PayPal V Stripe

We’ve been hearing more and more about Stripe, the new kid in town payment processor. But what about good old  PayPal? They have developed a trusted brand and have a long history of processing payments on the internet.

Let’s do a quick review of PayPal V Stripe. Let’s look at We’ll compare each payment processor in two key categories: Transaction Fees and Customer Service. This information is sure to be of value to folks of every industry: home builders, Pasadena MD tree services, limos, house cleaning Pasadena MD and the like. These companies are sometimes not in a position to pay large banking fees. We don’t intend to declare a winner, but to point out the differences and help you  make an informed decision.

Transaction Fees

The fee for PayPal is the same, 2.9% + 30¢. But, they offer discounts as volume goes up. The discounts start to kick in at $3,000 (2.5% + 30¢), $10,000 (2.2% + 30¢), and at $100,000 per month. This may look like a better deal on paper, but PayPal is sure to toss in some extra service fees that certainly complicates things.

Stripe is simple. They have a flat rate charge of 2.9% + 30¢ per charge for folks doing under $1 million in volume per year. This rate varies slightly country to country, but it’s stays flat. They won’t disclose special high volume rates or things of that nature.

Quick Comparison:

Service Stripe PayPal
Charge cards from your website Free $30/mo
Chargeback $15 $20
American Express Same Flat Rate 3.5%
Refund Free Transaction Fee
International cards 1% 1%
Authorize card Free 30¢

You’ll notice that PayPal fees are more complex and require explanation. For example, they charge extra for American Express only if you’re on one of their paid plans, which is counterintuitive.

But, how do the transaction fees compare in real life? Let’s compare Stripe vs PayPal transaction fees based on sales volume. Remember, if you want to accept charge cards on your site using PayPal but not provide the actual PayPal service as an option, you’ll require PayPal Pro (which I may cover later).

PayPal V Stripe transaction fee comparison

Volume / month Stripe PayPal Standard
$500 $22 $22
$1000 $44 $44
$2,500 $110 $110
$5,000 $220 $200

As you can see, $5,000 in monthly volume is where it starts becoming cheaper to use PayPal. However, we’re not counting the service fees noted above, which would bring the overall PayPal cost up somewhat.

When do I get paid?

If fast access to your funds is important, PayPal usually pays out inside of 1 business day, while Stripe takes 2 business days.

Customer Service

PayPal is notorious for poor customer service practices. Email support is slow and unreliable, and it is nearly impossible to contact them via phone. At one point, PayPal’s phone system continued hanging up on us before we could ever even talk to anyone. This dragged on for months. Also, there are rumored horror stories of PayPal freezing funds in accounts for no reason.

On the other hand, Stripe maintains open channels for support via email and also have an IRC channel where developers can receive live support from real engineers.  This service is invaluable if you run into a problem and need live help. As of this writing, Stripe doesn’t yet offer phone support, but it’s surely in the works. They’ve always been very courteous and available when we’ve reached out for support.

In all fairness, PayPal is suffering from age, scale, and bureaucracy. Stripe has youthful hustle and interest on their side. They’re playing to PayPal’s weakness with great customer service. But, the real test is over time. Stripe may find it difficult to provide such stellar customer service as they no doubt will grow exponentially. Hopefully we’re all still raving about their superior customer service five years from now.

Competition is good

So, I choose Stripe. It’s makes everything we do easier. Just having necessary and professional support at the ready is worth it to me.  With that being said, PayPal has taken significant steps to respond to their new competition like Stripe, and has already improved their API. I am interested in seeing how these two evolve and compete over the next few years. In the end, we will all enjoy better service all around because of their competition.

Comments are closed.