Stripe vs PayPal for a Business of One
Disclosure: Neither company pays us anything. No affiliate arrangement with Stripe or PayPal, no link on this page earns a cent. The one thing to declare is that PayPal is the account this site would eventually be paid through — and the conclusion below is that Stripe is cheaper, configured correctly. Check the arithmetic; all of it is shown.
Stripe advertises 2.9% and PayPal advertises 3.49%. On invoices, PayPal is usually cheaper. The reason is a single line on a page most people never open — and once you know it, Stripe becomes the cheapest way to be paid on this site by a wide margin.
The short answer
Stripe — but only if you do not use Stripe Invoicing. Its 0.4% is what hands the win to PayPal.
- ⚠️Stripe Invoicing adds 0.4% per paid invoice on top of 2.9% + 30¢. That makes Stripe 3.3% — and PayPal’s card rate of 2.99% + 49¢ beats it above $61.29.
- ✅Connect Stripe to free invoicing software instead — Zoho Invoice or Invoice Ninja — and the 0.4% disappears. Stripe then beats PayPal at every invoice size.
- 🏦Bank transfer is where it becomes absurd. Stripe caps ACH at $5. A $25,000 invoice costs $5.00 to receive. PayPal caps at $10.
- 🌎Overseas, PayPal is cheaper: 5.00% against Stripe’s 5.81% once currency conversion is involved.
Jump to: The 0.4% Cards Bank transfers Overseas clients Which one are you?
The fee that decides the whole comparison
Stripe publishes its card rate on one page and its invoicing rate on another. Stripe Invoicing charges 0.4% per paid invoice, and Stripe’s own page says plainly that Payments pricing applies on top of it.
Stripe, two ways.
Through Stripe Invoicing: 2.9% + 30¢ + 0.4% = 3.3% + 30¢
Through free invoicing software connected to your own Stripe account: 2.9% + 30¢
PayPal, card: 2.99% + 49¢ · PayPal, its own button: 3.49% + 49¢
Everything below follows from those four lines. The comparison people expect — 2.9% against 3.49% — is not one that exists in practice, because nobody sends an invoice without invoicing software of some kind.
Cards: PayPal wins, until you remove Stripe’s invoicing fee
| Invoice | Stripe via free software | PayPal card | Stripe Invoicing |
|---|---|---|---|
| $100 | $3.20 | $3.48 | $3.60 |
| $500 | $14.80 | $15.44 | $16.80 |
| $1,000 | $29.30 | $30.39 | $33.30 |
| $5,000 | $145.30 | $149.99 | $165.30 |
| $10,000 | $290.30 | $299.49 | $330.30 |
Read the last two columns first, because that is the comparison most people are actually making. PayPal beats Stripe Invoicing at every size above $61.29 — the point at which PayPal’s lower percentage overtakes its higher 49¢ fixed fee.
Now read the first column. Stripe without the invoicing surcharge has both the lower rate and the lower fixed fee, so it wins at every size with no crossover at all. The difference between column one and column three is one setting: whose software creates the invoice.
Bank transfers: not close, in either direction
| Invoice | Stripe via free software | PayPal | Stripe Invoicing |
|---|---|---|---|
| $1,000 | $5.00 | $10.00 | $9.00 |
| $5,000 | $5.00 | $10.00 | $25.00 |
| $10,000 | $5.00 | $10.00 | $45.00 |
| $25,000 | $5.00 | $10.00 | $105.00 |
$5.00 on a $25,000 invoice is 0.02%. That is Stripe’s ACH cap doing all the work — the fee stops growing at $625 of invoice and never moves again.
The same $25,000 on a card costs $725.30. Same client, same money, $720 apart.
If you compare Stripe Invoicing against PayPal on bank transfers — which is the comparison you get if you use each company’s own invoicing tool — the answer is oddly non-linear. PayPal is cheaper below $833, Stripe wins in a narrow band from $833 to $1,250, and PayPal is cheaper again above that. Two caps of different sizes crossing over is the reason, and it is a good illustration of why headline rates are useless without arithmetic.
Overseas clients: PayPal, clearly
| Invoice from abroad | PayPal | Stripe (with conversion) |
|---|---|---|
| $500 | $25.44 (5.09%) | $29.30 (5.86%) |
| $2,000 | $100.29 (5.01%) | $116.30 (5.82%) |
| $5,000 | $249.99 (5.00%) | $290.30 (5.81%) |
Both are expensive and PayPal is less so. Stripe adds 1.5% for an international card and a further 1% if currency conversion is required; PayPal adds 1.5% on top of its invoicing rate. Neither figure includes PayPal’s currency conversion spread, which we did not establish and which would narrow the gap.
The honest framing is not “PayPal is 0.8 points better”. It is that both charge about 5%, and 5% of an overseas invoice is a larger cost than every subscription on this site combined.
Which one are you?
Which one are you?
💰 US clients, invoices over $1,000, and they can pay by bank
Stripe, connected to free invoicing software. $5 flat, forever, however large the invoice. This is the cheapest configuration on this entire site. Set it up once: Zoho Invoice or Invoice Ninja plus your own Stripe account.
💳 My clients always pay by card
Still Stripe via free software — 2.9% + 30¢ beats PayPal’s 2.99% + 49¢ at every size. But the gap is small ($4.69 on $5,000). If PayPal is what your clients already have, that convenience is worth more than the difference.
🌎 Most of my clients are overseas
PayPal, at about 5.00% against Stripe’s 5.81%. On $5,000 that is $40 saved. But budget 5% either way, and check PayPal’s currency conversion spread before assuming the gap holds.
🛠️ I do not want to set up two tools
Then PayPal. Its invoicing is built in, free, and beats Stripe Invoicing on cards above $61.29 and on bank transfers above $1,250. Stripe Invoicing is the one configuration that loses to everything.
🧾 My invoices are under about $60
The fixed fee dominates and Stripe wins on both routes — 30¢ against 49¢. The larger fix is fewer, bigger invoices: the fixed fee is charged per invoice, not per dollar.
What we could not verify
Country. Every figure is from the United States schedules. Stripe redirected us to its Japanese page first, where the domestic rate is a different number entirely, and PayPal’s fixed fee alone ranges from 0.39 EUR to 49.00 JPY. Open your own country’s page first.
PayPal’s currency conversion spread. Applied on top of the fees above when currencies differ. We did not establish it, and it is the number most likely to erode PayPal’s overseas advantage.
Whether Stripe’s 0.4% applies to ACH. We assumed it applies to any paid invoice, which is what “per paid invoice” says. If it does not, Stripe Invoicing’s bank figures here are overstated — which would make Stripe better, not worse.
The thing that actually decides it
Not which company is cheaper. Configured one way Stripe is the cheapest thing on this site; configured another way it is the most expensive of the three. The company is not the variable.
Two decisions do all the work, and neither is “Stripe or PayPal”:
One. Do not pay a percentage for the software that makes the invoice. Free invoicing tools connect to your own Stripe or PayPal account and remove that layer entirely — worth 0.4% on every card payment you take.
Two. Ask to be paid by bank transfer. On a $25,000 invoice that is $5 against $725. There is no software decision on this site, at any price, that comes close to being worth $720.
Related: Is Stripe Invoicing actually free? and Is PayPal Invoicing actually free? — the full breakdowns. Square Invoices, and the two free invoicing tools you would connect either one to.