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CTO at Triare
A complete guide to top online payment systems for businesses.
If you read this article, you are probably looking for a reliable, safe, easy online payment solution with the lowest fees for your business. Unfortunately, the choice can get complicated. Intricate pricing systems, nuances of setup, and features are overwhelming.
In this guide, we are going to compare the top payment systems on the market: PayPal and Stripe, to their specialized counterparts Amazon Pay and Shopify Pay. The pros & cons with a detailed comparison table will help you choose what’s best for your eCommerce business.
But first, let’s understand the mechanism behind online payments and why you need a payment system anyway.
Knowing how the money travels from customers to you and back is helpful to understand where the fees come from.
Let’s imagine the simplest scenario: a one-time payment in the US. There will be four major players:
To receive the payment, you will need to set up the work with each of them. First of all, you’ll need an account at your merchant bank and to establish a relationship with a payment processor (if they are separate entities).
That’s when payment aggregators or payment facilitators (PayFacs) like PayPal or Stripe come into the game. (They are often called payment gateways, too). That’s a piece of software that links your website to the processing network.
Using a PayFac, you won’t need a merchant account, because you will be using theirs alongside all other people. The technology behind it is such that the information about millions of users and transactions is bundled to make it indistinguishable – and, therefore, secure.
Businesses use gateways because they simplify the process a lot. Apart from providing ready-made checkout forms, they take the responsibility of storing and protecting all the fragile credit card data (it never touches your website). In other words, they take care of (almost) all PCI Compliance, and that’s a lot of bureaucracy if you had to deal with it yourself.
Of course, if you become a highly successful business, you will probably need your own merchant account and the responsibility will be all yours. But that’s another story.
So, who gathers fees in the process?
If your product’s price was $100, the total fee (Network Costs) would usually be about $2-3, depending on the partners you choose.
Now, let’s dive into the detailed comparison of payment gateways to pick the best solution for your type of business.
What to consider before choosing a payment system:
PayPal has been around since 1998, so no wonder that it has by far the biggest share on the market. It stores customers’ card or bank account information to process online payments. More than 20 million merchants use PayPal’s solutions, including big companies like Groupon, Hulu, Spotify.
What are the advantages of using PayPal?
Cons of using PayPal:
What is PayPal most used for?
Stripe is probably the most flexible payment solution designed with custom web development in mind. It acts as a merchant account for its providers, allowing the customization of UX, integrations, complex money movement, etc. Just like PayPal, it takes care of all PCI Compliance issues. Google, Microsoft, Uber are among the big companies using Stripe.
What is the advantage of using Stripe?
Cons of using Stripe:
Who uses Stripe?
|Standard fees||Same (2.9% + $0.30 per transaction)||Same (2.9% + $0.30 per transaction)|
|Refunds||Same (no fees, original charge not returned)||Same (no fees, original charge not returned)|
|Ease of use for customer||Checkout solutions may need some configurations to have fewer clicks, but no need to have a credit card||Fewer clicks from the beginning. But requires having a credit card at all times|
|Accepted payment types||Doesn’t accept Apple Pay, and charges a separate 3.5% per transaction fee for American Express. But accepts PayPal Credit (very important for the US)||Accepts more types: Apple Pay, China UnionPay, Maestro, and a wide range of global options like WeChat Pay due to Stripe API|
|Popularity||22 million merchants and over 305 million people||1 million users|
|International availability||200+ countries, 25 currencies||44 countries (but there’s an Atlas tool for a workaround), 135 currencies|
|Pricing for higher turnovers||Graduated pricing ($3,000 USD monthly – 2.5% + 30 cents, $10,000 monthly – 2.2% + 30 cents, $100,000 monthly – undisclosed||For over $80,000 monthly you can contact for negotiations|
|Micropayment fees||Lower: 5% + 5¢ per transaction for payments under 10 USD||Higher: 5% + 5¢ per transaction for payments under 5 USD|
|Payment plans||Better (easier setup of checkout process and buttons)||Worse (you’ll need a developer or a plugin for a workaround)|
|POS capabilities||Better and cheaper (PayPal Here service)||More difficult and expensive (SDK Terminal)|
|Ease of use for merchant||Easier for a broad audience||More difficult to set up but more customization|
|Outside of the US fees||Higher (4.4%)||Slightly lower (a total of 3.9%)|
|Chargebacks||Up to a $20.00 fee (refundable)||$15.00 fee (refundable) + Chargeback Protection at 0.4% per transaction|
|ACH Transactions||Only supports through a Braintree integration||Supports|
|Support||has a community forum, but limited hours of phone support||24/7 phone and live chat|
|Security||PCI Compliance (in the Payments Pro plan, you will have to take some burdens yourself)||PCI Compliance + additional security features like Stripe Radar (for free with all standard accounts, $0.05 per transaction for custom plans)|
Amazon Pay is a payment gateway for eCommerce that allows customers to pay using their Amazon credentials. Therefore, it saves precious clicks on entering billing and shipping information.
It is basically a plugin on eCommerce platforms like Shopify, BigCommerce, Magento. To activate it, you will need an Amazon Seller account. Basic domestic transaction fees are same: 2.9% + 30 cents.
What are the benefits of Amazon Pay for merchants?
The disadvantages of Amazon Pay:
Who uses Amazon Pay?
Shopify Payments is essentially a white-label solution powered by Stripe. It is conveniently integrated into a Shopify eCommerce platform. Basic Shopify plan includes a 2.9% + 30 cents of transaction fee.
What are the benefits of Shopify payments?
Who uses Shopify Payments:
What is the cheapest online payment system?
Depends on the type and geography of your business. For micropayments or turnovers $3000+ it’s likely PayPal. For international businesses, it can be Stripe.
What is the safest payment method online?
When it comes to major payment gateways like PayPal and Stripe, they are all PCI compliant. Stripe offers additional security features like a machine learning tool Stripe Radar.
What is the best online payment system?
PayPal is the most popular system, but Stripe is growing fast and attracting a lot of businesses with a need for custom web development solutions.