Most web users are familiar with PayPal; it has been around since 2000 and has hundreds of millions of users. In addition to traditional PayPal payments, PayPal also offers PayPal Pro, a service that allows organizations to process credit card transactions directly.
Stripe is a newer payment processor that was founded to help organizations easily and quickly set up their online billing and payment systems. Stripe isn’t a household name, but it runs in the background of many well known companies such as Lyft and Instacart.
Authorize.net is a well-known payment gateway that connects to many merchant account providers. A merchant account is an account that you establish with a bank (eg. Wells Fargo, Chase, etc.) for the purpose of processing credit card transactions, while a payment gateway connects the information submitted by your users online to the merchant account for processing. Stripe and PayPal combine the functions of a merchant account and a payment gateway, but Authorize.net is more commonly used to enable online transactions with traditional merchant accounts that are set up with banks.
Let’s see how these three services stack up for accepting payments online.
PayPal
PayPal transaction fees for U.S. Merchants*:
- Online debit and credit card transactions using Payments Pro are 2.89% plus $.49 per transaction.
- Transactions run through PayPal Checkout are 3.49% plus $.49 per transaction.
- 501(c)3 organizations can qualify for reduced PayPal charity rates (currently advertised for U.S. nonprofits at 1.99% plus $.49 per transaction).
- PayPal offers organizations with high sales volumes — beyond $250,000 per month — more favorable fees.
- See fees for merchants outside the U.S.
Monthly fee*:
- PayPal Pro is required to take handle credit card transactions directly on your website, which helps better convert applicants into members. It costs $30 per month as well as the transaction fees noted above.
- If you offer automatic recurring payments or subscription billing to your members with Pro, PayPal charges an additional $10 per month.
- PayPal Checkout does not have a monthly fee, but your organization will still be charged PayPal transaction fees, which are higher for Checkout than they are for PayPal Pro.
Payout time frame for most U.S. Merchants: Funds are typically available to transfer to your bank account immediately. Instant transfer options are available.
Considerations for MembershipWorks customers:
- MembershipWorks offers two choices for PayPal integration — PayPal Pro or PayPal Checkout. Learn more about the differences between Pro versus Checkout.
- For members on automatic recurring billing, you do not have the ability to charge a member’s card on file for incidental transactions on the member Timeline unlike with Stripe or Authorize.net. This scenario might come into play if your member asks you to manually handle a transaction for an incidental item.
- Once automatic recurring billing for a member is established, you cannot change the next billing date or the billing schedule (eg. from monthly to yearly). This means you cannot edit the Next Renewal Date on the Timeline or switch a member to a different membership level or billing option that has a different billing schedule.
- If you are using PayPal Pro, PayPal may require that you complete and provide the PCI SAQ (Self Assessment Questionnaire) and AoC (Attestation of Compliance) documents to them for proof of PCI compliance. Even though you are using MembershipWorks for processing payments, you are still responsible for the security of your website/hosting, to ensure no malicious code is embedded on your website which may be used to steal credit card information from your members/users.
Business process considerations:
- Your organization may already have an account with PayPal, so using this gateway can reduce your learning curve.
- Your bookkeeper may already be familiar with exporting and recording transactions from PayPal.
Stripe
Stripe transaction fees for U.S. merchants*:
- 2.9% plus $.30 per transaction.
- 0.5% additional fee for transactions that are billed on a recurring basis
- Reduced transaction costs are potentially available for U.S.-registered 501(c)3 organizations:
- 2.2% + 30¢ for non-American Express transactions
- 3.5% for all American Express transactions.
- Contact Stripe to discuss nonprofit pricing.
- Volume discounts may be available for U.S. customers who are processing more than $100,000 per month.
- See fees for merchants outside the US by going here and selecting your country at the bottom of the page.
Monthly fee: None.
Payout time frame for most U.S. merchants: Two day wait to access to your funds.
Consideration for MembershipWorks customers:
- If you use Stripe and your member has signed up for auto-recurring (subscription) billing, you can:
- create additional payments to the member’s credit card on file on the member’s Timeline, and
- allow members to charge the card on file for event tickets.
- You can also adjust the Next Renewal Date and/or billing schedule (eg. from monthly to yearly) for a member as the admin.
- Reduced PCI compliance requirements – once you install the SSL certificate on your website (see below) and force your website to load over HTTPS, MembershipWorks automatically uses Stripe’s tokenization system and Stripe will automatically pre-fill your PCI SAQ and AoC documents, so no action is required on your part to provide prove that you are PCI compliant.
Authorize.net
Authorize.net fees*:
- Most organizations sign up for Authorize.net through their merchant account provider (eg. banks like Wells Fargo, Chase, etc). Your transaction fees and monthly fees will vary depending on the contract with your merchant account provider. Check with your merchant account provider regarding the fees for the Authorize.net gateway, as well as whether there are additional fees for Authorize.net Recurring Billing and Customer Information Manager (CIM).
- You can signup with Authorize.net directly. If you do not have a merchant account provider, they offer an all-in-one merchant account with gateway service. The transaction fee is 2.9% plus $.30 per transaction. There is also a monthly fee of $25 per month as well as a $49 one-time setup fee.
- Although Authorize.net accepts international transactions from customers worldwide, merchants must be based in the United States, Canada, United Kingdom, Europe or Australia.
Payout time frame for most U.S. Merchants: Funds are usually deposited into your business checking account within 2 business days after a batch of payments is processed. However this may vary with your merchant account provider.
Considerations for MembershipWorks customers:
- If you use Authorize.net and your member has signed up for auto-recurring (subscription) billing, and Customer Information Manager is enabled in Authorize.net, you can:
- create additional payments to the member’s credit card on file on the member’s Timeline, and
- allow members to charge the card on file for event tickets.
- You can adjust the Next Renewal Date and/or billing schedule (eg. from monthly to yearly) for a member as the admin without re-entering the credit card information (requires CIM).
- If a member’s scheduled recurring billing payment fails, MembershipWorks will automatically retry payments (requires CIM).
Business process considerations:
- If your organization already has a merchant account with a bank, Authorize.net may allow you to use the same merchant account for processing credit card transactions online (if you merchant account provider connects with Authorize.net).
- Authorize.net offers Account Updater, which helps you to keep your member’s card information up-to-date to avoid payment interruptions and lost sales.
Bottom line — PayPal vs. Stripe vs. Authorize.net:
You will be paying a minimum of $30 per month to use PayPal Pro with membership software that offers subscription billing. Authorize.net fees will vary according to which merchant account provider you use. Stripe does not charge monthly fees. With any service, you will pay similar transaction fees if you are a U.S. merchant. Merchants with higher sales volumes should consult with each payment gateway to see if you qualify for better transaction fees that could sway your decision toward one provider or another.
Security is Required
Note that if you are going to accept credit card payments on your membership website, you will need to have an SSL certificate installed. If you use MembershipWorks as your website host, it’s easy to add an SSL certificate to your site that will last for 2 years.
Having a SSL certificate is a basic requirement for PCI compliance. In addition to being required for PCI compliance reasons, if you do not have a SSL certificate for your website, your members will not see the secure “Lock” icon on their browser indicating that your website is secure. On Chrome browsers users will see a red “Insecure” warning. Most users would not trust entering credit card information on a website that is not secure.
Beyond establishing trust in the transaction process, secure sites are also favored by Google. Secure sites (those with HTTPS in the URL) rank higher than sites that are not secure. HTTPS encryption secures the connection between the member’s browser and the website; this ensures that no outsiders can disrupt the traffic or spy on what the member is doing.
* Fees were accurate when this post was published, but are subject to change. For the most up-to-date information, please see the Stripe, Authorize.net and PayPal websites.
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