For some professionals, making an international payment is just another thing to do in the weekly routine.
If you will soon need to make international payments and don’t know which platform best suits you, this guide will help you see the differences between the two primary service providers: Stripe and PayPal.
Stripe vs PayPal
PayPal and Stripe are two services with similar purposes. Both of them let people send and receive money through the internet no matter where they live.
With PayPal, you don’t need a bank account to start receiving payments. Of course, if you want to use your money to pay for things at large retailers or small shops across your country, you will need to withdraw the money to your bank account.
Both platforms also work as means for you to receive from services such as WordPress (when you make money through AdSense) and Twitch (if you are an affiliate/partner streamer or receive donations), as well as many other platforms.
Stripe is less popular than PayPal because it is a newer option and works quite differently in some key aspects which we will examine later.
However, eCommerce is helping the platform grow, and the quality of Stripe has been noted by users all across the world.
Tech geeks love Stripe because it is customizable. The platform offers development tools that let different users with varied purposes tweak their accounts to best serve the type of business they are running.
Right now, Stripe is very popular among brands such as Pinterest, Lyft, Blue Apron, and TaskRabbit.
If you are starting a small business and need an option to deal with online payments, Stripe might be the payment platform for you.
What Defines PayPal?
PayPal is perhaps the largest and most popular, well-known platform for online payments.
None of this is undue, as PayPal makes international payments seem very simple, and they process orders on the same day no matter what.
Not all gigantic services count with PayPal to let users make payments, but many do. For people outside the USA who sometimes buy online services based on the country, PayPal helps them make purchases with their local credit or debit cards.
As of now, also many professional freelancers (artists, writers, designers, musicians, etc.) receive through PayPal from clients all over the world. PayPal makes working and getting paid for it democratic and accessible, thus setting the bar very high for services that want to compete with it.
For many people, fees are a defining factor for picking one service over another. Especially if the services are so similar that the only difference is truly the fees. Fortunately, both Stripe and PayPal are fairly transparent regarding fees, so it is easy for us to investigate them. Check below.
There are many types of fees to be covered, so let’s start with the basics. Per each transaction within the US, Stripe will charge you a base fee of 2.9% + 30¢. Fees can get lower, though, if you receive a minimum of $80,000 per month.
Besides the base fee, other factors can impact the total charged for one single transaction:
- credit card payments
- converting currencies
PayPal has the same base fee as Stripe, but it can go higher due to what the service considers when calculating the total fee. Let’s take a look at what will impact the fees of a single transaction on PayPal:
- U.S. or international (4.4% fee for transactions originated outside the U.S.)
- Larger payments or micropayments (micropayments incur a fee of 5% + .05¢ per transaction)
- Online, mobile, or in-store
- Profit or non-profit
- Virtual Terminal to collect payments by phone
- Hosted, embedded, or customized checkout
- Recurring billing. Read Stripe Vs PayPal For Recurring Payments.
- Currency conversion
- Chargebacks ($20 fee compared to Stripe’s $15)
- American Mobile card reader transactions
- Express payments
Very few things impact the total fees you will pay for using Stripe, against a plentitude of factors on PayPal that can make fees go very high. That way, Stripe offers potentially lower fees for clients.
Read Stripe Vs Wave.
Countries and Currencies
Unfortunately, Stripe is only available for 44 countries right now. However, they are expanding their support as fast as they can. If you research info about Stripe on only a few months older posts online, you will see “Stripe supports 35 countries”. The service is putting its effort into being accessible. This can be better visualized by their currency support: right now, over 135 currencies can be traded through Stripe.
Since PayPal is a much older service, it is available for over 200 countries, making it a widely regarded payment option. On the other hand, though, PayPal only deals with 25 different currencies. This way, countries that do not use any of the available currencies need to deal with trading fees all the time.
Stripe wins in currencies available, but PayPal wins in availability worldwide. At the end of the day, it all boils down to how broad you want to offer services online and what other features are more convenient for you.
Stripe is very supportive of clients, offering several ways for them to get in touch. First of all, you can contact the help center. Other options include social media, support channels, and the already classic phone and email troubleshooting.
Beyond all that, Stripe also offers premium support. Of course, this is directed at premium members.
One would expect PayPal to have better support due to its magnitude. However, online reviews of the support offered by both companies vary from poor to kind of good. This is a tie, then, but not a very good one.
Ease of Use
Here, there is no use separating headings. Both companies offer very intuitive interfaces. Stripe, being a newer enterprise, looks shinier and more beautiful, but that is only a gimmick in the end. What matters is how easy and quick you can see your funds, send them or withdraw. Both services only help you get things done quickly.
Both platforms are easy to use. Stripe only looks more modern.
Also read Stripe vs Wise.
When looking for online payment services, you need to check if they comply with the standards set by the Payment Card Industry. In the case of Stripe and PayPal, both meet those standards, meaning that they are safe.
Storing and Transferring Funds
When you receive through Stripe, your money reaches the bank within 2 days. PayPal, on the other hand, receives your money immediately and keeps it. To send from PayPal to your bank account takes between 2 and four days. On business days, however, the process usually takes a few hours.
PayPal is a better option since you can choose to retain your money at the platform. This is useful since you can divide your total funds between your bank account and PayPal account to make future purchases online without touching your credit card (this way, you protect your credit score).
Invoicing is sometimes the quickest way of getting a payment. Both Stripe and PayPal make the process very quick. However, after you bill $1 million, you start to be charged.
Both platforms have good invoicing options.
What are other options for international payment?
Formerly known as TransferWise, Wise is an excellent online platform that helps people across the world make transactions. You can choose the currency you are sending and the currency the other side will receive. This is excellent to trade between, say, Canada and Brazil.
The most attractive feature of Wise is its fees for international transactions. They are much lower than PayPal’s.
Wise lets you set a bank account where the money received in a certain currency will automatically go to. However, you can also retain the money received on the platform. To access such an option, you need to set up a wallet in that currency, which requires making the first deposit.
Skrill is one of the biggest alternatives to PayPal. Its merchant fees are significantly lower than PayPal’s, and any other transactions are free of charge.
If you don’t move your funds too much, however, you will have to pay a fee. Skrill charges $5 if you don’t use your account for 12 months.
Just like PayPal, Payoneer already operates in more than 200 countries.
However, things are a bit more complicated on Payoneer, thus making it less popular, but still, an option if it fits your purposes. The platform offers two types of accounts. One of them is free but only allows withdrawals directly into your bank account. To access more options, you need to acquire a prepaid card which costs $29,95 monthly. Moreover, local bank transfers are charged a fee of $1,50.
Stripe and PayPal are both incredible payment platforms, and each of them will be fit for different companies. If you plan to only do business within your country where you know Stripe is available, then the service seems like a great idea. PayPal, on the other hand, already has popular acclaim. Sometimes, it is easier for people to pay you with PayPal because they probably already have an account.
All in all, it is difficult to tell which service is the best for all people and all types of business. You should evaluate what you are seeking, if being able to customize the platform matters (Stripe has tools for that), which fees will be applied to your transactions, etc.