Stripe vs PayPal Payment Processing

Verdict: Stripe for the engine room, PayPal for the door. If you’re building a custom checkout, billing subscribers or splitting marketplace payouts, you want Stripe.

If you’re trying to stop hesitant consumers bouncing at the card form, you want the PayPal button. Most growing UK stores run both, with Stripe as the primary acquirer.

Best For Stripe: A UK SaaS startup with 500 subscribers at £29/month that needs proration, dunning and retry. A Manchester print maker on Shopify + Etsy + own site that wants clean Xero reconciliation. Any marketplace where a slice goes to the platform.

Best For PayPal: A D2C food brand whose buyers skew over 45 and already have a PayPal balance. A freelancer invoicing US and EU enterprise clients who recognise the brand. Any store where “do you take PayPal?” comes up in customer support.

Not Ideal For: Stripe if you’re a sole trader without a developer, you can ship Payment Links and that’s about it. PayPal if you’re above £5k MRR on subscriptions, because the 2.9% + 30p wallet rate eats margin fast.

Neither, if you’ve been hold-frozen before and can’t survive another 21 days without cash.

Key Facts: Stripe charges 1.5% + 20p on UK cards online. PayPal charges 1.2% + 30p for direct card and 2.9% + 30p when the buyer hits the wallet button (provider pricing pages, 20 May 2026).

Stripe Payments UK Ltd is FCA-authorised as an EMI (FRN 900461, since 2 May 2018). PayPal UK Ltd took over from PayPal (Europe) S.a.r.l. et Cie on 1 November 2023, FCA EMI FRN 994790.

Which Is Better for UK Small Businesses?

The decision splits on two numbers: the fee gap and the conversion gap. Below roughly £5,000/month, PayPal’s wallet button usually earns its premium back.

The Nielsen Media Behavioural Panel (95,161 UK desktop transactions between October 2019 and September 2020, commissioned by PayPal) measured a 24% checkout conversion uplift, PayPal’s own figure, so weigh it accordingly.

But the directional point holds: a checkout that converts a quarter more visitors is worth a heavier fee.

If your buyers skew over 45, or if cross-border traffic from the US, Ireland or Germany matters, the PayPal button is often the single highest-ROI change you can make to a UK checkout.

A D2C food brand using Klaviyo for email-driven sales, with a 40-plus customer base, will see the lift land harder than a Gen-Z streetwear store where Apple Pay does the same job.

The maths inverts as you scale. Take a UK Shopify store turning over £10,000/month at an average basket of £40, 70% UK and 30% EU. On Stripe you pay roughly £200/month in fees.

On PayPal, with wallet-weighted traffic and the 1.29% EEA surcharge on the EU slice, you pay closer to £352. That’s about £150/month, £1,800/year, before you factor in conversion uplift. (Derived from stripe.com/gb/pricing and paypal.com/uk/business/paypal-fees, 20 May 2026.)

The break-even is where the PayPal lift stops paying for itself. At £10k/month the answer is usually “run both”, Stripe primary, PayPal as a secondary wallet button.

At £30k MRR in a SaaS context the answer is almost always Stripe alone, because subscribers don’t need a conversion nudge once they’ve already signed up.

Two concrete shops to anchor this. A Manchester art print maker doing 30 orders a week at £45 average, selling on Shopify, Etsy and her own site: she should keep PayPal on Shopify for the wallet conversion. Her audience overlaps heavily with PayPal-native Etsy buyers.

A UK SaaS founder billing 500 subscribers at £29/month, planning to add metered usage tiers and annual plans: Stripe Billing for the proration, dunning and customer portal. PayPal would actively get in the way.

If you run a UK marketplace, think Etsy-style with multiple sellers and split payouts, Stripe Connect is the only mature option.

PayPal’s marketplace story is a multi-product stitch-together (Payouts API plus Braintree plus standard PayPal accounts), and merchants we’ve looked at report it eats engineering time the Stripe approach doesn’t. (Source: stripe.com/connect.)

Stripe vs PayPal Fees and Charges

Card Transaction Fees

Stripe’s online rate card: 1.5% + 20p on UK consumer Visa/Mastercard; 1.9% + 20p on commercial cards (the corporate cards your B2B clients pay with); 2.5% + 20p on EEA cards; 3.25% + 20p on non-EEA.

Amex sits at 2.0% + 20p. Add 2% any time a currency conversion is involved. (Source: stripe.com/gb/pricing, 20 May 2026.)

PayPal’s direct-card product, Advanced Credit and Debit Card Payments, charges 1.2% on UK domestic debit and credit plus a fixed fee, current schedule at paypal.com/uk/business/paypal-fees.

Here is the part that catches people. PayPal wallet transactions (the actual checkout most of your buyers will use) cost 2.9% + 30p.

You cannot stop a customer choosing the wallet route.

PayPal then layers 1.29% on EEA buyers and 1.99% on non-EEA buyers on top of that. Sell to a German customer paying with their PayPal balance and you’re paying 4.19% + 30p before FX. (Source: paypal.com/uk/business/paypal-fees.)

PayPal’s FX markup is roughly 3% above the wholesale rate, baked into the exchange rate rather than itemised on the invoice. Stripe’s 2% is shown as a separate line.

If you invoice a US client £5,000, the PayPal version is less transparent and harder to reconcile. Current rates at paypal.com/uk/business/paypal-fees.

In-person, the picture is simpler. Stripe Terminal: 1.5% + 20p on UK cards, 1.4% + 10p on EEA, 2.9% + 10p on non-EEA. Tap to Pay on iPhone adds 10p per authorisation.

Zettle by PayPal runs a flat 1.75% across every card type including Amex , the easiest in-person rate to explain to a non-technical operator. (Source: stripe.com/gb/pricing and zettle.com/gb, 20 May 2026.)

Monthly, Setup and Contract Costs

Neither provider charges a monthly fee on the standard tier. No setup fee, no PCI compliance fee, no minimum volume to hit.

That makes both meaningfully cheaper to start with than a traditional acquirer like Worldpay or Elavon, where a multi-year contract typically layers £25–£80 a month in PCI and gateway fees on top of the headline rate.

Stripe’s add-ons are where the cost stack builds. Stripe Billing for subscriptions costs 0.7% of billing volume on pay-as-you-go, or £450/month flat for up to £70,000 MRR (0.67% above that).

Stripe Radar fraud screening is 2p per transaction on standard accounts, 6p on custom pricing. Chargeback Protection adds an optional 0.4%. None of these are forced on you. If you run a SaaS, you’ll end up paying for Billing. (Source: stripe.com/gb/pricing, 20 May 2026.)

PayPal’s recurring-payment tools have historically carried monthly fees in some markets, but the current UK position is not clear from public pricing pages , check paypal.com/uk/business for current terms.

Other Fees to Watch

Chargebacks are where small numbers add up. Stripe takes £20 per dispute and refunds it if you win. Five disputed transactions in a quiet month is £100 you weren’t expecting. (Source: stripe.com/gb/pricing, 20 May 2026.)

PayPal’s dispute fee in GBP and the exact reversal terms are not published on the standard pricing page, paypal.com/uk/business/paypal-fees has the current schedule.

What is well-evidenced is that PayPal tends to side with the buyer in marginal disputes, so even when you win a card chargeback the PayPal claim can still go against you.

If you live or die on cash flow timing, payouts matter more than the headline rate. Stripe Instant Payouts cost 1% (50p minimum) and clear in about 30 minutes via Faster Payments, 24/7 including bank holidays.

Useful if you’re a weekend market trader and your supplier wants paying on Monday. PayPal standard withdrawals to a UK bank are free when no FX is involved, but you wait a few business days. (Source: stripe.com/gb/pricing and paypal.com/uk/business/paypal-fees.)

Open Banking is a Stripe advantage. Stripe Pay by Bank launched in May 2024 at 0.5% + 20p over Faster Payments, a third of the card rate. PayPal has no comparable UK Open Banking merchant product as of May 2026. (Source: stripe.com/gb/pricing and paypal.com/uk developer docs, 20 May 2026.)

If a meaningful share of your customers will pay by bank transfer, that’s a structural cost win for Stripe.

Fee Verdict: Who Costs Less

On blended rates, Stripe is cheaper for almost every UK online merchant. At £10k/month, a UK-only Shopify store pays roughly £200 on Stripe versus £340 on PayPal (wallet-weighted).

Add 30% EU traffic and the gap widens to about £152/month thanks to PayPal’s 1.29% cross-border surcharge. A SaaS at £15k MRR using Stripe Billing pays roughly £405/month versus PayPal’s £510. (Derived from provider pricing, 20 May 2026.)

The one nominal exception: PayPal’s direct-card product, Advanced Credit and Debit Card Payments, at 1.2% + 30p, is technically cheaper than Stripe’s 1.5% + 20p on pure domestic debit.

In practice, almost no UK merchant runs that configuration alone. It needs developer integration, and if you have PayPal at the checkout most consumers click the wallet button instead. The headline doesn’t survive contact with real buyers.

Stripe vs PayPal Payment Methods and Checkout Options

Cards, Wallets and Alternative Payment Methods

The base coverage is the same: Visa, Mastercard, Amex, Apple Pay, Google Pay. Stripe goes further on EU APMs, iDEAL for Dutch buyers, Bancontact for Belgian buyers, SEPA Direct Debit, SOFORT, Giropay and Przelewy24.

Since June 2024, Stripe adds 1.5% on European bank-based methods (a post-Brexit cost pass-through). If 30% of your traffic is Dutch, that matters. (Source: stripe.com/gb/pricing, 20 May 2026.)

Stripe’s BNPL story is Klarna Pay Later and Pay in 3 at 4.99% + 35p. (BNPL availability subject to change, current options at stripe.com/gb.)

PayPal’s methods are wallet-anchored. iDEAL, SEPA Direct Debit and Bancontact aren’t directly listed for UK merchants via standard PayPal Checkout.

If you’re selling into the Netherlands or Belgium and you want the local payment rails, Stripe is doing more for you.

PayPal Pay in 3 is available at checkout for UK buyers on purchases between £30 and £2,000, interest-free over three payments. It’s an unregulated credit agreement, not FCA-regulated, worth knowing if your customer ever queries the terms. (Source: paypal.com/uk/webapps/mpp/paypal-payin3.)

Stripe Link has 250 million+ globally registered users and works as a one-click wallet for returning Stripe buyers. PayPal’s button does the same job with vastly bigger UK brand recognition.

If your customers are millennial-and-older, the PayPal button still wins for recognition. Stripe Link wins on customisation and developer control.

Checkout Experience

Stripe Checkout is a hosted page that handles form fields, validation, 3DS/SCA, payment-method routing and post-payment redirects in one embed.

If you ship that or Stripe Elements, your PCI compliance scope drops to SAQ A, the lightest tier, a meaningful annual saving on audit work. (Source: stripe.com/gb/payments/checkout.)

If you don’t have a developer, Stripe Payment Links are the escape hatch. No code, support subscription billing and custom branding, and you can drop the URL into an invoice email or an Instagram bio. Stripe Elements gives the deeper customisation if you do have design resource.

PayPal Checkout is a button-and-modal flow. Buyer clicks, popup appears, they authenticate, modal closes. You get less control over the look. You get more trust at the moment of payment.

If your customer is 60 and shops online twice a month, the PayPal modal is the one she recognises.

PayPal Complete Payments (UK launch reported early 2024) unifies card and wallet in one form and has been cited as improving card acceptance rates. SCA and 3DS2 are handled automatically by both providers.

Methods Verdict

Stripe wins on method breadth. EU APMs, UK Open Banking, Stripe Link and real developer control over the checkout flow give you tools PayPal simply doesn’t carry.

PayPal wins on consumer conversion. The wallet button, Pay in 3 at checkout, and Nielsen’s 24% UK desktop uplift are real advantages on a consumer-facing site. We’d weight those most heavily if your buyers are over 45 or come from international PayPal-native markets.

The smart configuration for most UK ecommerce: Stripe as primary card and APM processor, PayPal as an extra wallet button at checkout. You get Stripe’s fee efficiency and PayPal’s conversion lift in the same flow. The trade-off is one more reconciliation feed in your accounting tool.

Stripe vs PayPal Hardware, POS and In-Person Payments

Card Readers and Terminals

Stripe Terminal’s hardware ladder: BBPOS WisePad 3 at £49 excl. VAT (Bluetooth, PIN pad, the entry option); WisePOS E at £179 (touchscreen, Wi-Fi/Ethernet); Reader S700 at £229.

Tap to Pay on iPhone needs no extra hardware but adds 10p per authorisation on top of the standard in-person rate. (Source: stripe.com/gb/terminal, 20 May 2026.)

In-person rates through Stripe Terminal mirror the online stack: 1.5% + 20p on UK cards, 1.4% + 10p on EEA, 2.9% + 10p on non-EEA. (Source: stripe.com/gb/pricing, 20 May 2026.)

Zettle by PayPal sells a standard reader at around £69 excl. VAT, with a first-reader promo price near £29 for eligible new businesses. The transaction rate is a flat 1.75% across every card type. (Source: zettle.com/gb, 20 May 2026.)

The neat part if you already use PayPal: in-person Zettle sales show up in the same PayPal Business dashboard as your online activity. A market trader doing weekend events and weekday Shopify orders sees one cash flow view.

POS Software and Hardware Add-ons

Stripe Terminal needs SDK integration. You bring your own POS software, Stripe handles the payment rails. There is no Stripe-built POS app to download.

If you’re building a kiosk, a delivery app or a developer-led omnichannel platform, that’s exactly what you want. If you’re a market trader who wants to take cards on Saturday, it isn’t. (Source: stripe.com/docs/terminal.)

Zettle Go, the PayPal POS app, is free on iOS and Android. It handles product and inventory management, gift cards, real-time reports, staff tracking and direct integrations with Xero, QuickBooks and Shopify.

A florist or small retailer can be selling within an hour of unboxing the reader. (Source: zettle.com/gb.)

In-Person Verdict

Zettle wins for non-technical in-person sellers. Plug-and-play hardware, 1.75% flat across every card type, a free POS app and PayPal dashboard integration covers most market traders, pop-ups and small shops.

Stripe Terminal wins when in-person is part of a developer-built platform , a delivery workflow, a kiosk, or a marketplace collecting in-person card data.

Neither is the strongest option for full-volume retail. If you run a shop with three tills and four staff, Square and SumUp give you more complete POS ecosystems out of the box.

Stripe vs PayPal Online Payments and Integrations

Hosted Checkout, Payment Links and APIs

Stripe’s API is the developer benchmark for a reason: idempotency keys, granular webhooks, sensible error responses and a sandbox that mirrors production. SDKs cover Ruby, Python, PHP, Java, Node.js, Go.NET, iOS and Android.

The Stripe CLI and Workbench tools make local debugging fast. If your engineer integrates on Monday morning, they’ll be shipping by Friday. (Source: stripe.com/docs.)

PayPal’s developer story is three overlapping tracks: REST API v2 as the main entry point, the JavaScript SDK for Checkout, and Braintree’s separate SDKs.

Error models aren’t consistent across them. Anything deeper than the basic Checkout button takes longer to build than the equivalent on Stripe. (Source: developer.paypal.com.)

Payment Links: Stripe supports custom branding, subscription billing and post-payment redirects with no code. PayPal’s equivalent is simpler and locked to the PayPal brand. Both work. Stripe gives you more control. PayPal gives your recipient the brand they already recognise.

Platform Integrations

Both plug into Shopify, WooCommerce, Magento/Adobe Commerce, Wix, BigCommerce, Squarespace, Xero and QuickBooks. The structural detail: Stripe powers Shopify Payments itself, while PayPal sits as a secondary checkout option inside Shopify.

If your store runs on Shopify, you’re already paying Stripe one way or the other. (Source: stripe.com/gb and paypal.com/uk/business/integrations.)

(Sources: xero.com/uk/integrations for Stripe; squarespace.com/payments for Squarespace gateway support.)

Reconciliation is the operational point most merchants miss until VAT quarter rolls around. Stripe gives you transaction-level fee data on every payout, so your accountant or QuickBooks rule set can match payments to invoices line by line.

PayPal usually settles net of fees, which means your bookkeeper has to unwrap a single payout against dozens of individual transactions. At 500 orders a month that’s a real time cost.

Online Verdict

Stripe Connect wins for marketplaces, decisively. Standard, Express and Custom account types handle split payments, KYC, instant payouts inside 30 minutes and multi-jurisdiction compliance from a single API.

PayPal’s Payouts API handles mass disbursements but is missing the onboarding and compliance layer. If your model pays other businesses out of customer payments, it’s Stripe Connect. (Source: stripe.com/connect.)

For developer-led builds, Stripe wins on API quality and speed to production. PayPal wins on ubiquity across consumer-facing and no-code platforms where dropping the PayPal button adds conversion without a custom build.

The sensible default for a UK ecommerce store: Stripe as primary processor, PayPal as a secondary wallet at checkout. You capture Stripe’s fee efficiency and PayPal’s conversion lift in the same flow.

Stripe vs PayPal Payouts, Contract Terms and Account Risk

Settlement Speed and Payout Schedule

Stripe’s standard UK payout timeline for new accounts varies: some accounts see seven calendar days, others three business days, current default at stripe.com/gb/payouts.

Stripe Instant Payouts cost 1% (50p minimum) and clear in roughly 30 minutes over Faster Payments, 24/7, bank holidays included. If your supplier expects payment on Monday and your weekend sales just landed, that’s worth the 1%. (Source: stripe.com/gb/pricing, 20 May 2026.)

PayPal credits proceeds to your PayPal Business balance the moment a buyer pays. Standard withdrawal to a UK bank account is free when no FX is involved and typically lands in a couple of business days.

Here is the bit that bites new sellers. PayPal’s standard policy puts a 21-day hold on funds for new merchant accounts.

Imagine you launched last month. Your first £8,000 of sales sits in PayPal, and your supplier invoices on Net 30 from a separate bank account. You have orders, an inbox full of “when will it ship?” questions, and no working capital.

The hold can be released earlier if you attach tracking and the buyer marks the item received, build that into your fulfilment workflow from day one. (Source: paypal.com/uk help centre.)

Get past the first 90 days on PayPal and hit £9,000 in annual sales and you unlock PayPal Working Capital: an advance between £1,000 and £160,000 (repeat borrowers up to £225,000) against PayPal sales history.

Repayment is a fixed percentage of future PayPal sales, single fixed fee, no interest. It is not FCA-regulated. (Source: paypal.com/uk.)

Stripe Capital is also available to UK merchants. Check current eligibility and terms at stripe.com/gb/capital.

Contract Length and Exit Terms

Both providers are pay-as-you-go. No minimum contract, no early-exit fees, no annual rate-review cycle. You cancel by closing the account in the dashboard.

After three years of Worldpay PCI fees, that on its own feels like a relief. (Source: stripe.com/gb/pricing and paypal.com/uk/business/paypal-fees.)

Both retain transaction history after closure for compliance reasons. GDPR data portability rights apply to your customer data. If you’re planning a migration and need historical transaction records out, review the export provisions in each provider’s T&Cs before you close the account.

Reserves, Holds and Account Stability

PayPal’s 21-day new-seller hold is not an anomaly. It is policy.

Beyond that, ongoing holds tend to trigger on sudden volume spikes (your Instagram post went viral overnight), category drift toward higher-risk goods (tickets, gift cards, electronics, CBD, adult), elevated dispute rates, or account information PayPal can’t verify.

PayPal’s dispute culture is consumer-first. In a marginal case, the buyer wins.

If your business model produces edge-case disputes (custom orders, late delivery, ticket resale), expect to lose more chargebacks than you would at a merchant-neutral acquirer. (Source: PayPal UK Acceptable Use Policy.)

Stripe isn’t freeze-proof either. Trustpilot complaint themes include accounts closed with no explanation, funds withheld, and limited support access to resolve it. (Current score at uk.trustpilot.com/review/stripe.com.)

Stripe’s freezes are less structurally predictable than PayPal’s new-seller hold. When they happen, they can be more severe and harder to escalate by phone.

Stripe closures with funds withheld for 90 days or more have been reported on Trustpilot. For high-risk categories (adult, gambling-adjacent, supplements), neither provider is the right processor. Specialist acquirers carry that risk tolerance.

Never route all your revenue through a single processor.

Stripe vs PayPal Customer Reviews and Reputation

Trustpilot and Independent Review Themes

Both providers score poorly on UK Trustpilot, both sit in the 1–2 out of 5 range across thousands of reviews. Scores move over time; the directional story is what matters, and it’s consistent.

PayPal’s negative themes cluster around account limitations and fund holds, difficulty accessing frozen money, slow dispute resolution and poor merchant support once an account has been restricted.

Positive themes: buyer protection and brand familiarity. Reviewers tend to be merchants who got stung, or buyers who got their money back.

Stripe’s negative themes are different in shape: abrupt account closures with limited explanation, template support responses that don’t resolve anything, and funds withheld during a closure investigation.

Positive themes: ease of integration and low transaction fees. Developers love it. Founders who’ve been frozen do not.

Current ratings at uk.trustpilot.com.

Support Channels and Response Times

PayPal has inbound phone support, reportedly 0800 358 7911 on a 24/7 line, plus a Message Centre and a callback option via the app or website. (Source: paypal.com/uk/selfhelp/home.)

The phone line is the meaningful bit. If you wake up to a frozen account on a bank holiday weekend, a number to dial is worth real money.

Stripe’s primary channels are dashboard chat (around three minutes to a human) and email (around 24 hours). Phone is callback-only from the dashboard, there’s no inbound number you can ring.

Merchants report template responses on account-review queries. (Source: stripe.com/gb/contact.)

Reputation Verdict

PayPal wins on support accessibility. An inbound phone number is a real escalation path, and Stripe doesn’t carry one. If an account hold is stopping you trading on a Saturday, that matters.

Both have low Trustpilot scores driven by hold and freeze complaints. PayPal’s consumer-first dispute culture is a structural disadvantage if you’re the merchant: buyers tend to win. Stripe is more merchant-neutral in disputes but harder to reach when things go wrong.

Stripe vs PayPal for Recurring Billing

Recurring billing is where the gap between these two is widest. Stripe Billing is the most complete recurring product you can get from a payment processor.

It costs 0.7% of billing volume on pay-as-you-go on top of standard card fees, or £450/month flat for up to £70,000 MRR with 0.67% above. (Source: stripe.com/gb/billing, 20 May 2026.)

What you get for that fee: subscription plans with trials and coupons, usage-based and metered billing, mid-cycle proration when a customer upgrades on day 14, configurable dunning with smart card retry.

You also get a hosted customer portal so you don’t have to build one, revenue recognition for accounting, and invoice generation. Nothing at PayPal does the whole job. Nothing at this price does it elsewhere.

Take a UK SaaS founder billing 500 subscribers at £29/month. On Stripe Billing (1.5% + 20p card + 0.7% Billing) you pay roughly £325/month in processing.

On PayPal’s wallet rate of 2.9% + 30p you pay around £570. The fee gap alone funds a part-time customer-success contractor. The dunning and proration logic you don’t have to build saves your engineer two weeks.

PayPal Subscriptions handles simple recurring payments with retry and failed-payment notifications. Mid-cycle proration and configurable dunning are not listed as standard features. (Source: paypal.com/uk developer docs.)

For a flat £15/month retainer with no upgrades, that’s fine. For anything with tiers, trials or usage, you’ll outgrow it fast.

Braintree, PayPal’s developer-first gateway, offers more advanced recurring billing than standard PayPal Subscriptions but needs a separate integration. (Source: braintreepayments.com/gb.)

Verdict: Stripe Billing wins for any SaaS or subscription business that needs proration, dunning or metered billing. PayPal Subscriptions wins for a sole trader on a flat monthly retainer, quicker setup, less to think about.

If you sell into a UK customer base that prefers Direct Debit, look at GoCardless. It charges 1% + 20p capped at £4 per Bacs Direct Debit collection, materially cheaper than Stripe Billing on a £100/month subscription. (Source: gocardless.com/en-gb/pricing.)

Downsides of Stripe and PayPal

Downsides of Stripe

Three things to weigh up before you sign up to Stripe.

First, the design assumes engineering resource. A non-technical sole trader can ship a Payment Link and that’s about it, Stripe Terminal, Connect, anything custom, all require SDK work. If you don’t have a developer on the team or on retainer, you’ll be limited to the out-of-the-box pieces.

Second, account closures can be brutal. Trustpilot complaints include closures without explanation, funds withheld for 90 days or more, and template responses that lead nowhere.

Stripe’s terms allow closure at its discretion, without the contractual protections you’d get from a traditional acquirer agreement.

Third, there is no inbound phone support. If your checkout breaks at 11pm on Black Friday, you can’t pick up the phone, you can only request a callback from the dashboard.

And the add-on stack compounds. Base 1.5% + 1% cross-border + 2% FX + 0.7% Billing + 2p Radar.

A UK SaaS billing US and Singaporean subscribers can see an effective rate north of 5% on non-EEA card transactions. Model the stacked rate before you commit, not after. (Source: stripe.com/gb/pricing and uk.trustpilot.com/review/stripe.com.)

Downsides of PayPal

Four things to weigh up on the PayPal side.

First, the headline rate is a fiction. PayPal Advanced at 1.2% + 30p needs technical integration, and even when you wire it up, most consumers route through the 2.9% + 30p wallet anyway.

At £10k/month of wallet-weighted volume you’re paying around £140/month more than you would on Stripe. That doesn’t get better at scale.

Second, account holds. The 21-day new-seller hold is standard policy, and ongoing holds triggered by volume spikes or category drift are the dominant negative theme in Trustpilot reviews. Your money can sit there for weeks while your supplier waits for payment.

Third, the cross-border stack. The 1.29% EEA surcharge plus a roughly 3% embedded FX markup means a UK merchant selling to a German PayPal buyer pays around 4.19% + 30p once you total it up. If your customer mix is half European, that is real money. (Source: paypal.com/uk/business/paypal-fees.)

Fourth, product sprawl. PayPal Checkout, Complete Payments, Braintree and Zettle are four overlapping products with different fee structures and different developer flows.

Merchants trying to pick the right one face decision paralysis and integration confusion. Stripe gives you one API and asks where to point it. (Source: paypal.com/uk/business/paypal-fees.)

Alternatives to Stripe and PayPal

Mollie is the right swap if your traffic is EU-heavy. EEA consumer cards cost 1.20% + £0.20 versus Stripe’s post-Brexit 2.5% + 20p. iDEAL is a flat €0.29, a fraction of what Stripe will charge you to route a Dutch buyer.

Mollie prices iDEAL at £0.25 flat (approx) for Dutch buyers, a fraction of what Stripe charges on the same transaction. FCA Payment Institution, FRN 977968. Trustpilot 4.5/5 across roughly 12,000 reviews.

If your German and Dutch customers are 40% of your basket, Mollie pays for itself within a quarter. (Source: mollie.com/gb/pricing.)

Visit Mollie →

GoCardless is the call when your customer base prefers Direct Debit over a saved card. 1% + 20p capped at £4 per Bacs collection, FCA-authorised.

On a £200/month subscription, GoCardless costs you £4 a collection where Stripe Billing costs roughly £3.40 + 0.7%, close, but the cap means GoCardless stays flat as the price rises. (Source: gocardless.com/en-gb/pricing.)

Visit GoCardless →

Revolut Business offers payment processing from 1% + 20p for UK cards online, with FX at roughly 0.6% above the interbank rate, competitive with Stripe on UK cards and meaningfully cheaper on FX if you invoice US and EU clients regularly. (Source: revolut.com/en-GB/business/fees.)

Visit Revolut Business →

Final Verdict: Stripe or PayPal?

UK SaaS startup with recurring subscribers: Stripe. Stripe Billing’s proration, dunning, metered billing, retry logic and hosted customer portal have no credible PayPal equivalent.

The fee gap also compounds at scale. If you’re a London-based SaaS founder shipping a £29/month product, this isn’t a coin flip. (Source: stripe.com/gb/billing.)

UK ecommerce store, consumer-facing: run both. Stripe as the primary card processor, PayPal as a secondary wallet button for the Nielsen-measured 24% conversion uplift among wallet-preference buyers. If you have to pick one, go Stripe above £5,000/month, the blended cost wins.

UK freelancer or sole trader invoicing clients: PayPal. Faster setup, universal client recognition, no developer needed. A London consultancy invoicing US enterprise clients gets paid faster on PayPal than almost any alternative.

UK marketplace with split payouts: Stripe, decisively. Stripe Connect handles KYC, split payments, instant payouts to connected accounts, and multi-jurisdiction compliance from one API. PayPal’s Payouts API doesn’t come close. (Source: stripe.com/connect.)

UK business with heavy EU cross-border sales: look at Mollie. Stripe charges 2.5% + 20p for EEA cards; PayPal layers a 1.29% cross-border surcharge. Mollie sits at 1.20% + £0.20 for EEA consumer cards, meaningfully cheaper if your traffic mix tilts European. (Source: mollie.com/gb/pricing.)

Frequently Asked Questions

Is Stripe cheaper than PayPal for UK businesses?

Stripe is cheaper for almost every UK online merchant once you apply the blended rate. Stripe’s flat 1.5% + 20p beats PayPal’s real-world rate, because most of your PayPal buyers will route through the wallet at 2.9% + 30p, not the 1.2% + 30p direct-card form.

At £10k/month, Stripe lands about £140/month ahead. PayPal Advanced direct card is nominally cheaper on pure UK domestic debit, but it needs a developer to wire in.

Most consumers click straight past it to the wallet button anyway. (Source: stripe.com/gb/pricing and paypal.com/uk/business/paypal-fees, 20 May 2026.)

Can I use both Stripe and PayPal together?

Yes, and most successful UK online businesses we look at do exactly this. Stripe handles primary card processing (lower fees, clean transaction-level reconciliation, subscription tooling).

PayPal sits as an extra wallet button for the buyers who want it. Both integrate independently and your checkout shows both options.

Your blended fee creeps up slightly versus running Stripe alone, but the 24% conversion uplift from PayPal-preference buyers usually covers it on a consumer-facing site. Xero and QuickBooks reconcile the combined feed without manual intervention.

Is Stripe or PayPal better for subscription billing?

Stripe is the better answer for anything more complex than a flat monthly charge. Stripe Billing (0.7% add-on or £450/month flat) gives you proration, metered billing, dunning with configurable retry, a hosted customer portal and invoice generation.

Most of those would be a multi-week engineering build to replicate from scratch.

PayPal Subscriptions handles simple recurring payments with retry, but mid-cycle proration and usage-based billing are not listed as standard features. If you’re a SaaS founder shipping tiers and usage, Stripe Billing is the default. (Source: stripe.com/gb/billing, 20 May 2026.)

Does Stripe or PayPal place holds on merchant funds?

Both can place holds, and the patterns matter. PayPal’s 21-day new-seller hold is standard policy, and ongoing holds recur on sudden volume spikes, category drift, or elevated dispute rates. Your funds can sit untouchable for weeks while bills come due elsewhere.

Stripe freezes are less frequent but more severe when they happen: closures with funds withheld for 90 days or more, reportedly with no clear escalation path.

Neither provider gives you the contractual protections a traditional acquirer would. The mitigation is structural: never route all your revenue through one processor. (Source: uk.trustpilot.com; scores change frequently, check current ratings before deciding.)

Is PayPal FCA regulated in the UK?

Yes, with a caveat. PayPal UK Ltd is FCA-authorised as an EMI, FRN 994790, in force since 1 November 2023 (it replaced PayPal (Europe) S.a.r.l. et Cie, S.C.A. post-Brexit). It also holds permissions for consumer credit (FRN 996405) and cryptoassets (FRN 1000741). (Source: FCA register, fca.org.uk.)

The caveat: PayPal Pay in 3 and PayPal Working Capital are NOT FCA-regulated products. They sit under PayPal’s own terms, without the statutory protections you’d get from a regulated credit agreement. Worth knowing if you ever need to challenge the terms.

What is PayPal Working Capital vs Stripe Capital?

PayPal Working Capital is a merchant cash advance between £1,000 and £160,000 (repeat borrowers up to £225,000), priced against your PayPal sales history. You need 90+ days of PayPal Business activity and £9,000 in annual PayPal sales to qualify.

Repayment is a fixed percentage of future PayPal sales, single fixed fee, no interest. It is not FCA-regulated.

Stripe Capital is also available to UK merchants. Current eligibility and terms at stripe.com/gb/capital. (Source: paypal.com/uk/webapps/mpp/working-capital for PayPal Working Capital terms.)