“I am currently looking at using Stripe, Braintree or PayPal as my payment platform and wondering which vendor is the best” is a question we always receive here.
To make an informed decision about which payment platform may be the best for your business you’ll first need to understand what each platform offers.
The point of this blog is the give you a simple comparison of the three vendors and review the major differences between Stripe, Braintree and PayPal.
Overview
If your business needs a tech-driven platform to power payments Braintree, Stripe and PayPal should all be high on your list when looking around.
Both Stripe and Braintree have very strong developer tools and can reach customers all over the world due to their global service.
It is important to note though – if you are between Stripe and Braintree before committing ensure you have a deep knowledge of coding or your developer does.
If not, you won’t be able to fully utilize their services and it may not be worth the added costs they tend to charge. You might want to look into a standard credit card processing company.
Is there a specific company that is much better than the other? Are there major differences between these three major payment platforms? These are all questions we will dive into below.
Supported Payment Methods
Majority of the time ecommerce, subscription, and marketplace type of businesses usually need to accept more than just the standard credit cards like Visa, Mastercard, Amex and Discover. This is where we will start to find some major differences between these three players.
One of Stripe’s advantages is that it works with Alipay – a Chinese payment platform. If your business is looking to target or already targeting the Chinese market then Stripe is a great option for you. Stripe also accepts ACH payments which is not available from Braintree.
That being said – since they are obviously major competitors Braintree does offer solutions to compete with Stripe.
Braintree is owned by PayPal which means they provide seamless integration between PayPal + Braintree.
While a business is using Braintree, they can accept PayPal payments and integrate with Venmo which is a digital wallet owned again by PayPal.
In regards to just using PayPal as your payment platform you can only accept PayPal, credit card and debit card transactions.
If you plan on accepting bitcoin down the road or other types of payments you should most likely consider Braintree or Stripe.
However, if your business currently is just using PayPal keep in mind PayPal owns Braintree so they would be more than happy to help with that transition.
How much does each platform charge?
This might be the most important question when looking into these three vendors. Below we will review how Stripe, Braintree and PayPal handle various types of charges.
Disputes and Refunds
As everyone reading this blog is aware – sometimes customers will dispute charges and each credit card processing company charges different fees for this.
Stripe, Braintree and PayPal all offer support when it comes to disputes. Both Braintree and Stripe refund the disputed amount and charge you $15 for the transaction while PayPal charges $20.
Now, when it comes to Stripe and Braintree, if the dispute ends up being resolved in your favor they will refund the entire $15 fee that was taken in the first place. PayPal will also return the bulk of the fees but still charge just $0.30.
One of the most convenient and beneficial aspects of Braintree is they pay back the transaction fee they took earlier if you issue a refund.
This is especially beneficial for business types that tend to have higher refund amounts than most. Stripe does not refund processing fees for refunded transactions which we are still shocked by.
Example – lets say your business takes an order for $1,000 and Braintree charged their standard fee of $2.90% + $.30 per transaction. For this transaction your business would have paid Braintree $29.30 (2.90% + $.30).
Now, once you refund this order a lot of credit card processing companies (including Stripe) would not refund the amount of $29.30 they charged for this transaction so you would be out that money.
However, Braintree would refund back the $29.30 which is a huge advantage.
What about PayPal? PayPal will also refund the transaction amount but will charge another fee of $.30 as it is technically considered a “new transaction”.
On Stripe’s pricing page it states “You can issue either partial or full refunds. There are no fees to refund a charge, but the fees from the original charge are not returned.”
Pending on your business type this can be a real deal breaker when doing a payment platform.
Transaction Fees and Pricing
The standard pricing for all three of these vendors is pretty similar, That being said, keep in mind once your volume starts increasing to over $100,000 + a month it may be time to negotiate a better pricing.
Below you will find the standard pricing for all three vendors.
PayPal Fees
- 2.90% + $.30 per transaction
- Payments Pro Plan – $30.00 a month
- Standard Plan – no monthly fee
- 1-4% transaction currency conversion
- $20 chargeback
- Volume discounts
- Non profit discount
Braintree Fees
- 2.90% + $.30 per transaction
- 1% transaction currency conversation
- No monthly fee
- $15 chargeback
- Volume discounts
- Non profit discount
- ACH Processing – 0.75%
Stripe Fees
- 2.90% + $.30 per transaction
- 1% transaction currency conversation
- No monthly fee
- $15 chargeback
- Volume discounts
- ACH Processing – 0.80%
It is important to note that Stripe and Braintree will allow you to accept cards from outside your home country but for an added cost.
Both companies will add an additional 1% per transaction; if that transaction is processed in one currency and settled in another, another 1% fee also applies for both companies.
Related Article: complete guide to negotiating Stripe processing fees
Discounts and Pricing Options
As mentioned earlier in the blog all three of the companies offer discounts mostly tailored to high-volume merchants.
Braintree and PayPal offer a 501(c)(3) discount of 2.20% + $.30 per transaction for Visa, MasterCard and Discover and 3.25% + $.30 per transaction for Amex.
Stripe does mention that they offer a 501(c)(3) discount as well but it is not clear what exactly this discount is.
Stripe, Braintree and PayPal all typically offer reductions as the volume increases. That being said, all three of these vendors want to keep you on the flat rate pricing structure as it tends to be much more profitable.
Example – once you hit the $100,000 mark in monthly sales and reach out for a reduction they may reduce the pricing from 2.80% + $.30 per transaction saving a total of 0.10% on your sales. In this example you would be saving $100 a month after the discount (not too significant).
When it comes to Stripe and Braintree they both offer an interchange plus pricing structure (we rate this the best structure) which usually will be the most cost beneficial.
As you continue to grow in volume this is going to be the structure you want to secure for the business.
They both tend to start looking into this around the $250,000 and up mark in monthly sales.
There is no direct point in which they are willing to offer it but from our work we noticed Braintree tends to offer this structure much quicker than Stripe.
PayPal does not offer an interchange plus pricing structure and will only reduce the flat rate.
Other Payment Methods
Both Stripe and Braintree work with many different payment methods including Bitcoin and ACH. As of recent bitcoin is becoming more and more popular so lets go over the fees for both vendors.
Stripe charges 0.80% for bitcoin and direct bank charges which are capped at a $5 maximum per transaction.
Braintree offers a much more lucrative structure in order to get your business to start accepting bitcoin.
The first $1M worth of bitcoin transactions are free. After this volume, Braintree 0.75% for direct bank charges. With Braintree you can accept PayPal and PayPal credit transactions as well.
Online Marketplace
As the tech world continues to evolve online marketplace business types are becoming more and more popular. An example of something like this would be Uber, Lytf, GrubHub etc.
A marketplace is pretty tricky as both the marketplace owner and the seller get part of what the buyer pays for an item.
Stripe and Braintree both offer a marketplace solution which is usually referred to as splitting payments (dividing payments in two ways).
The marketplace owner receives an amount – the fee that the seller has agreed to pay for using the marketplace. The rest goes to the seller. Stripe, PayPal and Braintree all offer this type of solution but PayPal only offers it to very few customers.
If you reach out to PayPal to use this solution they will refer you directly to Braintree. This was one of the major reasons PayPal acquired Braintree.
The fees are the same as above and they will also offer volume discounts.
Which Service Is Right For You?
Stripe
As you can see by reading this blog these three vendors have a lot in-common including pricing. Stripe’s API allows businesses to establish fully customized ecommerce processes.
As of now Stripe does not have a great face-to-face option or in person transaction.
That being said, they are currently working on building out an in person solution which is meant to compete with Square.
If you are launching a new business Stripe is always a good choice because it allows you to setup a scalable infrastructure.
Stripe has a ready-made solution which is really easy to implement and start taking payments quickly or you can have the option to customize Stripe completely to fit your goals.
It is important to keep in mind if you are not going to be using all of Stripe’s customizable tools it might be financially beneficial to look into other credit card processing companies.
PayPal
The simplest solution of them all is PayPal. If you just need to start taking payments and not worry about other details PayPal is a good safe option.
You can always add a Stripe or Braintree integration later as your business grows so it isn’t a bad idea to start out with a PayPal.
PayPal provides a smooth customer experience and allows users to pay both online and offline.
Braintree
Braintree and Stripe both have similar features when it comes to customization. Braintree currently supports 45 different countries whereas Stripe is available in only 26.
Being part of the PayPal network, the company has an additional benefit and is open to a very large share of the market.
When it comes to accepting payments and getting approved it is a little bit harder than just going online and signing up like Stripe or PayPal.
Braintree goes through an extensive underwriting process similar to a standard credit card processing company. Sometimes, even businesses that are processing with PayPal will not get approved through Braintree.
The Approval Process
Stripe is a third-party payments provider, which means the company doesn’t do an in depth underwriting process when you apply for an account.
The main issue that tends to arise with this type of model is you could face more scrutiny once you start processing. Stripe has numerous reviews of terminating accounts with no warning.
This can be due to prohibited services being sold, chargebacks too high or Stripe believing there are too many risky transactions. When Stripe shuts you down it is not even worth it to battle with them – simply move on.
Braintree has a much different on-boarding and underwriting process. Braintree has more of a traditional underwriting approach.
Each business goes through an extensive process to get approved which helps with not shutting down as many accounts.
During the approval process they may ask for things like bank statements, processing history, tax returns etc prior to approving or declining the account.
Tips for Choosing a Payment Gateway
Ask your developer – this seems like a simple task but you would be shocked how many people skip it.
We highly suggest speaking with your developer and having them look into the different API’s and what might be the most beneficial in regards to the tech side of things for your business.
Be aware of hidden fees – always get the full scope of the fees and exactly what you are paying. These three vendors don’t have too many hidden fees but if you are looking at other vendors as well you will want to do more research on pricing structures.
Think long term – don’t just sign up for PayPal because it might be the easiest to start. We see great success with companies that pick a vendor and grow with it.
Don’t forget to negotiate down the road – once you pick a vendor and continue to grow do not forget to negotiate your pricing. These three vendors can be hard to negotiate with but as your volume grows you do not want to pay the standard fees.
Final Thoughts
In regards to Stripe and Braintree they are both two fantastic tech companies but tend to be on the expensive side relative to a standard credit card processing company.
Businesses that want a fully branded solution, as well as subscription based businesses, marketplace and tech-focused companies will find all the tools they need within the Stripe and Braintree platform.
For these types of businesses it does make sense to overpay a bit more relative to a standard credit card processing company (but not by as much as they want you to think).
However, for the eCommerce business that just needs a payment processor, Stripe and Braintree may be overkill. If you don’t have the developers on staff, you may never tap into their full potential.
About Merchant Cost Consulting
If you made it this far in our blog, we assume your head is spinning, but hopefully in a good way. The key take way to note in all of this is all three of these platforms are great services and could be a good fit for your business.
Stripe and Braintree are fantastic on the tech side of things and PayPal is a very easy setup if you just need to get started.
Here are Merchant Cost Consulting, it is our job to educate, inform, and assist our audience about the murky waters of the credit card processing industry and help our clients lower credit card merchant fees without making a change to their current processor, bank, equipment, or gateway provider.
Don’t like reading long blog posts? Check out our 1 minute video explainer here!
If you are currently using Stripe, Braintree, PayPal or any other vendor and want to know if your pricing is appropriate simply reach out and we will run a full analysis on the margin these vendors are currently making
Maybe something worth editing?
This is from Braintree’s website
“Transactions fees charged by Braintree will not be returned for refunded transactions. However, if you signed up prior to 1 August 2018, transaction fees charged by Braintree are returned for fully refunded transactions.”