Need of PayPal alternative
PayPal is market leader in online payments area.Most of the people use PayPal to send money and receive money online.Most of the websites have PayPal as their payment option.The global reach of PayPal is one of the main reason behind it.It does provide feature rich services.Integrating PayPal payment system on your website is also easy.Almost all major shopping carts and content management systems have support for PayPal.So you do not need to hire a developer or develop yourself to use PayPal payment system on your website.
Having so many benefits yet people look for PayPal alternatives.The most important reason of looking for PayPal alternatives is the fees charged by PayPal.Apart from fees the currency conversion rate is also bad.The currency conversion rate is far less than current market currency conversion rate.Lets see different PayPal fees
Sellers with sales less than $3,000 per month are charged with 4.4% + .30 cents dollars.That is around 7.4% for a $10 item (.44 + .30 ) = .74.But PayPal offers less rate to merchants with sales volume greater than $3,000 per month.The rates known as merchant rates are
2.9 to 3.9 + .30 cents domestic
3.4 to 4.4 + .30 cents international
For for a $10 item the above rates translates to
2.9 to 3.9 + .30 cents domestic = ( .59 % to .69 %)
3.4 to 4.4 + .30 cents international = (.64 % to .74 %)
This does not take into account the infamous currency conversion rate PayPal offers.Since the conversion rate is dependent on market I will not covering it here.But I would cite a real life experience.The images show PayPal currency conversion rate from USD to INR in two cases both on same date.First case is when you are paying some one in USD using your Credit Card or other payment option having money in INR.The second case is you are receiving money in your Bank account from PayPal and you have USD balance in your PayPal account.
In First case PayPal conversion rate between USD and INR is 63.561.In second case PayPal conversion rate between USD and INR is 59.7675.The difference between two rates is 3.7935 INR.So if you are spending $1 and receiving $1 from PayPal then you will be losing 3.79 INR per USD.This is very frustrating for website owners not using currency supported by PayPal.
Above are the reasons people are searching for PayPal alternatives.The alternatives listed below are not in any particular order.The one which matches your requirement is best for you but not be best for other.I have listed PayPal alternatives according to country.
PayPal alternative for US only
WePay is PayPal alternative for US people only.Business residing in US can use this service.WePay accepts credit cards and Bank account payments.It accepts all major credit cards. It charges different rates for credit cards and bank account payment.The charges are
Credit Card Payments = 2.9 % + 30 cents
Bank account payment = 1.0 % + 30 cents
So it is cheaper than PayPal in all cases for Bank account payments.In case of credit card payments it is cheaper for small business as well as merchants getting above the lower range of PayPal fees.
But WePay fees page says about App fee.But nothing in details is mentioned about this App fee.They have also cited couple of examples giving calculations involving app fee.But this makes things complex.The calculation on the site gives below figures if Payer pays with credit card.If we take the App fee into account then WePay no longer is the cheap alternative.
Payer is charged: $108.34
App receives: $5.00
WePay receives: $3.34
Payee receives: $100.00
WePay is new player in online payments area.So there is not much support for this service.It does come with SDK for different programming language.In case you are using WordPress thenit comes with official plugin.You can use the plugin to place WePay buttons on your website.But there is no WePay support in many top eCommerce plugins for WordPress like WooCommerce or WP eCommerce.MarketPress does support WePay.
Dwolla is available for business in US only.You can create Dwolla account only if you are resident of US.The best part of Dwolla is the fee structure.The fee structure is pretty simple and cheap.It charges
Transactions with value less than $10 = 00
Transactions with value more than $10 = 25 cents
This makes it one of the cheapest PayPal alternative.Dwolla is relatively new service in online payments area.But the team has worked hard to provide support for most content management systems.Dwolla provides official plugins for most popular WordPress eCommerce plugins like WooCommerce,Jigoshop and Cart66.You can also implement Dwolla in mobile applications.
International PayPal alternatives
Stripe also referred as MoneyBrookers are one of the best PayPal alternatives.Stripe charges 2.9 % + 30 cents per successful transaction.It does not have any other fees like setup fees or monthly fees or card storage fees.If we compare Stripe with PayPal on basis of fees then it is best suited for people not eligible for PayPal merchant accounts.
Also Stripe fees is on lower range of PayPal merchant fees.So people being offered merchant rates by PayPal can have Stripe account.Stripe does support more than 100 currencies.This is more than 14 currencies supported by PayPal.This means you can mention cost of your products in more than 100 currencies if you are using Stripe but only in 14 odd currencies in case you are using PayPal.
Though PayPal converts them and pays you as per conversion rate mentioned above.Stripe charges 2% fees for conversion.So places where conversion comes into picture it becomes slightly costly.But we need to take into consideration Stripe currency conversion rate compared to PayPal currency conversion rate.
The biggest drawback of Stripe is country supported.Currently India is not supported.This means your business should be located in one of the countries mentioned.If your business is located in India then you can not use Stripe.You can get complete list of countries supported by Stripe here.
From implementation point of view WordPress plugins exist for Stripe.Though number is small compared to PayPal.The popular eCommerce plugins like WooCommerce do support Stripe.So adding stripe support to your website should not be a problem.You may have to buy a premium plugin in some cases as most free versions support only PayPal.But this is only one time investment.
2checkout is not an cheaper alternative to PayPal for all customers.But it is cheaper for customers dealing with currencies not supported by PayPal.Lets take an example of business in India.In case of PayPal you can not place PayPal button accepting INR payment from your customers.So PayPal transaction fees + conversion rate comes into picture.Your PayPal balance in USD is converted back to INR and is paid to your bank account.You have seen above the conversion rate offered by PayPal.
But if you are using 2checkout then you can accept payment in INR from your customers.It is worth mentioning here that PayPal does not support INR as of now.So there is no conversion involved during withdrawal of the 2checkout money to your bank account.So you saving the money lost due to conversion.But 2checkout does have higher fee rate then PayPal.
2checkout fees = 5.5 % per transaction + 45 cents
For $10 transaction = ( .55 + .45) = $1
= 10 %
So it is costlier than PayPal.Taking currency conversion into account it will be slightly cheaper for some users.It does support almost all countries with exception of North Korea,Cuba,China,Iran,Sudan,Myanmar and Syria.There was a time Indian user had problem using PayPal that time it was highly recommended by many.
From implementation point of view it is perhaps most supported Online payment service after PayPal.You will get support for 2checkout in most of content management system as well as programming languages.
Authorize.net has different fee model in place then PayPal and the alternatives discussed above.It has
One time setup fees = $99.
Monthly Gateway fees = $20
Transaction fees is = $.10 per transaction
Batch fees is = $.25
Authorize.net accepts payments only by Credit cards.So this is a limitation of their service.Your customers cannot use Debit cards to pay for your goods.Also in above fee structure I am not sure about the Batch fee charged by them.Looking at above rate it seems costlier than PayPal for small business.For Business having sell value more than $500 or $1000 in a month it will prove cheaper than PayPal.It also have few optional value add products but they also come with some price.
The other problem with Authorize.net is that it does not support number of countries supported by PayPal.With Authorize.Net you can accept international transactions from customers worldwide. However, your business must be domiciled in the United States, Canada, United Kingdom, Europe or Australia.So it is not a PayPal alternative for Indian publishers or people having their business in locations not mentioned above.
From implementation point of view it is supporting by majority of content management system.In case you are using WordPress then there are plugins to help you integrate Authorization.net on your website.There are plugins to integrate in major WordPress eCommerce plugin like WooCommerce.But some plugins support it as paid extension rather than free one as in case of PayPal.PayPal as mentioned above is the free online payment system provided by almost all plugins.
PayPal alternative for India only
Most of the PayPal alternatives mentioned above does not support Indian customers.If your business is based in India and you accept payment in INR then these alternatives prove very costly.Apart from transaction fees currency conversion also takes place.This makes situation worse for small payments.
For example if you want to sell any item for 100 INR (that is around $1.6 taking 60 INR per dollar rate) then PayPal fees is around 35 cents.So you get $1.25.Again this money is converted to INR and paid to your account.PayPal will at max offer you rate of 56 INR per dollar or 57 INR per dollar.So you will get around 70 INR.
This makes it better to have Indian alternative of PayPal which helps you accept payment in INR.PayUMoney is the answer.The fees of PayUMoney is 2.9 % per transaction.So if you are based in India then this is the cheapest PayPal alternative for you.You can sign up for PayUMoney using this affiliate link.
PayPal is not the most costly online payment service.If you consider global reach and tools provided by it then PayPal is definitely worth the price.I have used PayPal for digital goods on this site.It is for people selling digital goods and is cheaper than other PayPal services.I have written separate tutorial on PayPal for digital good.You can read it here.
But I will be testing out PayUMoney as it seems to be cheaper for business based in India.I will write separate detailed tutorial covering PayUMoney.I will be updating this post from time to time to keep it updated with new players.
Do share the PayPal alternatives you found useful or is using? Consider sharing the post in case you found this useful.