Many people may not know that Elon Musk (founder of Telsa) created a company that merged with PayPal and sold it to EBay make his first few hundred million back in 2002.  However, after it’s sale, PayPal’s features and technology remained largely the same for many years.  In fact, even now it’s customer service is incredibly slow and its security technology remains largely outdated.   Here are a few specific reasons why we at Circle Fund only accept donations using Stripe over PayPal.

Stripe is Cheaper Than PayPal

At the end of the day, Stripe is much cheaper than PayPal, especially for nonprofits. Although the basic credit card fee of 2.9% plus $0.30 per transaction is the same, PayPal adds a pile more fees.  Paypal also does not offer a 2.2% rate for registered 501(c)(3) nonprofit organizations.

Here are some specific fees which PayPal adds that Stripe does not;

  • $30 per month fee for collecting credit card payments
  • $20 chargeback fee (vs $15 for PayPal)
  • American Express card rate is 3.5% (vs the 2.9% rate for Stripe)
  • Micropayments under $10, Paypal adds 5% plus $0.05
  • 1% international card fee, none
  • Recurring billing/donations $10/month
  • Advanced fraud protection $10/month

Stripe Is More Secure: They Do Not Store Credit Cards!

Stripe’s technology is much more update to date vs PayPal.  They use a browser based script called Stripe.js to process payments. When you use their Stripe.js javascript code on your website, the credit card information entered into your payment form is not ever sent to your web server. This sensitive data is actually sent directly to Stripe.com. Why is this important?

  • Stripe is PCI compliant because you don’t see or handle any sensitive credit card data on your servers.
  • Stripe is more secure because a hack or breach of your servers won’t result in any stolen credit card data.
  • With Stripe, you are not tempted to store credit card data on your servers, which you really should not be doing unless you’re a big business and want to pay for PCI compliance.

Stripe Believes That Your Customers Are Yours

PayPal, as crazy as it sounds, will not allow you to transfer recurring membership (subscription) payments to another payment processor. Stripe absolutely will let you change payment processors at any time.  PayPal simply won’t give you the data from your subscribers! All of your existing customers would have to sign up again to donate to your cause, which would mean very likely that you will lose many of your existing donors. Another big strike for PayPal!

Stripe Will Rarely Freeze Your Account

There have been many very angry PayPal account holders, including even many non-profits, who have had their accounts frozen for no apparent reason.  Paypal’s rules on holding accounts appear to be somewhat random, even for accounts in good standing, with few charge-backs and transactions based in low-risk countries.  A hold of 21 days or longer is not uncommon.  Some account holders have had their money held for up to 180 days without explanation until PayPal reviewed their account.  Stripe is much more responsive to any issues like this, and will work to resolve such holds within days, not weeks. Stripe is very much on top of security, and works with sellers and account holders in a much more proactive way than Paypal.

Stripe Works Well with QuickBooks

Many nonprofits use QuickBooks for managing their financial information.  It is crucial that your donation platform talks to your financial accounting software.  With Circle Fund, it is easy to post your donation information to Quickbooks. All you need to do is to export it from your Stripe.com donation account. You can export a CSV file to QuickBooks Online, or an IIF file to Quickbooks software that is offline.  All donations that come through your Circle Fund donation pages feed into your Stripe account, so your QuickBooks software will stay updated.  You can export this data from your Stripe account at any time by following the detailed instructions at this link.

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