The new payment processor that is now being going viral is Stripe. Though Paypal is the most trusted brand and have been in the market for such a long time for processing payments online let us find and compare both the new and the old and find out which is better. Here you can test them through their five key categories: Transaction and service fees, Security, API, Data Portability, Customer Service and feel the difference or similarity and find out who would you opt to go for your payment processing.
1. Transaction and service fees
Stripe charge you a flat rate of 2.9% + CA$0.30 per successful charge as long as you’re doing under $1 million in volume per year. This rate varies country to country, but it’s always flat. They don’t disclose any special high volume rates. The base fee for PayPal is the same as Stripe, 2.9% + 30¢, but PayPal throws in some extra service fees that make things a bit more complicated. Let’s compare Stripe and PayPal’s fees:
|Transaction fees ||2.9% + 30¢||2.9% + 30¢|
|Charge cards from your website||$30 / month||Free|
|American Express||3.5%||Same flat rate|
|Micropayments (less than $10)||5% + .05¢||Same flat rate|
|Recurring Billing||$10 / month||Free|
|Advanced Fraud Protection||$10 / month||Free|
|Accept Apple Pay ©||Not available||Free|
Note that Stripe and Paypal transaction fees vary by country. PayPal Payments Pro allows you to provide a fully customized checkout experience on your site and includes Virtual Terminal. American Express fee is only charged for PayPal Payments Pro, PayPal Payments Advanced, and Virtual Terminal, which is required for certain features. Fixed fee portion of the original transaction fee (for example, the refund fee is $0.30 for domestic payments).
You’ll notice that PayPal fees are far more complex and nuanced. For example, they only charge extra for American Express when you’re on one of the paid plans, which seems a bit counterintuitive. In almost all cases, Stripe is the cheaper option because of lower service fees (unless you’re exclusively processing micropayments).
Also PayPal usually pays out within 1 business day. Stripe has rolling 7 day transfers in Canada and 2 day transfer for US and Australia (see the Stripe automatic transfer schedules). If fast access to your funds is important and you’re outside the United or Australia, keep this in mind.
2. Security with Stripe and PayPal
Secure transactions is what the customer looks for and both Stripe and PayPal take security seriously. At the core, they’re both very stable and secure platforms. At Stripe’s killer feature when they first launched was Stripe.js. When you use Stripe.js on your website, the credit card data entered into your payment form is never sent to your server. Instead, the data is sent directly to Stripe that automatically PCI compliant because you don’t handle any sensitive credit card data on your servers. Also it is more secure because a breach of your servers won’t result in any stolen credit card data.
You’re not tempted to store credit card data on your servers, which you really shouldn’t be doing unless you’re a big business and want to pay for PCI compliance.
If you follow the normal flow with Stripe, you’ll just automatically store your cards in their vault. You’ll never touch the sensitive data and this encourages good security.
PayPal now has a way to store cards in a vault, but it isn’t quite the same as Stripe.js. The sensitive card data still has to go through your server first, and this puts a big security burden (see PCI compliance above) on the software developer or the customer.
In summary, Stripe.js encourages good developer security practices, while PayPal gives developers room to make bad decisions. They’ve recently taken steps to provide better options, but these options still aren’t as secure as Stripe.js.
3. API in Stripe and PayPal
When Stripe first launched to the public, the Stripe API was a difference maker. It’s clean, well documented, and extremely easy to use. Payment processor APIs of the past were buggy, inconsistent, and poorly documented. In fact, PayPal was one of the worst offenders.
In a way, Stripe has forced PayPal to up its game. The documentation and organization of their new RESTful PayPal API is vastly improved and modeled after Stripe. This is an example of competition benefiting customers. Stripe has set a new standard for a clean and well documented API, and the rest of the industry (including PayPal) is rushing to catch up.
4. Data Portability with Stripe and PayPal
This is an area where PayPal falls flat on its face. Imagine you’ve built a successful membership site over the years, and you powered it with PayPal subscriptions. If you want to move to another payment processor (like Stripe), you can’t transfer that credit card data. PayPal simply won’t give it you. All your existing customers would have to sign up again and you’d probably lose some of them during the process.
Stripe on the other hand values data portability. If you decide to leave Stripe they’ll help you migrate your credit card data in a secure and PCI-Compliant way. This over accommodating stance on data portability is certainly worth noting. It’s refreshing to know you have a choice, and won’t be locked in forever.
5. Customer Service offered by Stripe and PayPal
This is also one important aspect that customer need to look for. Paypal has many stories relating to its unfriendly customer support. Also their response to many members have been very slow. There are also countless horror stories of PayPal freezing funds for no reason.
Stripe has open channels for email support, and they also have an IRC channel (#stripe on Freenode) where developers can chat and get live help from real engineers. This is invaluable if you’re working through a tough problem and need some live help. Stripe doesn’t yet have phone support, but they may have one soon for sure.
With Stripe as new payment processor with advanced features and on the other hand Paypal has slowly tried to improve, it is finally up you to decide which is better. Both are competitive now and time will soon tell which far reaches more to public.