PayPal vs Stripe for small businesses in 2019

Written by Michael

This post made the #1 spot on Hacker News and was read by more than 10,000 people within 24 hours. If you're interested, join the discussion on HN.

PayPal and Stripe are online payment processors. As a business owner, you may ask yourself which of the two to use. This post shares my experiences.

I'm developing a software product called fman. It's a file manager for Windows, Mac and Linux. It's free to try, but people who use it regularly must buy a license.

Initially, payments for fman were handled exclusively via Stripe. This let customers pay by credit card. But I got many requests that people also wanted to use PayPal. So I added it as a second option. It was a horrible experience: PayPal's APIs are extremely difficult to use. Supposedly, Braintree make it possible to integrate PayPal much more easily.

Despite these difficulties, it turns out that offering PayPal was a good decision: Even though Stripe is the default option, two thirds of fman purchases are now made with PayPal. From feedback, I know that some people simply can't pay by credit card. Thus, offering PayPal significantly increases fman's (small) revenue.

So why is this? There are are several reasons. As mentioned above, some people simply don't have a credit card. But another, I believe more important reason is that people like that PayPal acts as a "safe" intermediary. It has its advantages: When you use PayPal to pay for a subscription service, you can cancel that subscription right in PayPal's admin interface. This is not possible when you directly use your credit card on a site.

The above points hold because fman is mostly bought by individuals. For your business, it will depend: Are you targeting consumers? Then offering PayPal is probably a good idea. Otherwise, I would avoid the pain and simply use Stripe.