Two of the biggest names in the online payment sector are Stripe and PayPal.

Despite the fact that Stripe and PayPal are actually targeting pretty different business demographics, the two brands are often pitched as online payment processor competitors.

For those who are interested, Stripe goes after developers and techier business owners, whereas PayPal is built for smaller, simple integrations.

But in this article, we’re treating them as direct competitors. We’ll run each service through a few different test categories to pick apart where their strengths and weaknesses lie. By the end, you should hopefully have a better grasp on what each processor has to offer and which, if either, is best for you and your business. Let’s get started.

What does it do?

PayPal and Stripe are both third party payment processors, which means they allow merchants to accept payment from their customers.

Here’s how each company describes their product.

Since PayPal has a bunch of different services, it’s a little unclear as to what we’re talking about. For simplicity’s sake, in this article, we’re dealing exclusively with PayPal’s Payments Pro package.

PayPal does offer a cheaper service called Payments Standard but it’s pretty underpowered and it’d be unfair to put it up against super techy Stripe.

Is it easy to use?

When a payment processor does a good job, you don’t even notice that it’s there. So, how easy to use are our two payment processors?

PayPal is incredibly easy to use. I mean, its whole business is built on providing a simpler way to get paid online. It’s probably the simplest payment processor to integrate into a website and is well within the remit of even severely un-technical business owners.

Stripe, on the other hand, was designed and built to appeal to developers. As a result, it’s a little bit techier.

Stripe is not as easy to use and if you’re looking for a simple plug-and-play payment processor, it’s probably not a great option. In fairness, though, that’s not what it’s trying to be.

How flexible is it?

The vast majority of merchants don’t need a flexible payment processor. Most are running normal businesses with normal payment structures. However, if you want to do something a little more unusual, you’ll need a payment processor that’s both flexible and functional.

Right from day one, Stripe has carved out a reputation as a very adaptable service. Its API is one of (if not the) best in the industry and it’s driving the industry standard upwards.

Stripe’s API is super simple, super clean, super well documented and super easy to use. There’s comprehensive libraries available in Ruby, Python, PHP, Java, Node.js and a handful of other programming languages, meaning that you can use Stripe in virtually all web projects. In short, Stripe’s API was built from the ground up for developers and it really pays dividends in highly technical projects.

Security

Any company dealing with money has to take security seriously and these two payment processors are no different. The good news is that both Stripe and PayPal are robust, stable and secure platforms. Both will allow you to accept online payments with complete peace of mind.

However, there are some differences in how they approach security. Let’s have a look at how each service deals with the issue of security.

Stripe was pretty innovative from the get-go, releasing a brilliant bit of kit called Stripe.js. When a merchant uses Stripe.js on a website, a user’s payment details are never sent to your own server. Instead, all sensitive data is redirected to Stripe’s system. This shifts a huge amount of responsibility from you to Stripe. With Stripe.js you have to think much less about PCI compliance and data security because you’re not actually storing it.

How much does it cost?

Functionality, support, flexibility and security are great but if a payment processor is charging exorbitant fees, it will never make good economic sense.

Here’s how the two services work out card payment processing fees for their users:

As you can see, Stripe comes out the clear winner, boasting processing fees 23 percent lower than PayPal in our £100 mock transaction. It’s also worth noting that both services have volume related pricing. In other words, the more you process, the cheaper your processing fees get.

Our comparison uses the top tier pricing, which gives each service the best chance possible. Unfortunately, for smaller merchants with a lower monthly turnover, PayPal is even more expensive.

If it’s a question of money, Stripe fees are more favourable.