Top online payment services: Stripe vs Braintree vs PayPal
If you’re building an eCommerce site, two-sided marketplace, or any other app that includes transactions, you should consider using online payment processing systems.
In this article, we’ll compare online payment systems to make it easier for you to choose the one that best suits your business goals and your users’ demands.
What is Braintree? And what are Stripe, and Paypal?
Stripe is a powerful US-based payment engine that moves money online. Stripe lets individuals, as well as companies, make payments using credit cards and other major online payment methods. Stripe is used by Google, Amazon, Shopify, Salesforce, Uber, Spotify, and other organizations.
Braintree handles mobile and web payments for eCommerce companies. The service is used by Airbnb, Beautylish, Twilio, GitHub, and others.
As far as history goes, Braintree acquired Venmo, and then PayPal acquired Braintree. This helped Braintree gain a larger market share.
PayPal allows users to send and request money online, which includes sending money abroad to family and friends. This is significant as not all other gateways offer peer-to-peer transactions. PayPal lets online shops, vendors, auction sites, and other commercial users process payments. Companies that accept PayPal include Pandora, eBay, Expedia, and Booking.com.
According to Google Trends, people show more interest in PayPal than the Stripe or Braintree payment gateways. The three countries that top the list for interest in PayPal are Germany, Italy, and Brazil.
How do payment gateways work?
A payment gateway establishes a secure connection between a client, an online platform, and a bank account. A gateway has the power to authorize electronic payments in real time.
When a client wants to purchase something online, a payment gateway needs to do a few core tasks to complete this transaction.
The workflow
To purchase a product, a customer chooses a payment method and enters their credit card details on your website. Then the website sends these credit card details to the customer’s chosen payment gateway. The payment gateway encrypts the credit card data and sends it to the client’s bank for authorization. The bank approves or declines the request and sends a response back to the payment gateway. Consequently, the payment gateway immediately sends the response to your website and the customer. If the credit card is approved, the money will be credited to you. If not, your customer will receive a message that their card was declined, in which case the transaction is cancelled.
The greatest advantage of this system is that an offsite provider is responsible for secure data handling. However, people in some countries tend not to trust offsite payment processors. Therefore, you should investigate how your audience feels about a hosted gateway before actually implementing one.
Pricing
These three services have pretty much the same fees. However, you should know that pricing may also depend on your country.
Stripe fees amount to 2.9% plus $0.30 each time you receive a credit or debit card payment. There are no hidden, monthly, or set-up fees. For international cards, there’s an additional 1% conversion fee. If you’re still wondering How much does Stripe charge users? see this page with Stripe payment fees.
When a Stripe user processes a refund, Stripe holds the fee for that payment but doesn’t charge an additional fee.
As far as currency conversion goes, funds are usually converted at 1–2% above the daily mid-market rate for users (this also depends on which country the business is located in). Here’s a link where you can see every detail about Stripe’s conversions per country. You can change the country at the bottom left of the page.
Stripe processes payments transparently. Users can see Stripe’s pricing in the documentation. They can also see the fees charged for each payment in the Stripe Dashboard.
PayPal charges a fee for sales that’s the same as Stripe’s: 2.9% plus $0.30 per transaction. PayPal offers a discount rate for charities of 2.2% plus $0.30 per transaction. For international sales, PayPal takes 4.4% per transaction plus a fixed fee based on the currency received. You can learn more about credit card fees and other charges here.
PayPal credits a variable portion of your transaction fee in the event of a refund. The fixed $0.30 per transaction, however, is not refundable. When you issue a partial refund, PayPal credits a percentage of the variable transaction fee based on the amount of the refund.
See PayPal’s fees for selling and accepting payments for more information.
Braintree charges 2.9% per transaction by card or digital wallet. There are no monthly fees or hidden Braintree fees. There are multi-currency and cross-border fees though. The multi-currency fee is an additional 1% fee that applies to transactions in any currency other than USD. The cross-border fee is an additional 1% fee that applies when a customer’s card is issued outside of the United States. You can find all these fees in the pricing details on the company’s website. If you would like to look at the pricing in a different country, change the country in the upper right corner.
What’s more, Braintree can charge you two additional fees. The first is charged when a customer disputes a charge. In this case, you have to pay $15 for each incident. The second fee is $0.30 for each refund.
Braintree also has public support articles with a lot of great information about their products and features. These articles can be found here.
Supported countries
These offsite providers offer their services in many countries. However, you should always check if they cover the country you’re targeting.
Stripe is active in 46 countries, including the US, the UK, Canada, New Zealand, Sweden, and Spain.
PayPal is available in over 200 countries across Africa, the Americas, Asia Pacific, and Europe. If you’re looking to develop a marketplace, check out the list of countries that are exceptions here: PayPal for Marketplaces Availability.
Braintree serves 45 countries in North America, Europe, Australia, and Asia.
Supported payment methods
Once you know where your target audience is located, you should research which payment methods your customers use before you settle on a provider. Here’s a list of cards and other payment methods that each service processes.
PayPal processes Visa, Mastercard, American Express, JCB, Maestro, Discover, and Diners Club credit cards. Users can also pay via PayPal accounts. However, the service doesn’t accept any other payment methods such as Bitcoin.
Stripe accepts Visa, Mastercard, American Express, JCB, Maestro, Discover, and Diners Club cards as well as Apple Pay, Android Pay, AliPay, Amex Express Checkout, Pay with Google, Bitcoin, and ACH transfer.
Braintree accepts Visa, Mastercard, and American Express as well as JCB, Maestro, Discover, and Diners Club. Apple Pay, Android Pay, MasterPass, UnionPay, Visa Checkout, Amex Express Checkout, Pay with Google, ACH transfer, PayPal, Venmo, and Bitcoin are also supported.
Developer documentation
Braintree documentation as well as documentation for Stripe and PayPal is quite comprehensive, including examples and sandbox functionality. However, our developers prefer Stripe for its simplicity and ease of set-up.
Online payment methods comparison
Now let’s look at Stripe vs Paypal vs Braintree in a table.
Available integrations
Many tools can integrate with these major fintech companies as shown in the image below. To find more tools to integrate, go to Stackshare.
Source: Stackshare.io
Examples
There are many companies that take advantage of the online payment systems we’ve compared in this article. Let’s look at some of these companies.
HotelTonight, an on-demand accommodation booking platform, and StubHub, an Airbnb for event spaces, use PayPal.
Source: Hoteltonight.com
Source: PayPal.com
Source: Lyft.com
On-demand transportation company Lyft uses Stripe, as do many other companies.
Airbnb lets users pay via Braintree.
Source: Airbnb.com
TaskRabbit can allow users to pay via Braintree too.
Source: Taskrabbit.com
There are also other merchants that use Braintree.
We’ve used Braintree for the WataGames project. WataGames is an online agency that grades retro video games.
Source: Watagames.com
Which service is right for you?
Stripe is suitable for a wide range of use cases. Its API allows businesses to establish customized eCommerce processes. Stripe isn’t suitable for offline sales, though. If you’re just starting your business, Stripe is a good choice because it allows you to build a scalable infrastructure. It’s especially helpful if you want to operate in the US but are based abroad. You can use Stripe as a ready-made solution. Just drop pre-written lines of code into your application to accept payments, or customize Stripe completely to fit your goals. You can create a unique payment flow using the tools, or so-called building blocks, that Stripe offers.
You should choose PayPal if you want a simple solution. If you just need to accept payments and not worry about lots of other details, you can’t go wrong with PayPal. This way you don’t need to look for an international PayPal alternative. And it comes standard with most platforms, so people can start paying you right away. You can add Stripe integration later, so starting out with PayPal may be a good idea. PayPal provides a smooth customer experience and allows users to pay both online and offline. If you’re looking for a simple and easy solution to capture payments, go with PayPal.
Braintree offers most of the features available in Stripe. Braintree-supported countries have reached over 45, whereas Stripe is available only in 26 countries. Since Braintree is part of the PayPal network, the company has an additional benefit and is open to a larger share of the market. If you’re just starting your business, Braintree can be a good fit. The provider has a lot of experience with startups. It caters to not-for-profits as well and works with some of the largest online retailers. However, Braintree won’t work with certain types of businesses as described in their acceptable use policy.
Alternatives to Stripe, Braintree, and PayPal
Your choice of payment provider may depend on the country you want to scale your business in. Besides Stripe, Braintree, and PayPal, there are several other gateways that cover business activity in Africa, the Middle East, and Europe. Let’s get familiar with some of them.
Skrill is a London-based provider handling low-cost money transfers. It supports 40 currencies, allowing you to send money abroad. The Skrill app allows you to manage your funds and withdraw them to a linked bank account. You can also make a direct bank transfer or send money to a Skrill wallet that belongs to another account holder.
Source: Skrill.com
HyperPay is an online payment service established in 2010 that’s available in the Middle East and North Africa. HyperPay provides a single API that can be integrated with popular platforms including WordPress and Magento. It works on desktop, mobile, and tablet.
Source: HyperPay.com
Ingenico is available globally. With Ingenico, merchants can process transactions via a range of smart terminals, payment services, and mobile solutions. Ingenico covers in-store, online, and mobile channels. Merchants can also accept alternative methods of payment such as digital wallets and QR codes.
Source: Ingenic.com
Dwolla became available in the US market in 2010 and is much cheaper than PayPal. The company is based around one simple idea: to let users move money easily without the hassle of credit cards or paper checks. Dwolla is an eCommerce company that enables online transactions as well as a mobile payment network. The service facilitates money transfers from users’ bank accounts to other bank accounts.
Source: Dwolla.com
Network International has spread across the Middle East and Africa. It accepts all global cards and incorporates mobile point-of-sale technology, eCommerce solutions, and card authorization. The industries that Network International covers include travel and hospitality, retail, and eCommerce.
Source: Network.ae
Fondy — a unified payment platform, which aims to enable site owners and mobile applications to accept online payments from their customers. Acceptance of payments is possible in any currency and any country, which markedly distinguishes the product from competitors.
Source: Fondy
Useful tips for choosing a payment gateway
Tip #1 Be aware of hidden fees. Always check what fees a service charges by looking carefully at the fee listings.
Tip #2 Investigate all features. Most systems come with a set of features you can choose from. You should clearly understand what each gateway brings to the table so that you can reach your business goals.
Tip #3 Check for custom integrations. Study if there are possibilities for customizing APIs and integrations with other apps to let all your SaaS apps work together.
Tip #4 Ask your developer. If you entrust development to professionals, seek their advice. They can study the documentation and tell you which solution best fits your goals.
No matter which option you choose, you should navigate the site attentively and contact support if any questions arise.
Moving money with ease
Technology has advanced as far as letting you move money online transparently and securely. You no longer need to do paperwork or be worried about compliance when accepting payments, as offsite providers can do all the work for you. If you want to start a business, you should consider integrating a payment gateway. There are many available, with various features, pricing, and capabilities. We’ve looked at the three most popular to give you some food for thought.
If you don’t know which solution to choose or if you need a skilled software development team to help you with your project, get in touch with us! We’ve worked with Stripe, PayPal, and Braintree. We’ve also implemented the Knet payment gateway, which works only in Kuwait. We can help you scale your business with any online payment processing system.
In the meantime, read our portfolio to see the sizes and types of projects we’ve worked on.