PayPal, Stripe, or Neither for your eCommerce Payment Processing?


PayPal and Stripe are resources to take care of online payment processing, however, they’re also highly disputed by so many merchants.

To begin with, it’s best to explain that neither PayPal nor Stripe offers the lowest payment processing charges around. For a fundamentally better payment processor with lower rates, you would be better off getting a routine merchant account.

You’ll find some simple eCommerce support, which might be best if you are focused on cost and not so much on attributes.

Some would argue that PayPal and Stripe’s strengths lie within their abundance eCommerce features, including support for electronic products, subscriptions, and even cellular app payments.

However, regardless of the fact that these two services do essentially the same thing, and are many business owners “go to” companies because they don’t realize the drawbacks and that that have so many other options for merchant account solutions.

Many merchants continue to be amazed by Stripe’s lack of a virtual terminal. It’s possible to manually enter transactions through the dash, but the company actively discourages using this attribute more than not.

Additionally, it leaves you on the hook for PCI compliance. While PayPal’s virtual terminal comes at a cost — and a higher processing speed — but based on your business, it could be a priceless tool. Many omnichannel platforms offer you a digital terminal nowadays. Then again, Stripe is mostly for online trade.

To get the maximum out of Stripe, you’re going to need a programmer, because it was not designed for the layman. It’s meant for businesses that need an extremely customizable and tech-based solution for payment processing.

While complaints pile up regarding how much PayPal is disliked in terms of cost because of its hosted payment site, virtual terminal, and recurring billing, provided that other choices on the market — not just Stripe — with lower pricing. Unfortunately, Stripe includes a chargeback fee of $15 so merchants are losing money on every transaction which should’ve been stopped by Stripe even before they occurred.

PayPal’s fees can make it rather difficult to project what you are going to make from sales and what the true cost of payments processing is. In addition to PayPal’s per transaction fee, you may also incur the following fees:

  • $30 per month if you would like to design and host your own checkout pages.
  • 1% cross-border surcharge if you want to accept payments from another nation.
  • 3.5% transaction fee as soon as your customers pay with American Express.
  • $0.30 a uncaptured authorization.
  • A fixed charge portion of the initial transaction fee when you issue a refund ($0.30 for domestic payments).

At the end of the day, neither of these payment processing companies stack up to those who offer full service payment processing merchant solutions for low and high risk businesses alike. A business has far less control with an aggregate account than they do with a dedicated merchant account team.

With a dedicated merchant account, transactions between the merchant and the customer are deposited directly into the business bank account. With an aggregate account, the funds from a transaction are sent to the account provider (PayPal, for example) and then are deposited into the merchant’s bank account. The aggregate account provider also makes their own rules and can make any change they deem necessary without your consent.

The upside to an aggregate account is that there is no underwriting process, unlike a dedicated merchant account where there is a very strict and thorough underwriting process that can determine whether the merchant will be approved or declined for a dedicated merchant account. Dedicated merchant accounts also tend to have much cheaper transaction fees.

Chances are, if you were dropped from a payment processor like PayPal and Stripe because your business is considered high risk, it is only a matter of time before you are dropped from the others. This means that your clear next step will be to apply for a merchant account with an assigned and specific merchant ID, more specifically, you’ll need to apply for a high risk merchant account – which is not even offered by PayPal or Stripe, so starting out with them for your payment processing needs can be detrimental to your business strategy from the get go.

Avoid these payment processing pitfalls right from the jump and do your research on high risk merchant account providers – the success of your business depends on it.