5 Alternatives to PayPal for Small Businesses & Online Stores
Updated: Mar 19, 2021 / Article by: Timothy Shim
PayPal is a digital payments processing service that is available worldwide. For retailers, it helps them accept payments from customers for online sales. For others, it’s a convenient way to pay for online purchases or simply to transfer money quickly anywhere around the globe.
What I like most about PayPal is the fact that it is convenient and simple-to-use. However, it isn’t a service without flaws. Most importantly, there are other options should you not wish to use PayPal.
The payments processing industry is one that has been evolving fairly rapidly. With traditional banks and financial institutions under tight regulation, payments processors offer consumers more flexibility.
Yet despite this apparent popularity, it isn’t necessarily the best option for everyone. For example, what if you need or want something that they might not offer, such as seller security for digital goods, lower fees for chargebacks, or faster turnaround?
Fortunately, we have some of the top PayPal alternatives listed below, with their respective pros and cons. Hopefully, you’ll find an option that works for you, your business, and your customers.
5 PayPal Alternatives That Work
Wise, previously TransferWise, is a digital payments processor that is relatively well known. It is a great alternative to PayPal if you’re making transfers internationally. Since the launch of the company, they’ve worked with over eight million customers who transfer more than five billion dollars each month.
One of the first things that you’ll see on their website is a statement reading: “Send money with the real exchange rate”. This statement stresses that customers are given the cost-effective option to transfer money without inflating it with invisible fees. It works more or less like PayPal and everything is purely digital.
Wise also combines the currency rates posted on sites like XE.com, Google, and Yahoo – which is seen on their website for your reference. This makes it convenient for customers to check and compare currency rates directly.
When the money has been exchanged, Wise then makes a local transfer to the person you wired the funds to on the other side.
So how does it save you money?
Well, they take a small percentage of the transaction, rather than having you pay a credit card transaction fee or a bank transfer fee. Bank transfer fees add up to pretty high amounts. Wise claims to be as much as 4x cheaper than banks.
Comparably lower fees compared to many digital payments processors.
Only additional fees are for debit and credit cards.
Launched in 2005, Payoneer is a financial services company that offers a platform for online money transfers, digital payments, and providing customers with working funds. Businesses that use Payoneer include Airbnb, Google, and Fiverr. Payoneer is also popular among affiliate marketers as it is used by major affiliate networks including Commission Junction and ShareASale.
The key differences between Payoneer and PayPal are the transfer speeds, fees, and network relationships. Payoneer transfers claim to be faster and less expensive than PayPal payments.
Whether you’re growing a small business or starting a remote team, making payments internationally can be a harrowing process. How you pay individuals can be impacted by timing, fees, and ease of use.
Google Pay is intended to enable its users to pay using their Android devices. It is a successful combination of Google Wallet and Android Pay. All consumers need to do is set up a payment method and they’re ready to shop online.
For merchants, they need to make use of Google API codes on their sites or applications. This allows them to support digital payments seamlessly by anyone using the ecosystem. Google Pay adds an additional layer of security to the traditional use of credit cards for digital payments.
Business is conducted with a virtual account number that stores account details so they can’t be hijacked and copied. The number used is randomly created within Google’s servers, making it tough to crack.
All payments also automatically generate confirmation information that contains where the payment occurred, the name of the business, and phone number so that you can trace anything suspicious.
Swift and easy NFC-based payment system.
Replaces actual card numbers with virtual ones for security.
If you have ever used Shopify, then you should be familiar with Shopify Payments – which is a Shopify-native payments processing system. There is no need for a third-party payments processor, making it very convenient for Shopify customers.
After going through the usual procedure of signing up, adding payment info, etc, you can easily manage your transaction processing system right from Shopify’s main dashboard. The result is a seamless transaction processing system.
If you use PayPal on Shopify you’ll be slapped with 0.5-2% in transaction fees on top of card processing charges, Shopify Payments qualifies you for zero transaction rates. In reality, you only pay the card processing fees, whose charges are based on your particular Shopify plan.
Integrated with Shopify online store seamlessly.
Can be used with other payment platforms and solutions.
Works well with numerous accounting applications.
Supports Shopify POS hardware system.
Eliminates transaction fees on Shopify.
Only available in a few countries.
Your account could be frozen and investigated without warning.
While it in fact supports the typical eCommerce checkout system, Payline is especially fitting for in-store payments. It’s cheaper and flexible when it comes to aiding retail businesses.
Payline doesn’t use the usual static pricing schedule. Alternatively, it offers solutions through an interchange-plus pricing method. Fees are more consistent and based on the types of cards you end up processing.
The interchange method is, undeniably, the most transparent in the payment processing space. The only challenge you might face, however, is determining your future expenses.
Although PayPal essentially charges a reasonable fixed rate of 2.7% for offline transactions, you’re bound to get a lower rate with Payline.
Things to Consider When Choosing a Payment Processor
Our compiled list of payment processors only mention five. However, there are many more options available in the market. Given the diversity of payment preferences, many are designed for specific niches.
Still, too many can be a headache for businesses.
Here are a few things you can consider if you’re looking for your next payments processor:
1. Payment Protection
It is vitally essential that you pick a payment provider that grants secure data processing. You should choose a processor that can safeguard your customers’ payments using the most advanced and latest in data security.
This means using technologies like tokenization, point-to-point encryption, and other fraud management tools.
2. Payment Processing Fees
You want to keep all processing charges as low as possible. The more you have to pay, the lower your profits become. It’s good to look around for providers that offer the most attractive rates — but be careful, many providers try to obfuscate and hide some fees.
3. Normal Transaction Amounts and Frequency
Most payment providers offer tiered pricing based on transaction frequencies and amounts. You should choose a package that fits your current needs in the here and now. If you miss or exceed these transaction limits, you’ll end up paying more than needed.
4. Setup and Maintenance Ease
Setting up and getting started should be quite simple. This includes enrollment applications, hardware and software upgrades, and training. These steps, if difficult, become “unknown” expenses and that should affect your decision-making.
The same is true of maintenance. If you have to regularly troubleshoot your payments processing system, you may be better off simply choosing another provider.
5. Customer Support
Even with the best processors in the world, difficulties will unavoidably pop up. Of course, you’d want a provider that is easily reachable 24/7. Email is fine for most issues, but being able to contact a live person via phone or chat is even better and faster.
It makes sense that some of those used to PayPal may be hesitant to move away. However, given the sheer number of established providers today, choice isn’t really an excuse anymore.
We're not saying you should completely write off PayPal altogether, but it's not a bad idea to get a taste of what the best alternatives to PayPal are. Who knows, you may end up saving a significant amount of money and be happier with the company you choose.
Ultimately, the choice is yours and you should experiment to find the best alternatives to PayPal that best suits you!
Timothy Shim is a writer, editor, and tech geek. Starting his career in the field of Information Technology, he rapidly found his way into print and has since worked with International, regional and domestic media titles including ComputerWorld, PC.com, Business Today, and The Asian Banker. His expertise lies in the field of technology from both consumer as well as enterprise points of view.