choose from its standard offerings or a customized e-commerce package. You’ll have the option to purchase equipment or download plugins to process payments, and use a personal dashboard to help track the payments you receive.
In addition to payment processing for your online business, you’ll also gain access to Stripe’s other services, including billing, invoicing and identity protection. Depending on which service you choose, you can utilize inventory-management tools or integrate Stripe directly with QuickBooks.
Here’s an example of a Stripe dashboard:
In addition to payment processing, Stripe offers these services:
If you choose Stripe for processing your brick-and-mortar or e-commerce payments, expect to pay fees starting at 5 cents per transaction plus 2.7% of the transaction value – 30 cents per transaction plus 2.9% for e-commerce. Pricing is the same for all cards and digital wallets, including Visa, Mastercard, Maestro, American Express, Discover, JCB, Apple Pay and Google Pay. Integrations are also available for other global payment methods, such as Giropay.
If your company has a unique business model – including large payment volume, country-specific rates, multi-product discounts or other specific features – Stripe will work with you to create a custom payment processing plan that can lower processing fees.
Stripe excels because it offers your business competitive pricing and a wide selection of tools. Consider using Stripe if you meet any of these criteria:
One big drawback of Stripe is that, with so many tools and features available, you may need some development experience to set it up. If you don’t know an IT specialist and don’t have the means to pay someone to help you configure Stripe, you may want to use PayPal or find a simpler system, because the software’s bells and whistles can be overwhelming.
Like Stripe, PayPal is a financial services company. However, PayPal functions primarily as a digital wallet for individuals or your small business. It’s generally used for sending money to friends and family, invoicing clients and receiving payments.
While Stripe focuses heavily on processing credit card payments for merchants, PayPal focuses on invoicing clients and receiving payments for work performed. PayPal also offers merchant services like POS systems and credit card processing, but its merchant services are much narrower and more expensive than Stripe providers.
To get started with PayPal, sign up on the PayPal website. Registration is straightforward, and instantly grants new users access to a digital wallet for sending and receiving funds. You can also link bank accounts to transfer money on and off the platform.
Once you’re signed up for PayPal, you can decide how best to use the platform to support your needs, order equipment, or add tools and features. You can also order a POS system, acquire a business loan, or use the platform to send individual invoices and receive payments.
In addition to payment processing, PayPal offers these services:
Here’s a sample of how easy it is to create an invoice using the PayPal platform:
PayPal transaction fees are based on the type of payment being processed, and whether transactions are domestic or international. Rates vary from 1.9% – plus a fixed fee for QR code transactions valued over $10 – to 3.49% with an additional fixed fee for standard PayPal checkout, invoicing, Venmo and other commercial transactions. American Express payments made via PayPal guest checkout include a 3.5% fee, but there is no additional fixed fee.
PayPal is considerably more expensive than other payment processing companies. Your service-based company, such as a consultant or landscaper, is an ideal user because you require a simple tool to quickly send invoices.
If you seek a tool that also receives payments, and you’re not inclined to set up a more complex system like Stripe, then PayPal may be your solution.
These are some typical scenarios for using PayPal:
When you’re considering Stripe as a payment processing tool for your business, evaluate its upsides and drawbacks.