Sometimes it seems like the options out there for your business are limitless. And then sometimes it seems like someone has the monopoly and there aren’t any other options. Not long ago, I thought this was the case when it came to purchasing products and/or services online. I thought that PayPal was the only payment option out there. Why? Because we see it everywhere… eBay, Etsy, Best Buy… even Walmart.
When my husband had a contracting business, we tried using PayPal and had a very bad experience. They froze our account (more than once) because the deposit was a large amount of money and we weren’t able to access our funds. We ceased to use PayPal and I personally chose to never purchase a product through PayPal again.
When I started learning about alternatives to PayPal, I was very excited! I know lots of people and businesses who are happy to use PayPal. If their service works for you and you’re happy, then please don’t quit on my account. The purpose of this post isn’t to burn PayPal, but to show you there are options. Maybe you’re like one of our clients who specifically asked for a “PayPal button” on their site to accept donations. We offered Stripe as the payment gateway, but they asked for PayPal because that’s what everyone else is doing. They didn’t know there were other options!
As a business, we accept both PayPal and Stripe. We even accept money the old fashioned way with a check via snail mail! To be honest, we much prefer Stripe to PayPal. But we offer both because we want to make it easy for our customers.
So what’s the big deal? How is Stripe different than PayPal?
Both ways will get you your money. The biggest difference is the way in which they treat your money. Stripe doesn’t hold the money long term like PayPal. PayPal wants to be a bank, holding your money, and having you use them like currency.
Stripe wants to put your money in your bank. Stripe automatically places the funds into your account once those funds have been verified. Stripes integrates well with our invoicing platform (Xero) and also with others like Quickbooks. So once a client pays their invoice, there is literally nothing I need to do. The money automatically shows up in the bank and in our bookkeeping software. A definite win-win!
With PayPal, you have to login and initiate a transfer to your bank account. You then need to separately record the transaction in your accounting software. It still gets the job done, but it requires extra work and time on your part. Time you could be doing something else. Because who really enjoys banking anyways, right?
Technologically, Stripe is much better to deal with. They’re better documented and seem to have less bugs. This means development costs are much lower.
Most inexpensive options (not requiring a monthly fee) for PayPal involve the customer leaving your site to go to PayPal. You never want a potential buyer to have to leave your site to purchase your product or service. Keeping that buyer on your site is important so they can keep looking around your site – learning more about you and the products/services you offer.
Stripe never redirects someone to an external site. Your customer stays on your site and doesn’t have to login to Stripe’s payment service to make a purchase.
How will this affect my bottom line?
You can get set up with a basic account for both Stripe and PayPal without paying a monthly fee. You are charged based on the amount of the transaction. For website payments, Stripe and PayPal both currently charge 2.9% of the transaction plus a $0.30 transaction fee. Stripe seems to go a step ahead by providing an option for ACH and Bitcoin transactions: 0.8% with a maximum fee of $5. Stripe also offers free tools to developers allowing for more flexibility and customization.
So what’s a merchant/service provider to do?
Just because everyone seems to be using a particular product doesn’t mean it’s the best, or that it’s even a good fit for your company. It’s important to compare the pros and cons. We like Stripe. It’s easy to use, competitive in price, and even offers extra tools for free. Does this mean we’re going to drop PayPal? Probably not. We know that a lot of people are familiar working with PayPal. We just want our customers to know PayPal isn’t the only way… that there are alternatives. Hopefully by providing our customers payment options, their experience will be easier and more pleasant.