PayPal is probably the best known and trusted free payment processing service in the world. However, it does have some downsides, which younger competitors have started to address. We believe there are three good reasons why you may consider looking for an alternative:
- Fees – there is no fee to use PayPal to purchase goods or services. However, you do pay to receive funds and this fee is often more expensive than alternative services. The PayPal fee on card swipe transactions is 2.7%, the rate for keyed-in transactions is 3.5% + $.15 per transaction and rate for online payments is 2.9% + $.30 per transaction.
- Payment delays – PayPal has gained a patchy reputation for holding-up or delaying payment, which it is working hard to improve.
- Your use case – there may be a service which better matches your specific needs, like the ability to transfer money overseas at the most competitive rates.
Top 6 Paypal Alternatives – Summary Table
| Alternative | Who is it right for? |
|---|---|
| Square | If you are a bricks and mortar merchant processing less than $7,500 per month in card sales, Square comes with the added benefit of free POS software. |
| Payline | If you are a merchant processing more than $7,500 per month in card sales, Payline will cost you less in card processing fees. |
| Amazon Payments | If you are an online merchant who wants to streamline the card payment process for repeat purchases. |
| Stripe | If you are an ecommerce site looking for a fully integrated payment experience so customers don’t leave your site to pay. |
| Transferwise | If you regularly transfer money overseas, Transferwise costs around 1% compared to 6.4% using PayPal. |
| Viewpost | If your customers provide you with their bank details, Viewpost costs a flat $0.50 (paid by sender) compared to 1.9 to 3.4% plus $0.20 per transaction with PayPal (paid by receiver). |
Many of PayPal‘s competitors are offering lower fees, faster payments, and improved service features like Square’s free POS software. In this article, we’ll be outlining the six of the best PayPal alternatives.
Let’s take a deeper look at each of these alternatives to find out what it is that is tempting customers away from PayPal.
Square
Who is it right for?
Square is a great alternative for bricks and mortar businesses processing less than $7,500 per month in card sales. It’s available in the US, Canada, Japan and Australia.
How much does it cost?
Free for customers, merchants pay a flat rate of 2.75% for all swiped transactions, 3.5% + $0.15 for keyed transactions, and 2.9% + $0.30 for online transactions.
How does it work?
We recommend Square because like PayPal, it’s so easy to get started. But unlike PayPal, Square comes with free, feature rich POS software. If you run a bricks and mortar store, this will allow you to manage many of your other essential business processes. For instance; inventory management, employee sales performance, customer email campaigns and gift card promotions. Square also has a range of reasonably priced POS hardware options. For instance, a Square EMV card reader will work perfectly with your Smartphone or Tablet for as little as $29.
Square provides simplified pricing, the flat 2.75% rate on swiped transactions makes it easy to predict what you’ll be charged. This is ideal for many types of small business because you know in advance exactly how much you’re going to pay. There are no monthly or hidden fees to worry about, and you pay the same flat rate no matter what type of card the customer uses.
Payline
Who is it right for?
Payline is great for merchants processing more than $7,500 per month in card sales. It’s available in the US.
How much does it cost?
Free for customers, merchants pay interchange (credit card company fee and issuing bank fee) plus 0.2% + $0.10 per transaction. For instance, a Visa Credit Card Retail Swipe has an interchange cost of cost 1.51% + $0.10, so the Payline cost will be 1.71% + $0.20 compared to 2.7% with PayPal. Learn more about interchange plus pricing.
How does it work?
Payline provides one of the lowest fees available from any payment processor. We recommend Payline because they offer affordable interchange plus pricing for all types of small businesses. This is a more cost-effective alternative than using PayPal, the higher your card sales per month, the more you save.
Merchant account pricing provides small businesses with access to the same low rates that larger corporations take advantage of. Although many credit card processors offer low rates, Payline stands out because its pricing is very transparent and provides you with discounts based on your sales volume.
We recommend Payline as the best merchant services provider for small businesses because they are an honest player providing one of the lowest processing rates in the industry. Plus they have a transparent payment structure, no monthly minimum charge and a reputation for excellent customer service.
Amazon Payments
Who is it right for?
Amazon Payments is a great alternative for online merchants who want streamlined card processing for repeat payments from a well known brand. It’s available in the US, UK and Germany.
How much does it cost?
Free for customers, merchants pay 2.9% + $0.30 per transaction. Like PayPal, Amazon offers volume discounts to merchants as well as a discounted rate for non-profits.
How does it work?
Like PayPal, Amazon Payments gives your customers the opportunity to make all their online payments using the Amazon account they already have setup.
Where it differs, is that it allows you to simplify the customer experience and streamline the process for repeat purchases. For instance, the need to re-enter full card details or shipping addresses. The order is processed by Amazon, which provides you with access to their highly regarded fraud protection service.
If you are looking to process online payments, using a trusted global retailer name like Amazon is one of the best ways to give consumers the confidence they need to pay online.
During the checkout process, your customers will have the option to pay with Amazon. After logging into their Amazon account, the customer’s Amazon address and payment information will be passed through to your website for a quick checkout. This simplifies the checkout process from a customer’s perspective, and the Amazon name gives them peace of mind.
With no setup costs, monthly fees and competitive transaction costs, Amazon Payments is a great alternative to PayPal at the same cost.
Stripe
Who is it right for?
Stripe is a great alternative for online businesses wanting to process card sales without customers leaving their site. Available in the US and 20 other countries.
How much does it cost?
Free for customers, merchants pay 2.9% + $0.30 per transaction and there are no setup costs or monthly fees.
How does it work?
Stripe is a fast growing alternative to PayPal for ecommerce payment processing. This is because unlike PayPal, Stripe can be easily embedded into your website so customers can checkout without leaving your site.
The solution is targeted at developers because Stripe needs some basic website development skills to implement. However, if you use a developer for the rest of your website or app needs, then Stripe should be easy for them to implement.
Apart from being good value for the money, Stripe accepts payment in over 100 different currencies, supports recurring payments with a streamlined payment process out-of-the-box, and has an effective anti-fraud team on-hand to deal with dubious transactions.
Transferwise
Who is it right for?
Anyone transferring money overseas. Available in the US and 40 other countries.
How much does it cost?
About 1% per transfer.
How does it work?
If you are looking to transfer money overseas, then Transferwise is a very cost-effective alternative to PayPal or bank transfer. TransferWise is a smart and transparent service that allows you to send money overseas as fast as possible for as little as possible. There are no hidden charges: you pay the lowest possible fee, which is clearly shown upfront. In addition, there is also bank level security and responsive customer service too.
PayPal charges 3.4% to transfer money overseas. Once the money has been transferred, it costs about 3% to convert into local currency, which you cannot avoid if you want to remove the money from your PayPal account. The fees are hidden in PayPal’s conversion rates. With Transferwise, you pay about 1% per transfer into local currency. So if you send $1,000, the fee is about $10. With PayPal, the same transfer would cost around $69.
Launched in 2011, Transferwise now has over 1 million customers, sending more than £800m using the platform every month via more than 645 currency routes around the world. It’s also backed by Peter Thiel who was a co-founder of PayPal!
Viewpost
Who is it right for?
Any business wishing to pay a bill or receive payment directly from one bank account to another. Available in the US.
How much does it cost?
Customers are charged $0.50 per transaction. Free for merchants.
How does it work?
Viewpost is a real-time, cloud based network for exchanging invoices and payments direct from one bank account to another. It’s dead simple to sign-up and create an account for free via desktop or mobile, start making payments, track their progress and also to receive electronic deposits too.
The cost structure for payment is very transparent. It’s totally free to receive payment and it only costs $0.50 to make an electronic payment. This compares with PayPal’s 3.4% to 1.9% rate (based on volume), plus $0.20 per invoice transaction. If your customers are willing to pay by electronic transfer from their bank account to your bank account, this is a great way to save money.
Viewpost seamlessly integrates with Quickbooks accounting software, and if your payment vendor isn’t connected, you simply send them an electronic invite to join.
The Bottom Line
PayPal now has great competitors who have started to provide more competitive rates and/or enhanced services for the same rate. If you are going to be making payments online, it’s definitely worth considering the alternatives available to make sure you are getting the most competitive rate. It’s also worth exploring services that match your specific needs, like the ability to transfer money overseas at the most competitive rates.
Don’t forget to check out Square, our recommended PayPal alternative. Click here to try it for free.
Jhon
Great stuff, thanks
Thanks for dropping by!
Reginald Grady jr
Viewpost is easy to use and makes
electronic invoicing simple, saving time and money
Thanks for your feedback Reginald.