
PayPal vs. Stripe for small businesses in 2019 - mherrmann
https://fman.io/blog/paypal-vs-stripe-for-small-businesses-in-2019/
======
EB-Barrington
Basing these comments purely on the credit-card processing side of things:

Context - small business, using PayPal for almost five years, large
transaction values, small transaction volumes, global dispersion of customers,
multiple currencies.

1\. PayPal works (mostly) without issue for customers from a wide geographic
region (my customers are from many countries all over the world).

2\. The exchange rates offered via PayPal are TERRIBLE. Several percentage
points, on top of the several percentage points initial processing fee. Either
the business, or the customer, is paying for these bad exchange rates
(dependent upon the source/destination of funds). This can be an additional
five percent.

3\. Customer service from PayPal is lacking, but in the case of disputes,
things have worked out in the way I would logically expect, around 99% of the
time. In the other 1%, PayPal refunded the money, I have never lost anything
(neither have my customers) due to disputes.

4\. STRIPE has categorized my business as high-risk, and therefore won't offer
me their services. I won't specify my business type here - I can safely guess
there is nobody on this planet that would consider my business type "high-
risk".

Some of the categories of what constitutes a high-risk business are obvious -
gambling, porn, etc etc, other categories make no sense at all. (I have never
had a single disputed charge in four years of operation)

Semi-regularly, I search and compare cc-processing alternatives. Mostly, due
to the currency exchange fees, poor customer service, and stories of PayPal
accounts being frozen/locked due to spurious reasons.

I consider PayPal the best of the worst choices.

~~~
kalleboo
At a previous job we also used PayPal. We tried switching to a traditional
credit card processor, which was a nightmare.

We had a seasonal business that processed sales of $1 million+ revenue in a
week, once a year. Around 60% of sales were international. This combination
was like kryptonite to card processors. We finally got accepted by one, the
fees weren't much better than PayPal. It was amusing seeing TFA describe
PayPal's API as "a horrible experience" after having implemented that
traditional processor's API.

We ended up going back to PayPal after one season.

Although in the end, our decade-old business was killed by relying on PayPal's
fraud detection. We got hit by a flood of China IP-sourced carders and the
chargebacks ruined us. This can happen with any traditional card processor as
well, it was really on us for being too naive (and being spared from fraud in
the past decade)

~~~
hn_throwaway_99
Did you have significant legitimate China business? These days it's probably
not as effective a technique, but back in the mid 00s we ended up just banning
entire countries at my company because well over 50% of transactions from
those countries ended up being fraudulent.

~~~
kalleboo
We did end up banning China, but there such a delay between the transactions
and the chargebacks that it was too late. We also tried preemptively refunding
suspicious charges, but you get hit with the chargeback fee regardless.

------
kabes
I think Stripe might soon offer payments through Paypal in some way. A few
weeks ago I tried their new PaymentIntents api. I forgot to give a valid
payment method in the request and it returned me an error stating I need one
of following payment methods:

    
    
      card_present, card_present_single_message, ach_credit_transfer, ach_debit, acss_debit, alipay, bacs_debit, bancontact, chf_credit_transfer, eps, giropay, klarna, multibanco, p24, paper_check, paypal, sepa_credit_transfer, sofort, wechat, or card
    

Note that this list includes paypal!

I asked them why that list included paypal and how that would work. They
replied it was a mistake and it has since been removed from the error. But
this tells me that internally they're working on paypal integration.

~~~
TrickyRick
Or they have done at some point, scrapped it and forgot to remove it from an
enum used in an error message. I wouldn't hold my breath.

~~~
MuffinFlavored
How do PayPal/Stripe move money around?

Meaning, are they integrated directly with Mastercard/Visa/banks or do they
use a First Data/TSYS/FiServ?

~~~
pmart123
I believe the rely on the underlying network of Mastercard, Visa and Amex.
Fiserv is more on the ACH side.

~~~
MuffinFlavored
How does the money actually exchange hands though? Like, your business wants
to charge my Mastercard $100. Who moves the money from the mainframe on my
bank? I don't think Stripe is integrated with every bank in America?

~~~
pmart123
The card network handles this I believe. I've never worked in payments, but I
have spent some time analyzing the space for investments. As far as my
knowledge with regards to online payments, the merchant gateway talks with the
merchant acquirer/payment processor, the acquiring bank then pays the
merchant, and the acquiring bank sends a request to authorize and settle the
transaction through the card network, which talks to the consumer's
bank/digital wallet. Stripe in this case is the merchant gateway and acquirer.
If PayPal is used, ACH replaces the credit card network.

~~~
MuffinFlavored
> card network

> merchant gateway

> merchant acquirer/payment processor

> acquiring bank

so, since no merchants integrate directly with Mastercard/Visa (it would seem
that's just not the business model of the industry. I'd also gamble it isn't
possible because if you're a mom and pop shop, Mastercard does not care for
you to integrate directly with them), they are going through
networks/gateways, which would be TSYS/FiServ/First Data, yes?

I'm just trying to picture a world where payment processor fees are lower
because instead of PoS systems for businesses connecting to gateways/middlemen
who need to take a cut and hike the rate up, they connect directly to the card
network/the underlying bank.

But, it sounds like a service like that would be exactly the middlemen I'm
describing, who need to take a cut of the fees :P

------
IvanK_net
I run an online Photo editor
[https://www.Photopea.com](https://www.Photopea.com) , where users can pay to
get a Premium account. Everything goes through PayPal and users seem to be
happy.

But PayPal has quite large fees. From a 9 USD payment, they take like 10%.
Also, if you are not from the US (I am not from the US), you can only withdraw
money in your local currency, and PayPal has quite bad conversion rates (you
lose 2-3% again).

I am still wondering, that after so many years, no big company (Google,
Facebook, Apple) came up with their competitor to PayPal (everybody would
switch to them, if they had lower fees).

~~~
dgudkov
>you can only withdraw money in your local currency, and PayPal has quite bad
conversion rates (you lose 2-3% again).

Someone on HN recommended TransferWise for that purpose. I tried it and it
works well: PayPal can transfer to TransferWise and then from TransferWise
money can be withdrawn in local currency with a very fair exchange rate close
to real-time Forex.

Disclaimer: I'm not affiliated with TransferWise in any sense.

~~~
IvanK_net
I used TransferWise many times and I am extremely happy with it. I have the
USD account in the US through TransferWise.

The problem is, that my PayPal does not let me withdraw money to my US
account, as I am not the US citizen.

------
yani
Been offering credit cards, paypal, and bitcoin payment options to my
customers. Bitcoin is horrible. 1 or 2 transactions per month - not worth the
investment it is just a hype for ecommerce. Paypal vs credit card is
completely different story. On my end I get 60% of all payments made via
PayPal. In general, if you are not offering PayPal as a checkout option then
you are probably missing 10 to 15% of potential sales.

~~~
Cerium
Same story here. I started with stripe, and constantly got emails asking to
add PayPal. I get about the same rate of PayPal vs stripe.

------
fabricexpert
I see similar results on an ecommerce site. PayPal's UX (login, click buy) is
a better experience over entering a 16 digit credit card, expiry date, csv &
address. It's one or two clicks and payment is done.

It's unfortunate but people will always choose the easiest way irrespective of
the costs to the merchant. It would be interesting to see what happens if you
charge 2% more for PayPal (or whatever the difference in fees are / amount you
need to cover the costs/risk of working with PayPal). I suspect checkout
conversions would drop.

~~~
onion2k
_PayPal 's UX (login, click buy) is a better experience over entering a 16
digit credit card, expiry date, csv & address._

You're comparing the UX for a customer _who already has a credit card
registered to a Paypal account_ with the UX of a user who doesn't have a
credit card registered with Stripe. _If_ your customer has a Paypal account
with a registered card the UX is better. If they don't then Stripe is much
nicer because you'd need to include the Paypal sign up process in your UX and
that's horrible.

Plus Stripe offers the same benefit of remembering the customer's card details
for subsequent purchases ([https://stripe.com/docs/saving-
cards](https://stripe.com/docs/saving-cards)).

~~~
patja
Paypal will happily process credit card charges without needing the customer
to have a Paypal account. They call it DirectPay

~~~
onion2k
Of course, and in that case as the user has to enter their credit card details
DirectPay's UX is more comparable to Stripe. In my opinion Stripe is
preferable in that situation as it's just looks much better, and has
friendlier language around it.

------
vbsteven
I've done a lot of checkout integrations and The Stripe API is orders of
magnitude easier to integrate than the PayPal API. As the author suggests
PayPal might be more popular because not everyone has a creditcard. Another
factor that helps PayPal is that you don't need to have your card at hand to
make the payment, if your account is active, the only thing you have to do is
click "next" 2 times and you're done.

Shameless plug related to this post: I'm integrating both Stripe and PayPal in
my software licensing SaaS product where I intend to provide the nuts and
bolts related to accepting payments and handing out and validating the license
keys for a standalone software product. It's still a Work in Progress, the
landing page can be found on [https://license.io](https://license.io)

~~~
cmg
I agree that Stripe is significantly easier to integrate than PayPal, but
Braintree has options for both credit card and PayPal integrations (because
they're owned by PayPal) and also has a very nice API.

(I'm not affiliated with either, but I've used both.)

~~~
watchdogtimer
+1 for Braintree. We have used several different payment providers over the
years, including PayPal alone. We switched to Braintree back when they were
offering $50K in free payment transactions.

The payment integration was straightforward, and getting built-in support for
PayPal (which accounts for 16% of our sales) and the ability to safely vault
payment methods made it a no-brainer.

~~~
ksec
My only concern is Braintree is more expensive. Stripe doesn't change any
additional percentage for non local currency while Braintree charges
additional 1%.

------
jonathanstrange
Aren't there many other alternatives, too? Admittedly, I'm a bit out of the
loop. When _Kagi_ [1] changed their payment structure to discourage small
prices, I started using _Fastspring_ [2] for many years for an old shareware
project. It works very well. However, I have almost zero sales now so there is
not much to work with.

Funny story: Just a few weeks ago, a a guy from Fastspring called me up in
Portugal on my landline phone. His accent was Australian or NZ, so I had
troubles understanding him and I also suspected a phone scam first. He turned
out to be a very nice person, he was interested in my business, how they could
help us grow, and about the Lisbon developer scene in general. I had to tell
him that I don't know anything about it, but I did mention Y Combinator and
the local government's efforts to attract startup companies. I also had to
explain the nature of my 'business' to him - that it's no longer a business,
only shareware maintained for existing customers. No idea what the real
purpose of the call was, but it was a nice chat and I was positively impressed
by Fastspring's customer service.

[1] I remember fondly the cheques I got from "Walnut Creek" and how I had to
move to Citibank because my local bank treated me like a suspected criminal
because of them. Sadly, I've just learned that they shut down in 2016:
[https://tidbits.com/2016/08/04/kagi-shuts-down-after-
falling...](https://tidbits.com/2016/08/04/kagi-shuts-down-after-falling-prey-
to-fraud/)

[2] [https://fastspring.com/](https://fastspring.com/)

~~~
Crinus
I remember people from Fastspring and BMTmicro being very active in the indie
game development forum i was participating at (i think the BMTmicro guy was
actually the owner, not sure about the Fastspring guy). That was around 7-8
years ago, but still left me a positive impression for both companies
especially since they weren't just bullshitting to appear "involved" in the
community, but actually participating in the discussions with useful comments.

------
eps
> _PayPal 's APIs are extremely difficult to use_

This is simply not true.

It took us less than one man/day to custom-wrap their REST API via libcurl to
add PayPal as an alternative to Stripe. I don't know how else to put it, but
it's just really dead simple.

Their own libraries are complete junk though... or at least they used to be
few years back.

~~~
mherrmann
Have you seen the post I linked to in that sentence?
[https://fman.io/blog/paypal-for-
saas-99-problems/](https://fman.io/blog/paypal-for-saas-99-problems/)

~~~
eps
Yes, I skimmed through it.

------
fastball
I was looking into payment processors the other day and came across Paddle[0],
which seems to tick a lot of boxes that make things easier for small
businesses that don't have much of a sales team, such as handling any payment
disputes for you and follow up with near-missed conversions.

They also automatically remit local taxes, for small businesses that want to
operate globally.

But I have not actually used them. Can anyone else chime in with actual usage
experience of Paddle?

0: [https://paddle.com/](https://paddle.com/)

~~~
charlesdm
I've used Paddle to handle sales of my $25 macOS desktop app, by integrating
their macOS SDK + using website integration. Works great, easy to integrate,
good admin panel, straightforward to receive payouts. And as an EU business
they handle all of the VAT stuff for me (awesome!) -- no VAT MOSS mess. You
have a direct B2B relationship with them, where they give you reverse invoices
your accountant can book in. Support is also friendly, helpful and very
responsive.

In short: would recommend. In my opinion fees are reasonable for the service
they supply, and I'm sure they would reduce them if you sell more than say
$10k/mo through their platform.

I just knew I wasn't interested in building a complete billing system for 5% +
$0.50 per sale, when Apple takes 30% on each sale. They also have affiliate
support, which is interesting. But the $0.50 fee might be a bit steep if
you're selling a product < $10 -- worth reaching out to them about that.

------
photonios
What about Braintree [1]? Owned by Paypal, but supports credit card payments
directly and Paypal, Apple Pay and Google Pay.

There's also Adyen [2], used by Uber for example. Supports dozens of payment
methods.

[1] [https://www.braintreepayments.com/](https://www.braintreepayments.com/)
[2] [https://www.adyen.com/](https://www.adyen.com/)

------
idlewords
My experience running Pinboard (which offers Stripe and PayPal as payment
options) has been that PayPal is indispensable if you want to collect payments
from people outside the United States. There are also common situations where
Stripe doesn't work (for example, the customer only has one credit card and
it's declined) but PayPal does.

Stripe is far more pleasant to use and implement, but continue to see around
2/3 of my payments coming through PayPal.

------
bluepnume
I work on the client-side javascript SDK for PayPal (documented at
[https://developer.paypal.com/docs/checkout/](https://developer.paypal.com/docs/checkout/)).

We took Michael's feedback from his original article at
[https://fman.io/blog/paypal-for-
saas-99-problems/](https://fman.io/blog/paypal-for-saas-99-problems/) very
seriously. We're not all of the way there yet; but if anyone has any remaining
concerns about the integration, I'd be glad to take them onboard!

~~~
mherrmann
Humbled to hear you're taking my feedback serious. Thanks!

------
cjslep
PayPal still cannot get its UX right for people resident abroad when adding
cards. For example, their telephone number country picker determines the zip
code validation, not the country of the billing address. It was quite
frustrating and silly to discover.

------
bemmu
Another reason to prefer PayPal is that you often have to fill in less fields,
transferring your payment, email & shipping address is just a click vs.
filling out an entire form.

I recently changed the order form for Candy Japan to ask only the minimum
amount of information, and the difference is quite huge for PayPal vs. credit
card:
[https://www.candyjapan.com/subscribe](https://www.candyjapan.com/subscribe)

------
neeraga
We use PayPal and Stripe together.

People trust PayPal a lot more compared to Stripe. The dispute handling
process is something which is really good PayPal innovation.

With Stripe people only have option to chargeback incase of any issues.

------
rahuldighe
I am most certainly biased since I work at PayPal and am responsible for APIs
that you might end up using but I would without hesitation encourage any
small/medium size business to have a PayPal Checkout enabled - it doesn't take
much to put the PayPal button and you can see the results for yourself and be
the judge. For a broader question of credit card processing I think there are
quite a few comments already.

I completely empathize with some of the concerns around using our APIs and
more broadly around some of the operational policies, pricing etc. I cannot
claim to speak for all of it but since the last 2 years we have been paying
serious attention to how we can surface our capabilities in a way that's more
understandable, approachable and meaningful to developers.

[https://medium.com/paypal-engineering/launch-v2-paypal-
check...](https://medium.com/paypal-engineering/launch-v2-paypal-checkout-
apis-45435398b987) is one of the first things we have launched and more
interesting stuff to follow.

~~~
bh1
Can you add a faster way to flag a suspicious transaction for review?
Currently we have to call support or send an email. It should be as simple as
issuing a refund.

------
gbersac
I have a small shopify store. Transaction fee for stripe is 2% of my turnover.
Paypal is 4%. Paypal is horribly expensive, but customer love it.

~~~
magduf
Do you sell really cheap products or something? Paypal's fees seem pretty
normal from what I've seen: the worst rate, for low-volume sellers, is 2.9% +
$0.30 per transaction. So if you're selling things that are only a few dollars
each, then those $0.30 fees are going to add up to a significant portion of
the product. How is Stripe better?

~~~
AnssiH
Maybe a different region?

Here (Finland) PayPal starts at 3.4% + €0.35 domestic, 4.4% + €0.35 US
customers.

Stripe is 1.4% + €0.25 EU, 2.9% + €0.25 non-EU cards.

------
proy24
Ny biggest beef with both services is that neither Paypal nor Stripe support
my Transferwise borderless account backend.

Also unpopular opinion - Transferwise for business is the most superior
solution for payments rn despite its shortcomings.

~~~
bogle
I'm a fan of Transferwise and recently opened a business account with them. It
was a very easy process, even compared to other UK challengers like Starling
(who aren't that great, really). They give you a SortCode and AccountNumber.
I'm very interested: what is missing for Stripe/PayPal integration?

~~~
proy24
Both these services require small deposit, automatic withdrawl for
verification purpose, transferwise account does not support the automatic
withdrawl part.

~~~
kentt
I assume you are correct about the automatic withdrawal, however I was able to
confirm my TransferWise account with PayPal just last week. PayPal deposited
the two small txns in the Transferwise borderless US account. It took a lot
longer than I expected, but it did work. I was able to withdraw from my PayPal
account into the the TransferWise Borderless account (no fees yay).

Hope that helps.

~~~
proy24
Must have been a recent development then, when I tried to link Paypal to
Transferwise back in January it didn't work, I called customer-care and got
them to manually add it then they again sent the verification amount which
they couldn't withdraw and once more blocked my account.

Same issue trying to add it as backend to Stripe, Shopify etc.

------
jiripospisil
> Supposedly, Braintree make it possible to integrate PayPal much more easily.

I've recently gone through that process for our startup
([https://sendingbee.com/](https://sendingbee.com/)) and I can attest to that.
Once both of your Braintree and PayPal accounts are set up, you just link the
PayPal account from the Braintree administration with a few clicks and it's
immediately available to customers (if you use the Braintree Drop-in
integration that is).

~~~
mherrmann
Is that also the case for subscriptions? Because (in my experience) that's
where the real pains of PayPal were.

~~~
jiripospisil
Yes. Once a user goes through the Dropin UI (which involves signing up to
their PayPal account), you get a "payment method nonce" which is then used as
a parameter when creating a subscription.

~~~
mherrmann
I see. Thanks :-)

------
mcv
I suppose for small businesses PayPal could work, but for an event I wouldn't
touch it with a 10 foot pole. I've read too many stories about accounts
getting frozen just as money started to come in, and with organisers not
having access to the money they needed, they had no option but to cancel the
event.

Apparently sudden increase in payment triggers PayPal's 'this might be
suspicious' flag, and once flagged, they apparently like to block until
they're sure that the customers are getting what they're signing up for. But
because they block the money, they're ensuring that customers are not going to
get what they signed up for.

Of course if PayPal as payment option brings in extra customers, you'd be
crazy not to accept it, but I wouldn't put all my eggs in that basket.

------
jay_kyburz
On a side note: Fman looks pretty cool, but has a long way to go before I
switch from my Total Commander!

~~~
Crinus
AFAIK Total Commander was fman's main motivation (IIRC the developer mentioned
that on the bootstrapers.io forum). It'll be interesting to see how it
evolves, but TBH i find Total Commander perfectly fine and i love how
lightweight it is (...compare win10 calc with tc...) while providing a ton of
features. And while i understand the (fman) author's point about lifetime
licensing, i still prefer TC's lifetime license.

~~~
kowdermeister
Agree, I'd miss lots of features even though it's a bit quirky at some points.

I made a dark theme for it:

    
    
        c:\Users\...\AppData\Roaming\GHISLER\wincmd.ini
    
        [Colors]
        InverseCursor=1
        ThemedCursor=0
        InverseSelection=0
        BackColor=2105376
        BackColor2=2763306
        ForeColor=12632256
        MarkColor=255
        CursorColor=1028084
        CursorText=-1
        ActiveTitleText=0

------
jermaustin1
Back in the day, before there was the beautifully simple Stripe, I had to
implement payments on Authorize.Net, which made PayPal's APIs look great. It
was cumbersome, ugly, they had libraries that weren't documented. I was on the
phone with their support multiple times in the week it took to implement. And
then after implementing it and pushing it to production, customers started
using credit card OVER PayPal, and within a month we were fielding over 10
charge backs per day. And within 2 months we abandoned taking credit cards all
together which alienated a subset of our customer base who lived in parts of
the world that PayPal doesn't allow accounts for.

------
home_project123
Do people periodically _withdraw_ all their pay-pal balance?

I can that doing this somehow flags you for further attention and increases
risk of blacklist. Sigh...

I keep hearing this horror stories about blocking the account, AND losing all
the balance. Which just seems bizarre.

~~~
kentt
I never leave any amount in my PayPal account that I'm not willing to lose.
I've been flagged before which I why I do it. I was flagged for having a surge
in sales, which was legitimate but meant I couldn't access my funds to service
the customers who were paying me.

------
WA
If you only have a few products with fixed prices, integrating PayPal is a
matter of defining a button for every product in their UI, copy the HTML form
that is generated next to the button and then submit a POST request to PayPal
to have the user start the PayPal checkout flow.

Stripe's new checkout system works similar. You define products in their UI
and submit a request with the according SKU. The advantage of PayPal is that
it requires zero JavaScript. It's just a POST request.

Of course, you need to listen to PayPal's IPNs to process a payment on the
server, but this is exactly the same effort as with Stripe.

------
josefresco
I service small businesses, and hook them up with payment processors on a
regular basis. Not once, over 19 years has any of my clients' customers
requested PayPal as a payment option (I've deployed over 100 ecommerce
solutions). This must be specific to software or global purchases (my clients
are in the US).

My advice always starts with the "easiest" which is PayPal. If they have
WooCommerce, I recommend Stripe, before Stripe existed the advice was to go
with Authorize.net.

~~~
graeme
I find PayPal works well if stripe declines a payment. I can direct customers
there.

The only customers I've had request it were a few international ones without
credit cards.

(Not saying stripe rejects more. It's just the default people use first)

------
jusob
I use both Paypal and Stripe on my website. I've had companies using Paypal to
pay $1,000 a couple of times. Both work fine for me. But dispute resolutions
are random with Paypal (never had any with Stripe). I just had a few on
Paypal: some where I gave no information and it was resolved in my favor,
other where I proved taht the customer made repeat payments from the same IP
address but Paypal decided one payment was not actually done by the customer.

------
Crinus
Since this is essentially a shareware product, wouldn't some service that
handles all those options for you be better, like BMTmicro and Fastspring?

These also handle hairy stuff like VAT MOSS for EU customers that -AFAIK-
Paypal doesn't handle for you and you have to it yourself.

------
m3nu
Also using both. First more people used Paypal. Since emphasizing that credit
cards are processed by Stripe, way more people use that. Maybe 75%.

Converting and withdrawing is very expensive. Better to use the funds to pay
for other services.

------
vatotemking
Its 2019 and Stripe still does not work here in the Philippines (merchant
accnt not supported)!

~~~
edwinwee
Working on it! Put your email in
[https://stripe.com/global#PH](https://stripe.com/global#PH) and we'll let you
know when we start going live.

~~~
vatotemking
Oh please do! The online retail market here is huge and is still growing as
more and more people are getting comfortable with online transactions.

------
p0nce
Use both! Customer use Paypal and Stripe 50/50 here.

~~~
bogle
If you only offered one do you think you'd see a drop off in sales? If you
have the volume, would you risk an A/B test to confirm the loss in sales
versus the loss in fees? I'm guessing, from other comments, that many
customers prefer PayPal _when it 's available_.

~~~
p0nce
Yes. No. I think yes, but some customers can only pay using Stripe.

------
disiplus
we have PayPal and Stripe. The take is maybe 30/40 in Stripe favour. It's b2b.
But those two come not close to paying with bank transfer.

------
RootKitBeerCat
Have you tried BitPay?

