Stripe vs. Paypal: What’s the Difference?
Written by
John Csiszar
Edited by
Emily Gadd
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Stripe and Paypal are two popular payment services. They both have web-based and app-based functionality and are used by both businesses and individuals.
But their greatest strengths lie in their processing of business payments. Although either can get the job done for many businesses, the way they operate is different enough that certain companies might prefer one over the other. Here’s a look at the ins-and-outs of both Stripe and Paypal so that you can choose the option that makes the most sense for you.
Paypal’s History
Paypal was founded in 1998, making it one of the original companies in the online payment space. As Paypal describes things, in 1998, “money” meant “paper and coins,” and their mandate was to change that.
As of year-end 2023, the company had certainly succeeded, as it had:
- 426 million active consumer and merchant accounts
- $1.53 trillion in payment volume
- 25 billion payment transactions
- 27, 200 employees
Paypal is also the owner of popular payments company Venmo. The company trades on the New York Stock Exchange under the symbol PYPL and has a market capitalization of $74.753 billion.
Stripe’s History
Stripe, on the other hand, is something of the “new kid on the block,” and it remains in private hands. Founded in 2010, the company is said to be among the largest private tech companies in existence, with a valuation of approximately $70 billion.
Founding brothers John and Patrick Collison said that the company reached $1 trillion in payment volume in 2023, up 25% over the prior year. That means the company is rapidly gaining on the payment volume of competitor PayPal.
Pros and Cons of Stripe
No payment solution is right for every solution, including Stripe. Here are Stripe’s main pros and cons:
Pros
- Simple to use and set up
- Wide variety of customizable options
- Accepts broad range of currencies
- Customizable
- Generally lower fees than Paypal
Cons
- Can require advanced coding to get the most out of it
Pros and Cons of Paypal
Just as with Stripe, Paypal has its own strengths and weaknesses, including the following:
Pros
- Easy to set up
- Available in more than 200 countries
- Offers free online invoicing
- Offers personal money transfers and acts as a digital wallet
Cons
- Can have higher fees than Stripe
- Not as merchant-friendly as Stripe
Stripe Overview
Stripe’s business model is centered around allowing businesses to accept payments more easily. To that end, it tailors its products towards processing payments for merchants for both in-person and online transactions.
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Its fees are competitive and in many cases more affordable than with Paypal, one of its prime competitors. You can see an overview of Stripe’s rates and fees and how they compare with Paypal in the table below.
PayPal Overview
Paypal originated as a person-to-person money transfer service, and it still excels in that capacity. It also functions as a digital wallet to make purchases easier for individuals. Plus, it offers cash back from various vendors if you use the app to make purchases.
As the company evolved, it got into merchant processing as well, and it’s been doing it for longer than Stripe has, with a broader reach in terms of currencies and countries. But you may have to pay slightly higher fees as a merchant for using it. Check out the table below for the comparison of costs for both Paypal and Stripe.
Transaction Fees for Stripe vs. Paypal
Here’s a comparison of the fees charged by both Stripe and Paypal:
| Stripe | Paypal | |
|---|---|---|
| Swipe fees | 2.9% + $0.30 per charge for domestic cards | 3.49% + $0.49 for USD transactions (will vary by currency) |
| Keyed transaction fees | 2.9% + $0.30 per charge for domestic cards | 3.49% + $0.15 for USD transactions (will vary by currency) |
| Chargeback fees | $15 | $20 |
| International fees | 1% on USD payments with a minimum $5 fee | 1.5% + $0.49 for USD transactions (will vary by currency) |
| Point-of-sale transaction fees | 2.7% + $0.05 for domestic cards (+1% for international cards) | 2.29% + $0.09 for card-present transactions, 3.49% + $0.09 for manual entry [91] |
| Cost of card readers | $59 | $29 |
| Cost of terminal | $249 | $199 |
| Invoicing | 0.4% per paid invoice | 3.49% + $0.49 (Paypal transactions), 2.99% + $0.49 (cards and alternative payment methods) |
Information is accurate as of Sept. 19, 2024.
