When you’re running a small business, it can feel like there are a million decisions to make, all the time. One of the most important ones is how you’ll get paid for your products or services. While an all-cash business sounds simple and appealing, a lot of your potential customers don’t carry cash, and they expect to be able to pay by credit card. So, it’s a good business decision to accept credit cards, but what system should you use to do it?
We’ve compared PayPal vs. Stripe for small business, as well as Square vs. Stripe. Today we’re looking at Stripe vs. Braintree, another payment processor you might have heard of.
Because one of the main differences between Stripe and Braintree has to do with merchant accounts (say what?), we’re going to take a minute to explain what the heck those are before we dive into comparing the two systems’ features in detail.
What’s a merchant account?
If you’ve ever accepted credit cards for payment before, you probably noticed that you don’t get the money instantly. That’s because the funds are sitting in a merchant account before they move over to your bank. When a customer makes a purchase with a credit card, the card issuer is essentially fronting the money for the customer, and fronting money always involves some risk. Credit card companies and banks minimize their risk by building some delay into the process and using merchant accounts as a go-between.
Even if you’ve never heard of merchant accounts before, if you’ve paid for anything with credit cards, your money has passed through one. The vast majority of payment processors, including Stripe, use aggregated or group merchant accounts, so consumers and most businesses never have to think about them. A few systems offer a dedicated merchant account for your business, and Braintree is one of those.
So the big question if you’re considering Braintree versus Stripe is whether or not your business needs its own merchant account, and we’ll cut to the chase — for 99.9% of businesses, the answer is no.
Who needs a merchant account?
Businesses usually set up their own merchant account because they’re doing such high volume that it makes sense for them to have all of their transactions processed together without mixing with anyone else’s (think Uber).
Small businesses selling baked goods at a farmer’s market, running a doggy daycare, or offering personal training, acupuncture, or massage services generally aren’t going to be hitting the sales volumes that would make having a merchant account a benefit. And in fact, the application process and fee structure of merchant accounts can be really hard to navigate. They can also wind up costing you more than you think, so it’s typically not worth the added hassle for small businesses.
Braintree Features, Pros, and Cons
Payment Types
Braintree works with PayPal, Venmo (in the US), credit and debit cards, and popular digital wallets like Apple Pay and Google Pay.
Accepting Online Payments
Braintree uses PayPal to offer integrations with Big Commerce,3d Cart, Yodle, and Woo Commerce.
Accepting Retail and Offline Payments
Braintree partners with PayPal (which is no surprise since PayPal acquired Braintree in 2013) and offers their PayPal Here Point of Sale Hardware for customers who want to support in-person and retail payments. We cover the fee structure and pros and cons of PayPal Here in our PayPal vs. Stripe post.
Ease of Use
Because of the way Braintree integrates with so many different PayPal services and products (and requires you to have a PayPal business account), it can be challenging to figure out what product you’re actually using, and what your fee structure is.
Security and Reputation
Braintree has a solid reputation when it comes to security, and is PCI compliant like all of the major payment providers.
Integrations and Apps
Braintree and Stripe have both been very smart about keeping their code and business models open to outside developers who want to tap into their system, and Braintree offers a number of integrations with apps for recurring subscriptions, e-commerce, etc. Stripe tends to have integrations with better-known apps and is more popular platform for developers to tie in with since it has better brand recognition than Braintree.
Data Portability
Unlike their parent company, PayPal, Braintree is making efforts to allow for data portability, so there’s a chance you’d be able to move recurring payments from your customers to a new system. However, all the back-and-forth between Braintree and PayPal makes it pretty challenging to untangle the fine print on this issue.
Cost/Fees
Monthly fee: $0
Online Transactions: 2.9% + $0.30
Retail Transactions
Braintree uses PayPal Here for retail transactions.
- A PayPal compatible card reader will run you a fixed, one-time cost of $14.99 to $99.99 depending on the model and features
- Swiped transactions: 2.7%
- Keyed or scanned entry transactions: 3.5% + $0.15
The verdict
Braintree is a good option for extremely large businesses running thousands of online transactions who will benefit from having a dedicated merchant account. It offers a good set of integrations and has a good reputation when it comes to security and customization. However, being owned by PayPal and using PayPal for retail payments means there are some extra levels of confusion when it comes to figuring out set up, what product you need, and how pricing works for retail payments. Stripe on the other hand is great for companies of all sizes, and setting up an account, then downloading an app like ChargeStripe is the fastest way to start accepting credit cards from your customers.
Stripe Features
Stripe is a simple, secure, and powerful payment processor with a lot of options whether you’re interested in selling online, in-person, or a combination of the two.
Payment Types
Stripe works with all major credit/debit cards (Visa, MasterCard, American Express, JCB, Discover, and Diners Club), and customers can also pay directly via a bank account, which is great for service providers and subscription businesses.
Accepting Online Payments
Stripe integrates in just a few clicks with many web platforms like SquareSpace, WordPress, Wix, Shopify, Weebly, Volusion, BigCommerce, and others to easily accept online payments. If you want a completely custom online store/checkout experience, you can also work with a developer to access a host of additional features via Stripe.
Accepting Retail and Offline Payments
Using an app like ChargeStripe makes it super simple to accept offline payments. Swipe, scan, or type in a customer’s card info and accept payments from anywhere on your smartphone.
Ease of Use
Stripe can really be as simple or as complex as you want it to be. The vast majority of small businesses will just need an account (here’s everything you’ll need to set one up), an e-commerce shop like SquareSpace or Shopify that integrates with Stripe for online sales, and an app like ChargeStripe for offline and retail sales, and these are all very easy to set up.
Security and Reputation
Stripe has really set the bar for payment processors in terms of security. Their set up never sends customers’ credit card info to your servers, so you don’t have to worry about storing credit card information securely, even if you have a developer create a custom online shop for you.
Integrations and Apps
Stripe offers a growing list of integrations with well known apps and has doubled down on their core technology and security acquiring 8 companies specializing in payment, POS, and security/authentication.
Stripe is also doing an amazing job attracting partners who use their system to create apps that help businesses in just about every category. ChargeStripe is a Verified Stripe Partner for mobile payments.
Data Portability
If you have subscriptions or recurring payments and you ever want to move to a different system, Stripe allows you to do this without having customers re-enter information.
Cost/Fees
- Online card transactions: 2.9% + $0.30
- Online ACH transactions: 0.8% (capped at $5) — this is an amazing option for small businesses that provide services like graphic design or marketing to regular clients.
Card Readers:
- Completely optional. ChargeStripe sells a secure card reader for $99 ($129 internationally)
Retail Transactions:
- ChargeStripe: an additional 1% per transaction, optional $99 card reader
The verdict:
Stripe is a great option for all kinds of small businesses with its easy-to-use basic features and a growing list of app integrations that are very business friendly, as well as developer tools for more robust set ups. The ability to accept credit cards by keying in a card number, or scanning using your phone’s camera mean that you can get started taking payments fast, without waiting for a card reader to arrive. Setting up the ChargeStripe app takes about 5 minutes, and a card reader is completely optional.
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