Stripe vs PayPal on Shopify: Which Should You Choose?

For a UK-based business, the decision-making process centers on three things: transaction costs, customer trust, and cash flow.

1. The Financial Reality: Fees and Payouts

The most immediate difference is how much they take from your pocket.

Stripe (via Shopify Payments)

Since Stripe is the engine under Shopify Payments, you get the “home field advantage.”

Transaction Fees: As low as 1.5% + 25p for UK cards (on the Shopify “Grow” plan).
The Bonus: By using Stripe/Shopify Payments, you pay 0% additional transaction fees to Shopify.
Payouts: Funds usually arrive in your UK bank account within 3 business days.

PayPal Express Checkout

PayPal is a “third-party” gateway. Even if you have a Shopify plan, the fees are slightly higher.

Transaction Fees: Typically 2.9% + 30p for standard UK transactions.
The Penalty: If you use PayPal instead of Shopify Payments, Shopify will charge you an extra 0.5% to 2% fee per transaction depending on your plan.
Payouts: Funds land in your PayPal balance instantly, but moving them to your bank can take anywhere from minutes (Instant Transfer) to 2 hours.

2. The Conversion Factor: Customer Trust

In the UK, consumer habits are split by demographic and device.

The “PayPal Trust”: Many UK shoppers (especially those over 40) still feel safer using PayPal. It acts as a middleman; if the product doesn’t arrive, they know PayPal’s “Buyer Protection” has their back. Removing PayPal can cause up to a 10% drop in conversion.
The “Mobile Speed”: Stripe shines on mobile. It powers Apple Pay, Google Pay, and Shop Pay. For a customer on an iPhone in London, being able to pay with a thumbprint via Stripe is far faster than logging into a PayPal account.

3. Dispute Resolution: The “Chargeback” Headache

Dealing with unhappy customers is part of e-commerce, but these two handle it differently.

Stripe: When a customer files a dispute, Stripe immediately deducts the amount plus a £20 fee from your balance. You then submit evidence through the Shopify admin. If you win, Stripe usually returns the £20.+1
PayPal: PayPal often acts as a mediator first. They have a “Resolution Centre” where you can talk to the customer before it becomes a formal chargeback. Their “Seller Protection” is robust for UK merchants—if you have proof of delivery to a verified address, they often cover the loss for you.

4. Global Selling (Selling outside the UK)

If you plan to sell to the US or Europe, the costs shift:

Feature	Stripe (Shopify Payments)	PayPal
International Cards	+2% fee	+1.5% to 2% fee
Currency Conversion	~2% FX markup	~3% to 4% FX markup
Local Methods	Supports iDEAL, Bancontact, etc.	Limited mostly to PayPal users.

Export to Sheets

Guru Insight: Stripe is significantly cheaper for international sales because their currency conversion rates are much closer to the mid-market “real” rate than PayPal’s.

5. The Verdict: Which Should You Choose?

Actually, you don’t have to choose. In 2026, the “Power Move” for UK businesses is to:

Activate Shopify Payments (Stripe): This becomes your primary gateway for all credit/debit cards and mobile wallets. It keeps your base fees low.
Activate PayPal Express as a Secondary Option: This captures the “Trust” segment of your audience who refuse to enter card details into a new site.

Summary Comparison Table

Feature	Stripe (Shopify Payments)	PayPal
Best For	Lower fees and mobile speed.	Brand trust and buyer protection.
UK Card Fees	1.5% – 2.2%	2.9% +
Setup Ease	Built-in to Shopify.	Requires separate business account.
Dispute Fee	£20 (Refundable if won)	~£14 – £20