Why I Switched My Payment Processor From PayPal to Stripe
In December of 2015, I transitioned from using PayPal to handle my website's payments to using Stripe. I've been with PayPal for four years.
Why did I switch? Should you switch too?
Let's break down the differences between Stripe and PayPal and see which solution is the best for your e-commerce business.
Want to listen? There's an audio version below
When I began selling digital products in 2012, I wanted the cheapest solution possible that would still allow me to sell something over the internet. I went in search for a low-cost solution I could understand and would integrate with the tools I had. My search led me to PayPal.
And, for the better part of four years, I've stuck with them. PayPal has helped me accept tens of thousands of dollars worth of payments and sell products to people around the world. Having an e-commerce business is cool like that!
But there were a few problems.
My goal here is to weigh PayPal vs Stripe and show some of the benefits and drawbacks of both. I'll walk you through my decision to switch, and the process that you can follow to make the change. My intent is to help you make the best possible decision about which payment processor you should use for your e-commerce business.
Benefits of PayPal
Integration – PayPal integrates with almost every e-commerce tool out there and that's a big plus for me. And, integration is usually free. My store uses the e-commerce platform Easy Digital Downloads and my Membership site registers new users with a combination of OptimizePress and a custom cart solution. Both systems integrate with PayPal.
PayPal also integrates with WooCommerce, Shopify and popular affiliate plugins and tools such as Affiliate WP. Plus, since you can create direct payment links for almost anything, PayPal is extremely flexible.
Ease of Use – Creating payment buttons in PayPal is super-easy. Type in your title, how much you want to charge, and viola, you get a payment link. I've created dozens of buttons and sent hundreds of links to clients to have them pay for products and services.
Cost – PayPal's fees are about the same as every other option out there. Their fees have remained steady at 2.9% plus $.30 per transaction. That means for a charge of $100, your take home is $96.85 – not bad for not having to leave the house to deposit a check at the bank.
PayPal also offers a “Pro” option that costs $30 per month in addition to the fees mentioned above. The advantage PayPal Payments Pro has over the basic is that Pro enables you to keep customers on your site while buying instead of sending them offsite to complete their transaction. That's a nice feature.
Mobile App – While most of my transactions happen online (ok, all of them up to this point), it's nice to have the option to swipe a card when needed. Plus, the mobile app makes it easy to check your balance and withdraw money when needed.
Drawbacks of PayPal
User Interface – In late 2015, PayPal decided to update their UI. Ever since, I've found it difficult to navigate and tools that used to be 1 click away are now 2-3 clicks. Not a big deal, but an annoyance.
PayPal also makes it somewhat difficult to find your transaction information. If you want to see growth over time, that's a pretty hard thing to do within PayPal's dashboard. When I go to find my list of customers, which is hidden under the “More” tab, the list isn't even complete. It's pretty frustrating to spend time clicking through PayPal searching for what you need.
Manual – Withdrawing money is a manual process with PayPal. To get my money from PayPal, I have to go in 2-3 times a week to transfer funds to my bank and then wait another 3-4 days for it to show up in my account.
Benefits of Stripe
Security – Stripe is known for its security and they maximize that security in two ways. First, all transactions are done by transmitting “tokens” instead of private information. More on that in a bit. Second, Stripe requires all of its account holders (i.e., store owners) to have an SSL certificate installed on their site(s).
These security measures mean your purchase from my store, and any other store using Stripe is about as secure as reasonably possible. By transmitting a “token” instead of actual card numbers, customers don't have to worry about store owners stealing card numbers.
Since security is one of Stripe's selling points, I'll go into a tad more detail.
Each customer is given a randomly generated customer ID token.
For example: cus_ 7eIR2VuAbC123
Each credit card stored on file is also given a randomly generated card ID token and assigned an encrypted “fingerprint.”
For example: card_ 1AzpdQQCk90B6S4YvuA1b2C3d, and 7uBoxgMyO1ZbCDefG.
As the store owner, all I have access to are those tokens, the purchaser's first and last name, the type of card, billing zip code, card expiration date, the last 4 digits of the card, and whether or not the card passed the CVC and zip code verification.
Each transaction and invoice are also assigned randomly generated tokens that serve to protect buyers.
Automatic Transfers – Where transferring money from PayPal to my bank is a manual process; Stripe automatically transfers your balance to your bank every 1-2 days. You can also change that schedule to weekly or monthly in just a few clicks.
Simple User Interface – Stripe's dashboard is extremely easy to use. They make it easy to see your total number of customers, total revenue, and even how much your next and last transfers were. Sorting by date range is pretty easy too.
I've not used Stripe for very long, so it could get more complicated, and I may have more issues down the road, but as of now Stripe is super-simple.
Drawbacks of Stripe
Complexity – I won't beat around the bush here, you almost have to be a developer to use Stripe on your website unless you integrate with 3rd party software. Even the support documentation is way over my head, and I've been looking at HTML code almost every day for the last four years.
That said, Stripe is a joy to work with if you have the appropriate integration tools. These integrations normally cost money so we'll take a closer look below.
Cost – While Stripe charges the same fees as PayPal (2.9%+ $.30), they're actually more expensive due to the security they require. As I mentioned above, Stripe requires you to secure your site with an SSL costing anywhere from a few dollars a month to several hundred dollars per year. I got a free SSL from GreenGeeks when I moved my hosting accounts to them.
If you're considering switching to Stripe, because they're so complex, do yourself a favor and budget an extra $60 – $100 for add-ons that work with Stripe when those same add-ons are often free when connecting with PayPal.
Why I Switched From PayPal to Stripe
I'll be honest, moving to a secure payment process has been a goal of mine for a while. It wasn't until I was going to make some upgrades to my hosting account for another reason that I decided to implement the SSL.
The previous process of having customers shop on my site and then get routed to PayPal to complete the transaction has never been a problem.
That I know of.
I say that because there's no way to calculate lost sales because of how many people didn't like or feel comfortable with the system of handling payments externally via PaPal.
That said, since implementing my current secure system, I haven't seen a dramatic rise in transactions either. However, I do feel a lot better about selling online whenever I see that little green padlock next to my name in the browser.
My primary goal with switching from PayPal to Stripe is to create a smoother buying experience for everyone who decides to purchase an item from my store.
Stripe has allowed me to do that.
Yes, PayPal Payments Pro would allow me to do the same thing, but I see little value for the additional $30 per month PayPal is charging when I can get identical results from Stripe for free.
Ultimately, Stripe and PayPal both allow me to do business online and sell products around the world. They charge similar fees and, in most cases, the customer is none the wiser about who is handling their payments.
Will I stop using PayPal entirely? No. But I will phase them out over time and use them as an offline/in-person tool only.
Over to you: What service manages the transactions for your e-commerce business? How did you choose them? Would you recommend them?