Stripe vs PayPal: Which One to Use?

Last modified on October 14th, 2021

Stripe and Paypal are the two most common online payment solutions in the world. However, PayPal is not optimised for recurring payments. For a long time, Subbly chose Stripe as the only payment processor. It was not until February 9th, 2020 that Subbly began to support PayPal.

Most existing Subbly users are already accustomed to Stripe, yet since we launched our integration, more and more have become curious as to whether or not switching to PayPal might be worth considering. For new users, the choice is about starting off on the right foot as they begin their eCommerce journey.

Whatever stage your subscription business is at, if you can’t decide whether Stripe or PayPal is the right choice, this guide is here to help.

Stripe vs PayPal: Comparison Table

ServiceStripePayPal
Fee per domestic transaction2.9% + 30¢/20p2.9% + 30¢/20p
Fee per international transaction🏆3.9% + 30¢4.4% + 30¢
Chargeback fee🏆$15$20
Micropayments (<$10)2.9% + 30¢🏆5% + 5¢
Subbly service fee🏆1%1.25%
Data portability🏆YesNo
Access to funds2 days🏆Instant
Account freeze risk🏆NoYes
User experience & conversion🏆Seamless experienceSeparate page
Customer support🏆 Email, help center, 24/7 phone & chatEmail, help center, phone & chat

Integration Ease

Subbly handles the integration for both platforms, so you don’t need to worry about technical documentation, plugins or APIs. You can set up both of them in the Settings tab of your Subbly admin page. All you need is to have an account with either payment service and log into it directly.

🏆 Winner: Subbly

Tariffs

There are no set up or service fees. Both services charge you for transactions.

🏆 Winner: Draw

Transaction Fee

Transaction fees are the same for most countries, e.g. US, Canada or the UK, where fees are 2.9% + 30¢ /20p. However, in countries like Ireland, New Zealand or Spain, Stripe and PayPal collect 2.9% and 3.4% respectively. 

See detailed pricing for your country on Stripe & PayPal’s own pricing pages.

🏆 Winner: Stripe


International Transactions

If your customer is from another country, or their card is issued by another country’s bank, you will be charged extra. In the United States PayPal’s fee is 1.5%, which makes the total per transaction 4.4% + 30¢. Stripe is more friendly regarding international transactions and takes 1%, coming to a total of 3.9% + 30¢.

🏆 Winner: Stripe

Refunds

Neither Stripe nor PayPal refunds the transaction fee when you are refunding your customers.

🏆 Winner: Draw


Chargebacks

These are when a customer can dispute a transaction and cancel the payment with their bank. Chargebacks are a typical anti-fraud system present in most banks throughout the world. When a chargeback occurs, you will be charged with additional fees by the payment platform — $15 on Stripe and $20 on PayPal. Occasionally, chargebacks are falsely initiated by unscrupulous customers. To combat this, Stripe launched their amazing Radar feature, which helps to avoid 98% of scams for just 5¢ per transaction.

🏆 Winner: Stripe

Micropayments

If the transaction amount is less than $10, PayPal’s fee is 5% + 5¢, though Stripe stays the same at 2.9% + 30¢. While it might seem that PayPal’s tariff is higher, if we do the math, we actually see that for a $10 transaction, you will be charged 55¢ by PayPal and 59¢ by Stripe. The smaller the transaction, the bigger the difference. 

🏆 Winner: PayPal

Subbly Service Fee

As Stripe is designed for recurring payments, it is more straightforward to support this integration compared to PayPal. Subbly’s transaction fee is 1% for Stripe and 1.25% for PayPal. 

🏆 Winner: Stripe


Access To Funds

Stripe offers two options to withdraw money to your bank account: you can either wait 2 days and pay nothing, or receive your money immediately for a 1% fee. The benefit of PayPal is that money from your sales arrives directly in your PayPal account and you can spend it as you wish. However, if you want to withdraw money to your bank account, it typically takes 2-4 days.

🏆 Winner: PayPal 

Security

Both Stripe and PayPal provide top-notch security and are fully PCI compliant, meaning your card data is stored securely.

🏆 Winner: Draw

Data Portability

Another important point is data portability. In the event that you decide to change your payment provider, you will be able to export all your customer data from Stripe. PayPal doesn’t provide such an opportunity.

🏆 Winner: Stripe

Account Freeze Risk

There are plenty of stories on the internet about how PayPal freezes accounts and transactions. Sometimes this occurs due to false positives triggering their anti-fraud protection, sometimes because of fluctuating amounts of income, but based on most negative feedback, this happens randomly. With bans lasting 180 days, it can be a real threat to a thriving business. 

However, over 7 years of integration with Stripe, not a single Subbly user has had a similar problem. 

🏆 Winner: Stripe

User experience and conversion

A customer’s experience during the checkout process significantly affects your conversion rate, and in this context, there is one crucial difference between Stripe and PayPal. Stripe transactions are processed directly through Subbly’s secure checkout page, which features a seamlessly embedded form for payment card details. On the other hand, PayPal requires opening a separate webpage and login, which is clunkier and more time-consuming for a potential customer, with a higher probability of checkout dropoff.

We have found that adding PayPal doesn’t actually increase conversions, on top of having a more difficult API framework, the ability to freeze funds, and a bias towards the customer, not the vendor. Some PayPal users have claimed otherwise, however upon further inspection, it was found that these extra conversions consisted of customers who were ready to buy anyway.

🏆 Winner: Stripe

Summary:

Both Stripe and PayPal are the top online payment solutions on the market. They are secure and provide an easy way to sell online without worrying about transaction security and reliability. However, based on the overall results of our comparison, Stripe is the winner.