Stripe Payments vs Paypal - Comparison for UK Businesses

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Choosing between Stripe and PayPal can directly impact your bottom line, customer checkout experience, and how easily you can access your money.

In this guide, we've compared Stripe and PayPal from a UK perspective, breaking down their fees, features, and international payment capabilities so you can make an informed decision.

Key takeaways

Stripe vs PayPal: At a glance

What is Stripe? An overview for UK businesses

Stripe is a powerful payment processing platform designed for businesses of all sizes, from startups to global enterprises. It's particularly well known for its developer-friendly tools and highly customisable nature.

This allows businesses to build a more seamless and branded checkout experience directly on their website or app, rather than sending customers to an external page. In practice, this can reduce checkout friction, improve conversion rates, and give businesses full control over branding, localisation, and payment flows.

It offers a comprehensive suite of products that go beyond simple payment acceptance.

Key Stripe features

• Stripe Checkout: A pre-built, optimised payment page that you can integrate with just a few lines of code.¹¹ This is often used as a fast way to launch while still benefiting from Stripe’s optimisation and localisation features.
• Customisable UIs: Build your own payment experience using Stripe’s developer tools.¹² This is particularly valuable for businesses that want to optimise conversion funnels or run A/B tests on checkout design.
• Stripe Invoicing: Create and send customisable invoices that customers can pay online.¹³ Useful for B2B businesses or service providers managing off-platform payments.
• Stripe Billing: Manage recurring revenue and subscriptions with tools for tiered pricing, metered usage, and automated dunning.⁵ This is critical for SaaS businesses where failed payments directly impact revenue.
• Stripe Terminal: Accept in-person payments with card readers that integrate with your existing Stripe setup.⁷ Enables unified reporting across online and offline sales.
• Stripe Connect: A solution for platforms and marketplaces to accept money and pay out to third parties.¹⁴ Essential for multi-vendor platforms or gig economy models.
• Radar: Fraud detection and prevention tools powered by machine learning.¹⁵ Helps reduce chargebacks while minimising false declines that could hurt revenue.

Stripe security overview

Stripe is a PCI Service Provider Level 1, which is the most stringent level of certification available in the payments industry.¹⁶

Stripe also encrypts sensitive data and provides fraud prevention tools to help businesses process payments securely. In practice, this reduces the operational burden on businesses, as much of the compliance and security infrastructure is handled by Stripe rather than requiring in-house expertise.

What is PayPal? An overview for UK businesses

PayPal is one of the most recognised names in online payments globally. Its brand familiarity can build consumer trust, which may help businesses at checkout.

For many customers, especially in cross-border transactions, seeing PayPal can reduce hesitation and increase the likelihood of completing a purchase—particularly if they prefer not to share card details directly with a merchant.

PayPal offers a broad suite of merchant services, especially for e-commerce stores and small businesses looking for a quick way to start accepting payments.

You do not need to be a developer to get started, and adding a PayPal button to a website can be relatively quick.

Key PayPal features

• PayPal Checkout: Add payment buttons to your site, including options such as Pay Later and Venmo in the US.⁶ This can increase average order value by offering flexible payment options.
• Invoicing: Send invoices from your account or the PayPal app so customers can pay online.¹⁷ Particularly useful for freelancers and small service businesses.
• PayPal Point of Sale (formerly Zettle): A point-of-sale solution with card readers and software for in-person payments.^{8, 26} It enables businesses to accept card and contactless payments, manage inventory, and track sales in one system.²⁶
• Seller Protection: Protection for eligible transactions involving unauthorised transactions or item-not-received claims.¹⁸ Helps mitigate financial risk, especially for online sellers.
• Working Capital: Eligible businesses can apply for funding based on their PayPal sales history.¹⁹ Provides access to cash flow without traditional lending processes.
• QR Code Payments: A way for customers to pay in person using the PayPal app.²⁰ Reduces reliance on physical hardware in some scenarios.

PayPal security overview

PayPal operates as a licensed and regulated payment provider in the UK and uses encryption and fraud monitoring to help protect transactions.

For business owners, PayPal's Seller Protection programme can add another layer of protection for eligible transactions.¹⁸ However, eligibility requirements and dispute processes mean businesses still need clear fulfilment and tracking practices to minimise risk.

Stripe vs PayPal fees in the UK: What you actually pay and why it matters

For any business, payment processing costs are a critical factor. Both Stripe and PayPal have complex fee structures, and the cheapest option will depend entirely on the types of transactions you process.

Beyond headline rates, businesses should consider how fees compound at scale, especially with international sales, refunds, and currency conversion.

Domestic transaction fees

• Stripe: Charges 1.5% + 20p for standard UK cards. For premium UK cards, the fee is 1.9% + 20p.²
  In practice, this lower base fee can significantly improve margins for high-volume businesses or those with lower average order values.

• PayPal: The standard fee for commercial transactions in the UK is 2.9% + 30p.³
  While higher, some businesses offset this through improved conversion rates due to PayPal’s brand recognition and stored customer details.

International transaction fees

• Stripe: Charges 2.5% + 20p for cards from the European Economic Area (EEA) and 3.25% + 20p for all other international cards.²
  These fees can quickly impact profitability for cross-border e-commerce, especially when combined with FX costs.

• PayPal: Charges its standard domestic rate plus a fixed cross-border fee. This fee is 1.29% for payments from the EEA and 1.99% for payments from all other markets.³
  The layered fee structure can make it harder to predict total costs, particularly for businesses scaling internationally.

Currency exchange rate markups

• Stripe: Charges a 2% currency conversion fee.²
  This applies when payments are automatically converted, which can reduce net revenue if not managed carefully.

• PayPal: Charges a 3% currency conversion fee on top of the wholesale exchange rate.³
  Over time, this higher markup can materially impact margins for businesses with significant international revenue.

Comparing Stripe vs PayPal features: Which is better for your business model?

Point of sale (POS) and in-person payments

• Stripe Terminal: Offers card readers that integrate with your online payment system.⁷
  Best suited for businesses that want unified reporting and a single payments infrastructure across channels.

• PayPal Point of Sale (formerly Zettle): Offers card readers, POS systems, and software.^{8, 26}
  The system allows businesses to accept payments, manage inventory, and track sales in one place, with options like Tap to Pay and mobile-based checkout.²⁶ It is typically easier to deploy quickly, especially for small retailers or businesses without technical resources.

Online checkout experience and conversion impact

• Stripe: Offers a more customisable checkout experience.¹¹
  This allows businesses to reduce redirects, maintain brand consistency, and optimise checkout flows—often leading to higher conversion rates.

• PayPal: Known for familiar checkout flow.⁴
  The recognisable interface can reduce trust barriers, particularly for new or lesser-known brands, even if redirects introduce slight friction.

Subscriptions and recurring billing

• Stripe Billing: Advanced subscription tools.⁵
  Supports complex pricing models and automated retry logic, which can directly reduce churn and recover failed payments.

• PayPal: Simpler recurring tools.⁶
  Suitable for straightforward subscription models but may lack flexibility for more complex billing scenarios.

Integrations and developer flexibility

• Stripe: API-first approach.⁵
  Ideal for businesses that want deep control, custom workflows, or integration into proprietary systems.

• PayPal: Plug-and-play integrations.⁶
  Enables faster setup with platforms like Shopify or WooCommerce, reducing time to launch.

Frequently Asked Questions

Is Stripe cheaper than PayPal in the UK?

It depends on the transaction.^{2, 3} In general, Stripe tends to offer lower domestic card fees, but the total cost depends on factors like international sales, currency conversion, and whether PayPal’s checkout improves your conversion rate.

How do Stripe and PayPal compare on security?

Both use strong security.^{16, 18} In practice, both platforms meet high compliance standards, but risk management also depends on how you configure fraud rules, handle disputes, and manage customer verification.

Can I use Stripe and PayPal together?

Yes.²¹ Many businesses offer both options at checkout to balance conversion via PayPal and cost efficiency/control via Stripe.

Which is better for small business?

Depends on needs.¹ PayPal is often easier to start with, while Stripe may offer better long-term scalability and cost efficiency as your business grows.

Which is better for nonprofits?

Both are viable.²³ The best choice depends on donation flow, international reach, and whether recurring giving is a core part of your model.

How do they compare to others?

Depends on the scale of your business.²⁴ Larger businesses may also consider providers like Adyen for global payment orchestration.

How do disputes work?

Both platforms charge dispute fees^{2, 3} and require evidence submission, so having clear fulfilment, tracking, and customer communication processes is key to minimising losses.

Sources:

Sources last checked on 31 March 2026