4/8/2015

StripevsPayPal:Whoshouldyouchoose?

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StripevsPayPal:Whoshouldyouchoose?

You'vebeenhearingmoreandmoreaboutStripe,thehottestnewpaymentprocessorontheblock.ButwhataboutPayPal?Theyhave
atrustedbrandandalonghistoryofprocessingpaymentsontheweb.
Let'sdoathoroughreviewofStripevsPayPal.We'llcompareeachpaymentprocessorinfivekeycategories:TransactionFees,
Security,API,DataPortability,CustomerService.Wewon'tdeclareawinnerforeachcategory,butwe'llpointoutsomeofthe
importantdifferences,whichshouldhelpyoumakeamoreinformeddecision.

TransactionFees
Stripetakesasimpleapproach.Theychargeyouaflatrateof2.9%+30persuccessfulchargeaslongasyou'redoingunder$1
millioninvolumeperyear.Thisratevariescountrytocountry,butit'salwaysflat.Theydon'tdiscloseanyspecialhighvolumerates.
ThebasefeeforPayPalisthesameasStripe,2.9%+30.But,theyofferdiscountsasvolumegoesup.Thediscountskickinat
$3,000(2.5%+30),$10,000(2.2%+30),and$100,000(notpublished)permonth.Thislookslikeabetterdeal,butPayPalthrows
insomeextraservicefeesthatmakethingsabitmorecomplicated.
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StripevsPayPal:Whoshouldyouchoose?

Let'scompareStripeandPayPal'sservicefees:
Service
PayPal
Stripe
Chargecardsfromyourwebsite $30/month[1] Free
Chargeback
$20
$15
AmericanExpress
3.5%[2]
Sameflatrate
Refund
Transactionfee Free
Internationalcards
1%[3]
Free[4]
Authorizecard
30[5]
Free
1. $5/monthforPayPalAdvancedand$30/monthforPayPalPro.Comparethedifferentfeatures.PayPalAdvancedrequires
youofferPayPalasapaymentoption.
2. AmericanExpressfeeisonlychargedforPayPalAdvancedandPayPalPro,whichisrequiredforcertainfeatures(seenote1).
3. PayPalcrossborderfees.
4. Internationalcardsarefree,butcurrencyconversioncosts2%.Example:YouconnectaGBPbankaccounttoStripe,butcharge
inUSD.StripewillautomaticallyconvertyourfundstoGBP(fora2%fee)anddepositthemintoyourGBPbankaccount.If
youinsteadchargedinGBP(orconnectedaUSDbanktoStripe),itwouldbefree.
5. PayPalcharges30foruncapturedauthorizationsandcardverificationtransactions.
You'llnoticethatPayPalfeesarefarmorecomplexandrequireplentyofexplaining.Forexample,theyonlychargeextrafor
AmericanExpresswhenyou'reononeofthepaidplans,whichseemscounterintuitive.
So,howdothetransactionfeescompareinareallifescenario?Let'stakealookataStripevsPayPaltransactionfeecomparison
chartbasedonsalesvolume.Remember,ifyouwanttochargecardsonyoursiteusingPayPalandnotprovidePayPalasanoption,
you'llneedaPayPalProplan.

StripevsPayPaltransactionfeecomparisonchart
Volume/month Stripe PayPalStandard PayPalPro
$500
$22 $22
$52
$1000
$2,500
$5,000
$10,000
$15,000
$20,000
$25,000
$50,000
$75,000

$44 $44
$110 $110
$220 $200
$440 $370
$660 $555
$880 $740
$1,100 $925
$2,200 $1,850
$3,300 $2,775

$74
$140
$230
$400
$585
$770
$955
$1,880
$2,805

Assumes$20foreachtransaction.
Asyoucansee,$5,000inmonthlyvolumeisaninterestingdatapoint.That'srightaroundwhereitstartsbecomingcheapertouse
PayPal.Keepinmind,we'renotcountinganyoftheservicefeeswediscussedearlier,whichwouldbringthePayPalcostsupabit.

WhendoIgetpaid?
PayPalusuallypaysoutwithin1businessday,whileStripetakes7fulldays.Iffastaccesstoyourfundsisimportant,keepthisin
mind.
Update:USAStripecustomersnowgetfastertwodaytransfers.

Security
BothStripeandPayPaltakesecurityseriously.Atthecore,they'rebothverystableandsecureplatforms.Let'stalkabouthowthey're
different,andhowStripeintrinsicallyencouragesgoodsecurity.
Stripe'skillerfeaturewhentheyfirstlaunchedwasStripe.js.WhenyouuseStripe.jsonyourwebsite,thecreditcarddataenteredinto
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4/8/2015

StripevsPayPal:Whoshouldyouchoose?

yourpaymentformisneversenttoyourserver.Instead,thedataissentdirectlytoStripe.Whyisthissoimportant?
AutomaticallyPCIcompliantbecauseyoudon'thandleanysensitivecreditcarddataonyourservers.
Moresecurebecauseabreachofyourserverswon'tresultinanystolencreditcarddata.
You'renottemptedtostorecreditcarddataonyourservers,whichyoureallyshouldn'tbedoingunlessyou'reabigbusiness
andwanttopayforPCIcompliance.
IfyoufollowthenormalflowwithStripe,you'lljustautomaticallystoreyourcardsintheirvault.You'llnevertouchthesensitive
data.Thisencouragesgoodsecurity.
PayPalnowhasawaytostorecardsinavault,butitisn'tquitethesameasStripe.js.Thesensitivecarddatahastogothroughyour
servers,andthisputsabigsecurityburden(seePCIcomplianceabove)onthesoftwaredeveloperorthecustomerwhohasinstalled
thesoftware.
Insummary,Stripe.jsencouragesgooddevelopersecuritypractices,whilePayPalgivesdevelopersroomtomakebaddecisions.
They'verecentlytakenstepstoprovidebetteroptions,buttheseoptionsstillaren'tassecureasStripe.js.

API
WhenStripefirstlaunchedtothepublic,theStripeAPIwasadifferencemaker.It'sclean,welldocumented,andextremelyeasyto
use.PaymentprocessorAPIsofthepastwerebuggy,inconsistent,andpoorlydocumented.Infact,PayPalwasoneoftheworst
offenders.
Inaway,StripehasforcedPayPaltoupitsgame.ThedocumentationandorganizationoftheirnewRESTfulPayPalAPIisvastly
improvedandmodeledafterStripe(coincidentally).Thisisanexampleofcompetitionbenefitingcustomers.Stripehassetanew
standardforacleanandwelldocumentedAPI,andtherestoftheindustry(includingPayPal)isrushingtocatchup.

DataPortability
ThisisanareawherePayPalfallsflatonit'sface.Imagineyou'vebuiltasuccessfulmembershipsiteovertheyears,andyoupowered
itwithPayPalsubscriptions.Ifyouwanttomovetoanotherpaymentprocessor(likeStripe),youcan'ttransferthatcreditcarddata.
PayPalsimplywon'tgiveityou.Allyourexistingcustomerswouldhavetosignupagainandyou'dprobablylosesomeofthem
duringtheprocess.
Stripeontheotherhandvaluesdataportability.IfyoudecidetoleaveStripethey'llhelpyoumigrateyourcreditcarddatainasecure
andPCICompliantway.Thisoveraccommodatingstanceondataportabilityiscertainlyworthnoting.It'srefreshingtoknowyou
haveachoice,andwon'tbelockedinforever.

CustomerService
Wehaven'tusedPayPalinovertwoyears,sowedon'thaveanyrecentexperiencewiththeircustomerservice.Backwhenwediduse
PayPal,emailsupportwasslowandunreliable,anditwasnearlyimpossibletogetsomeoneonthephone.Atonepoint,wehada
runningjokebecausePayPal'sphonesystemkepthanginguponusbeforewecouldevertalktoanyone.Thiswentonformonths.
TherearealsocountlesshorrorstoriesofPayPalfreezingfundsfornoreason.
Stripehasopenchannelsforemailsupport,andtheyalsohaveanIRCchannel(#stripeonFreenode)wheredeveloperscanchatand
getlivehelpfromrealengineers.Thisisinvaluableifyou'reworkingthroughatoughproblemandneedsomelivehelp.Stripedoesn't
yethavephonesupport,butI'msureit'sintheplans.They'vealwaysbeenveryopenandpleasanttodealwith.
Tobefair,PayPalissufferingfromscale,age,andbureaucracy.Stripeisnewandhustlingformarketshare.They'reworkinghardto
differentiatewithgreatcustomerservice.Therealtestwillbeovertime.Stripewillfinditmoreandmorechallengingtoprovidetop
notchcustomerserviceastheygetlargerandlarger.Hopefullywe'restillravingabouttheircustomerservicefiveyearsfromnow.

Competitionisgood
ForMemberful,wechoseStripe,andwecouldn'tbehappierwiththatdecision.It'smadeeverythingwedoeasierfroman
engineeringperspective,andwe'vebeenthrilledwiththeserviceandsupport.Withthatbeingsaid,PayPalhastakenstepstorespond
toupstartslikeStripe,andhasalreadyimprovedtheirAPIsignificantly.Itwillbeinterestingtoseehowthesetwocompaniesevolve
andcompeteoverthenextfewyears.Intheend,we'llallenjoybetterservicebecauseofit.
PublishedonJanuary10,2014.
https://memberful.com/blog/stripevspaypal/

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4/8/2015

StripevsPayPal:Whoshouldyouchoose?

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