As a nonprofit organization, you need a payment system to receive donations on your website., which means choosing between different providers with various functionalities and fee structures.
Now, if you’re reading this post, you’ve probably narrowed down your options to Stripe and PayPal — the two most popular payment processors in the US.
But which one is better for a nonprofit? In this post, we’ll compare them to help you make a more informed decision.
If you manage a small business, check Stripe Vs. PayPal For Small Businesses.
What Is PayPal All About?
PayPal, founded in 1998, is one of the most recognized payment providers in the world. Its primary business is letting users send and receive payments online. As of June 2021, PayPal has more than 300 million users in more than 200 countries.
The company offers various payment methods such as instant transfer, eCheck, PayPal balance, and credit card.
Besides online payments, PayPal offers services like contactless payments via its mobile app and debit card for online and real-world usage. In 2020, the company started to provide services in the cryptocurrency space.
What Is Stripe All About?
Stripe is a San Francisco-based company offering a set of payment APIs that everyone from freelancers to small businesses, nonprofits, and online stores can use to accept and process payments.
Stripe platform is known for its flat-rate fees and highly customizable features. It’s also one of the best options for international payments.
Stripe offers services other than payments, too. Stripe Sigma is a customizable data analytics tool. With Stripe Issuing, you can create physical and virtual cards right away.
Although founded in 2010, Stripe is PayPal’s biggest competitor.
Comparing Stripe and PayPal
|Transaction Fee||2.9% + $0.30||2.9% + $0.30|
|Transaction Fee for Nonprofits||2.2% + $0.30||2.2% + $0.30 for monthly transactions less than $100,0001.9% + $0.30 for monthly transactions more than $100,000|
|Funds Access||After 2 Days||Instant Access|
|Availability||40+ Countries,135+ Currencies||200+ Countries,25 Currencies|
|Early Termination Fee||None||None|
Pricing and Fees
The most important item on the list for many of us is pricing. To really decide about pricing, you should consider many factors, including upfront costs, pricing model, transaction fees, monthly fees, and early termination fees.
Fortunately, Stripe and PayPal are very similar in these factors.
Both have no upfront costs and offer a pay-as-you-go model without forcing you to sign a contract.
Plus, you won’t pay any early termination fees, so you won’t be stuck with a contract you don’t like. And you don’t have to pay monthly fees for standard products on either platform.
The only significant difference here is in the transaction fees. The normal transaction fee on Stripe and PayPal is 2.9% + $0.30.
But if your organization is a verified 501(c)(3) charity on Stripe, you’ll pay 2.2% + $0.30 for every transaction.
On PayPal, if your monthly transaction volume is less than $100,000, you’ll pay 2.2% + $0.30 for each transaction. But if you exceed $100,000, you’ll only pay 1.9% + $0.30.
If your nonprofit’s monthly transactions are worth less than $100,000, PayPal and Stripe are the same for you in terms of fees. But if you often exceed the $100,000 threshold, PayPal is a better option.
Consider using free software like Wave. We wrote a full comparison between Stripe and Wave.
Another significant aspect is how simple and convenient it is to set up and operate these platforms.
Both PayPal and Stripe are very easy to use. And PayPal is easy to set up, too. You can sign up for a business account on the PayPal website. It only takes 15 minutes.
But with Stripe, you have more customizable features and options. And with more options comes added complexity. You need a bit of technical knowledge to leverage Stripe’s more specialized tools.
When it comes to ease of use, if you care about customizability, Stripe is better for you. But if you want to keep it simple, we recommend PayPal.
If the payments you are receiving are small, check Stripe Vs PayPal For Micropayments.
Other Differences Between Stripe and PayPal
Here are some other aspects you should consider:
Availability is a key factor for international nonprofits. PayPal is available in more than 200 countries, while Stripe is only available in 46.
Conversely, PayPal is only available in 25 currencies, while Stripe is available in more than 135.
Someday you might want to end your relationship with PayPal or Stripe and go to another payment processor. In this situation, data portability matters.
PayPal has a strict policy towards data portability. It doesn’t allow you to transfer credit card data.
But Stripe helps you to export your card data securely. For data protected under PCI regulations, you should ask Stripe to make the transfer. For other data like payment history, you can do it yourself through your Dashboard.
Both Stripe and PayPal offer very good customer service. You can get support from both platforms through help center, email, live chat, social media, and phone calls.
With PayPal, you can get help through a community forum, too. Stripe also offers a special chat service for developers.
Winner: It’s a tie.
You should consider that Stripe is not a household name like PayPal. Northstar Research found that more than 75 percent of donors are willing to donate again if they could do it through PayPal and trust using PayPal on unknown websites.
How to Apply For Fee Discounts For Nonprofit Organizations
Organizations registered under section 501(c)(3) of the Internal Revenue Code are eligible to receive Stripe and PayPal fee discounts.
To apply for this status on Stripe, at least 80% of your transactions on Stripe should be donations.
If you meet this condition, you need to provide some information like your EIN. You can go to this page on Stripe’s website to see what you should do.
To apply on PayPal, you need to provide documents like a preprinted bank statement or voided check from your bank account, your organization’s EIN, address, and contact information, and your estimation of monthly donations. To find more information, see this page on PayPal’s website.
4 Alternatives to Stripe and PayPal For Nonprofits
|Transaction Fee||2.9% + $0.30||2.6% + $0.10||2.49% – 3.20% + $0.26||2.9% + $0.30|
|Additional Fees||1.5% platform fee||None||None||4.9% platform fee|
|Availability||44 countries||US, Canada, Japan, Australia, and the UK||40+ countries||US, Canada, Australia, France, Mexico, and the UK|
|Special Characteristic||Security and encryption||Flat rate fees||Exclusivity||Affordability|
Donorbox is a payment processor specially designed to facilitate donations and seamlessly integrates with your website.
This platform has made it easy to accept recurring donations. Setting up a recurring donation system only takes 15 minutes.
On Donorbox, donors can manage their recurring donation plans. Read Stripe Vs PayPal For Recurring Payments.
Donorbox accepts payments via Apple Pay, Google Pay, PayPal, ACH, and SEPA bank transfers. It receives a 1.5% platform fee plus a processing fee for every transaction.
Square is mainly known for its mobile card readers. But it provides useful tools for nonprofits, too. Some benefits of Square include a flat rate fee, ease of use, and no hidden fees.
Square only offers services in five countries: the US, Canada, Japan, Australia, and the United Kingdom. Transaction fee on this platform is 2.6% + $0.10.
iATS Payments is a payment solution that exclusively offers its services to nonprofits.
The company’s mission is to provide an easier and more efficient way for nonprofits to process donations.
iATS Payments is available in more than 40 countries and receives 2.49% – 3.20% plus $0.26 for every transaction.
Fundly isn’t a payment processor per se, but it offers special tools for receiving donations. It has a user-friendly interface designed for fundraising and donating.
You can use Fundly services if you’re in the US, Canada, Australia, France, Mexico, or the United Kingdom. Fundly receives 2.9% + $0.30 and 4.9% platform fee.
Final Verdict: Which One Is Better for Nonprofits?
Stripe and PayPal are among the most popular and recognized payment processors. Deciding between these two is a difficult task. Let’s review their advantages over each other.
- Better pricing for monthly transaction volumes of more than $100,000.
- Easier to set up and use.
- Available in more countries.
- More recognition and trust among consumers.
- Higher customizability.
- Supporting more currencies.
- Better data portability.
For monthly transaction volumes of less than $100,000, their prices are the same. Other similar aspects include pricing model, upfront costs, and customer support.
So, it’s up to you to decide which one is more compatible with your organization’s needs and preferences.
You can also use other platforms like Donorbox, Square, iATS Payments, Fundly, or many other platforms that provide specialized services to nonprofits. Note that these services charge you a platform or subscription fee for their additional features.
If you live in Canada, read our comparison of PayPal and Stripe in Canada.