Paypal Versus Stripe. Which One Should I Choose?

The payment gateway is one of the most important and sensitive components of any electronic business. Your income as a company or freelancer depends on its smooth operation, and its fees, usability, and performance will affect your business in ways which few other tools can.

We would like to highlight two of the most popular ones from among the various alternatives available on the market: the veteran and very well-known Paypal, and the novel and innovative Stripe.

Paypal was founded in 1998 and bought up by eBay in 2002. It launched on the stock market that same year. With so many years up and running and having become a global giant, it has not managed to avoid the odd controversy, such as blocking the Wikileaks account.

Stripe, founded in 2010, is still considered a startup – though one belonging to members of the Unicorn Club (valued at over US$1 billion). It has received investment of US$80 million and currently comprises Paypal’s fiercest (and, why not say it, sexiest) competition. Likewise, it has also managed to incur the wrath of some angry customers.

It is not an easy decision to make. Which platform should I choose? What are the differences between them?

In order to clarify things, we have decided to look at six areas: fees, usability, security, data portability, API and customer service.

Fees

Both payment gateways charge a fee for transferring funds. However, Stripe offers a linear fee structure of 2.9% + 30 cents if you do not exceed US$1 million annually.

Paypal fees are set at 3.4% + 35 cents, and decrease based on the volume of your income.

Let’s take a look at the rest of the charges:

Service Paypal Stripe Checkout on your website $30 / month (1) Free Chargebacks $20 $15 American Express 3,5% (2) 2,9% + 30 cent. Refund Paypal Comissions Free International Cards 1% (3) Free (4)

1. Depending on the account type, this can drop to US$5/month.

2. This charge is only levied with certain accounts.

3. More info here.

4. The transfer is free, but currency conversion costs 2%.

Usability

Let’s have a look at the standard purchase process on the two platforms. We’ll start with Paypal:

• The user wants to make a payment and clicks on the corresponding button.

• They are redirected to the Paypal page, leaving your page.

• They are asked to enter their bank details or to log in to their Paypal account.

• The user confirms that they are authorizing the payment.

• They are redirected back to your page.

The same example with Stripe:

• The user wants to make a payment and clicks on the corresponding button.

• A modal window opens where the user enters their details or logs in.

• They confirm the payment.

These two steps represent a huge difference. The fact that the user is not sent to an external page has a positive effect on closing sales. In terms of usability, you keep the potential customer inside your platform’s environment.

Security

As far as security goes, both platforms take the issue very seriously.

Stripe has developed Stripe.js, and this functionality means that the bank details entered by the customer never have to pass through your server, instead being sent directly to Stripe. This means that you never store the bank details of any customers, and even if someone did gain access to your server, that information would not be present.

Paypal, on the other hand, does not work this way. If we use their API on our website, sensitive bank details have to pass through our server before being stored by Paypal, meaning that it is possible to engage in bad practices at the development level.

Data portability

Let’s have a look at an example. Imagine that you offer a membership (a recurring payment from your customers, like a subscription to your products or services). If the user wants to change their payment method and change to Stripe, it is not possible to transfer over the details because Paypal will not give them to you. The user will then have to go through the entire payment process again, with the implicit risk of losing the customer.

Stripe permits the portability of these details. They will give you access to them under strict security protocols. In reality, there is not a huge difference, except that you have the peace of mind of not feeling locked in.

API

If you are developer, then you may already be aware of this. In the words of a software engineer, “the Stripe API is pure poetry”. It is very well-documented, extremely easy to use, and very clean.

Before the launch of the Stripe API, the Paypal API was a veritable nightmare. But thanks to the stiff competition, Paypal is striving to provide access to its new API. It will not be long before we see to what extent they are capable of making things easier for programmers.

Customer service

Paypal has never been famed for good customer service. Droves of people have seen their funds frozen with little or no explanation, such as some indie videogame companies during their crowdfunding campaigns.

I once needed to contact their support by e-mail. They took several days to respond with a link to the FAQs, which were not much help.

Stripe has e-mail support. They also have an IRC channel for developers, where you can obtain help in real time if you need it.

It is worth noting that Paypal suffers from more complaints related to its customer service due to its gigantic size. We will see whether Stripe continues to maintain the level it currently offers in a few years time.

Conclusions

Stripe is making huge strides, and that will benefit both their users and Paypal users, as the competition will soon put both services on a par.

Paypal is the most ubiquitous payment method on the internet. Stripe is more usable. A corporation listed on the stock market versus a company which has barely been around for four years. The robustness of a giant versus the agility of a startup.

And you, which one will you go with?

This article was syndicated from Business 2 Community: Paypal Versus Stripe. Which One Should I Choose?

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