We stopped accepting payments through PayPal and here’s why!
We enjoy paying online through PayPal, because it’s convenient and widely accepted. You just make an account and link your debit/credit cards to it. You shop online, click the PayPal button and boom – the payment goes through.
It’s very easy for the customer, but how is it for the receiving end?
Well, to be honest not that great when we compare it to the other options out there.
You might have noticed that recently we stopped accepting payments through PayPal. Here are two reasons why we decided to quit PayPal.
1. Fees to receive money PayPal vs. Stripe
As a small company that doesn’t sell for tens of thousands of euros volume online every month – PayPal charges us 3.4% + 3.25 kr (Swedish krona) on every transaction.
Our transactions are normally rather small, so therefore having any fixed fee hurts. Then comes the percentage, an additional 3.4%. Wow, it’s like an extra tax that you pay to your payment provider.
We of course understand that PayPal is a company as well and needs money to run their operations, but look at this calculation where we compare our other payment provider Stripe with Paypal. Stripe is also a widely known payment provider, but somehow their fees are just 1.4% + 0.25 €.
Let’s start with a “regular” RENJER order:
PayPal: Customer X purchases jerky for: 59.97 euro + 8.90 euro shipping. Fees: 2.34 € + 0.33 € = 2.67 €.
Stripe: Customer X purchases jerky for: 59.97 euro + 8.90 euro shipping. Fees: 0.96 € + 0.25 € = 1.21 €.
Okay, hmm there is a difference of 1.45 €. Doesn’t sound like a lot.
Let’s say we get 100 of these “regular” orders per month. How does this sum up?
PayPal fees: 234.49 €
Stripe fees: 96.67 €
A difference of 137.82 € per month. Okay, that’s already enough to pay a couple of phone bills or our email marketing fees for four months.
Finally, let’s look at the whole year. Assuming, we always get 100 of these “regular” orders per month over 12 months.
PayPal fees: 2810.23 €
Stripe fees: 1157.27 €.
That’s a difference of 1652.97 €. That’s already enough for hiring somebody to manage your social media for a month or two!
2. Fees to pay out money from PayPal vs. Stripe
Here comes another step. We don’t receive the money from PayPal or Stripe directly to our bank account, but to our PayPal and Stripe accounts. There is another huge difference between those two providers here.
Since we are a Swedish company PayPal forces us to convert the euro we receive to Swedish krona before we pay out the money to our bank account. For this PayPal charges an extra 5%. This is simple to illustrate.
Let’s say we have 5000 € on our PayPal account and we want to have it on our bank account. First we need to convert it to Swedish krona, because PayPal forces us to do so.
Let’s see how the conversion looks like:
According to Morningstar, today, 5000 euro is worth 52 039 Swedish krona. According to PayPal 5000 euro is worth 50 013 Swedish krona. Here we lose another ~5%.
And how does Stripe do? They pay out the money in euro to our euro account without any fees…
We hope these reasons are enough for us to justify why we decided to say goodbye to PayPal!
We wish you a nice weekend and hope that you enjoy some of our new jerky during it 🙂
Anton, Tim and Alex