There was a time when PayPal was hands-down the best option for small businesses looking for an easy way to accept credit card payments. It was cheap, there were no setup fees, there were no monthly service fees – you just paid a 3.4% commission on each transaction.
But Stripe is quickly gaining market share with a sleek modern look and customer-friendly experience. Will PayPal, the sleeping giant, lose to this rising star in the world of payment processing? Here’s our take on comparing the two services for NZ businesses looking for an easy, cost-effective method to accept credit card payments online.
Firstly, we’ll review PayPal and Stripe separately, and then finish with an overall winner (in our opinion).
PayPal: 3.4% + $0.45
Stripe: 2.9% + $0.30
What we like about PayPal
- Cheap (no monthly fees) – As a low-cost affordable website option for NZ businesses, we look for cost-effective options for our clients – when you know where to look there are plenty of options around. The cost of setting up a payment gateway with one of the big banks was generally prohibitive for businesses on a budget – setup fees, a long list of requirements that generally involved expensive web development time and then ongoing fees for everything from failed transactions to scratching your nose (you know what big banks are like, always crying poor). PayPal offered a setup that was quick and easy, and then you only paid a commission on transactions. This removed the risk factor that a lot of businesses face when starting out – no sale, no fee.
- Simple – Compared to a traditional merchant gateway with one of the big banks, setting up PayPal was a breeze. Creating pay now buttons to add to your website was also relatively simple (once you’d tracked down the right section in the admin screens, don’t even get me started!). This kept any web development costs to a minimum. Adventurous business owners could just as easily create them and add to their website as needed (we had seen entire e-commerce sites created from PayPal buy now buttons – ugly but it worked!
- Reliable – PayPal has been around for a long time (and I swear they haven’t updated their interface much in the last 10 years!) so while a lot of NZ shoppers don’t have a PayPal account, they’re at least familiar with the brand and that generates trust (which is critical when taking payments online). They have fine-tuned their infrastructure to build a reliable backend payment processor and that’s important when you’re talking about a business’s cash flow.
What we don’t like about PayPal
- ‘I don’t have a PayPal account’ – Despite shoppers not actually needing a PayPal account to use their credit card payment facility, PayPal had designed their interface to make it seem like you did. This resulted in a lot of shoppers abandoning their purchase because they didn’t want to create an account. For the business owner it means either a big education campaign or a lot of missed sales!
- Outdated interface – PayPal used up all its innovator spirit on being one of the first in the payment processing space. Sadly, there wasn’t anything left to create a nice, user-friendly interface that made it easy for business owners to manage customers or payments (let’s not even talk about managing recurring payments or bulk updates).
- Took customers away from your website – Everyone who does online marketing that it’s risky allowing customers to navigate away from your website; they may not come back! Maybe back in the day when more of us were shy of making online payments it made sense to process the payment on a well-known website but these days when SSL security certificates are more common there’s not the same need for it.
- Manual withdraw and fees – Business owners have to remember to log in and manually withdraw funds, and pay for withdrawals less than $100.
- Ugly – I know we’re told looks aren’t everything but it’s 2018 and PayPal have had long enough to make their payment system look pretty. And studies will tell you that ugly design can erode trust, so yes it is important and PayPal’s buttons are just plain outdated.
What we like about Stripe
- Even cheaper – If you thought PayPal’s fees were reasonable you’ll love Stripe, with cheaper transaction fees (see above), no charge for withdrawals to a NZ bank account and cheaper chargebacks (if needed). Like PayPal there are no setup or monthly costs.
- Integrates with your website – Unlike PayPal shoppers can stay on your website to make a credit card payment so it’s less likely they’ll abandon their purchase out of frustration or confusion with your checkout procedure. Stripe also allows customers to have their credit card details saved for future payments and a nifty option for mobile users is they can use the camera on the phone to scan their card instead of manually entering the number. Overall it just makes your ecommerce website feel more professional (ie trustworthy!).
- Automated payouts – You can set your received payments to automatically credit a NZ bank account every day, or set it to weekly if you prefer.
- Looks great – It’s definitely a nicer look (phew, finally) and as we mentioned this can help assuage any trust issues shoppers might have. Since it’s embedded in your website it also means there’s no disconnect from your brand’s look and feel (which happens with PayPal when they get shunted off to a whole different website).
- Minimal web development – Not only is setting up an account a lot simpler than PayPal, adding it to your website is also relatively straightforward (there are also WordPress plugins available that allow you to easily integrate with Stripe).
What we don’t like about Stripe
- PayPal-style buttons aren’t easy – If you’ve previously used PayPal buttons then you won’t find an exact match in Stripe. To create buttons there’s a bit more behind-the-scenes development needed (Stripe Checkout needs to be setup and configured), which could be costly. If you’re a payment button user, we would recommend switching to a full ecommerce solution – it’s a lot more professional.
- No native support for PayPal accounts – If you have a lot of customers who like to use their PayPal account, then you might be better off sticking with PayPal for now (although you probably didn’t need us to tell you that!).
What’s the Best Payment Gateway for Business Websites?
We are actually genuinely happy to recommend Stripe (we’re not affiliated in any way but we do use it ourselves), and glad that it’s finally available to NZ businesses after a long time waiting.
It’s a better looking, cheaper, PCI-compliant alternative to PayPal that will hopefully help business websites look and work more professionally – without needing the expensive and complicated payment gateways that traditional banks have been flogging for years.