When looking for an online payment provider, there are a lot of options. Depending on your country, there may be just a few, but in countries like the United States and United Kingdom, there are dozens to choose from. PayPal is by far the most commonly used service in both countries, but there is competition, including a startup based in San Francisco, California, called Stripe. Stripe is looking to outperform PayPal; the question now is if they can.
PayPal is owned by eBay and has been since 2002. It’s used for online payments, as well as money transfers. The online payments it’s used for include auction sites (it’s the most common payment method for eBay), as well as other online vendors and commercial users. It charges sites other than eBay a fee, as well as charging users a fee for transfers received if it’s from anyone other than friends and family. Stripe and PayPal have the same fee per transfer. Transfer methods include directly from a bank account, credit cards, and eChecks.
PayPal has a partnership with China UnionPay that allows Chinese users to use PayPal when shopping online. It has a worldwide presence, though it does not support Montenegro, Pakistan, Iraq, Bangladesh, or Afghanistan. It also does not support countries on the United States economic sanctions list. There are also restrictions in various other countries when it comes to personal transfers, and India has other specific regulations when it comes to payment methods and bank account transfers through PayPal. Stripe vs PayPal has received $40 million in funding to start up, whereas PayPal is the result of a company merger.
PayPal allows users to set a hierarchy of payment methods; if one payment method doesn’t have enough funds, it moves to the next method in the hierarchy. It requires a verified bank account if a user spends more than a specified amount. When distributing funds, PayPal has the options of a check, a deposit account with PayPal, or a transfer to the user’s verified bank account.
Stripe received $40 million in startup funds, including investments from the founders of PayPal. Stripe is far more committed to transparency, as PayPal is unclear on things such as freezing accounts. Stripe plans to post any legal requests from third parties to freeze accounts or stop doing business with a user to the Chilling Effects Clearinghouse website, which is committed to publicizing people who seek to suppress the speech of others.
Stripe has a very simple way for businesses to accept credit cards; they don’t need to send users to another site to submit their payment. Stripe itself does all the harder work of processing the transaction. It is available as a mobile application from the start, as well as online. Stripe aims to outperform other eCommerce online payment processers by making the payment acceptance process so easy for sellers. Stripe is currently only available in the United States and Canada because it’s so new, but it plans to expand quite rapidly.