Everything you need to know about alternatives to PayPal
December 26, 2023
Sending money online can sometimes feel unnerving, and you may favor PayPal when it comes time to complete a transaction due to its seemingly omnipresent nature.
While PayPal is a solid option — and a pioneer of online payments since 1998, facilitating millions of transactions since then — it can have its drawbacks. Plus, it’s no longer the only payment service around, so it might not be your preferred method.
PayPal’s top competitors each have unique qualities that set them apart. Here’s all you need to know about the best alternatives to PayPal and why you might consider using one.
What is PayPal?
PayPal is a digital financial service that helps you pay for purchases and transfer money online. If you need to send money or make a payment internationally, PayPal converts currencies when necessary. The platform also allows you to invoice others and quickly get paid.
How does PayPal work?
PayPal provides a digital wallet that stores debit cards, credit cards, or bank accounts. When you make a purchase using PayPal or pay another user, the service pulls the funds from your chosen payment method and transfers them securely to the retailer or person you’re paying.
Is PayPal safe?
PayPal offers a range of security features to ensure safe transactions.
A top feature is how PayPal stores your financial data for transactions so that the recipient never sees it. PayPal will never share this information with an online retailer or whoever you send money to. It also offers purchase protection, meaning if you purchase an item that doesn’t arrive as described, PayPal will issue you a complete refund.
Regarding cybersecurity, PayPal takes strides to protect you there, too. It encrypts and monitors every transaction, protecting your financial data from falling into the hands of cybercriminals like phishers and keeping you safe from identity theft and fraudulent transactions.
Pros and cons of PayPal
PayPay offers familiarity, safety, and convenience, but there's still competition in the payment service game. Here’s where this option shines and falls short.
Many retailers accept this payment option, making it convenient to use at checkout.
It offers a range of safe payment options, allowing you to connect your credit cards, debit cards, or bank account to complete transactions.
Setting up an account is simple.
Its broad international presence makes it easy to pay and transfer money worldwide.
PayPal integrates seamlessly with most e-commerce sites.
It can handle recurring payments (like a service subscription).
There are no fees for sending or receiving money from friends and family (unless they’re international).
It offers cashback and exclusive offers, helping you save a little money.
Bank transfers take time, so you may have to wait longer than other services or methods to receive payments.
PayPal charges higher fees on business transactions than some competitors.
Customer service help can be slow and confusing.
Scammers use PayPal frequently for phishing scams — and convincingly so — sending emails with invoices to falsely convince individuals that they unknowingly made a purchase or owe money on PayPal.
You can only use PayPal if you have an account, which some people may not like.
It charges high fees for international money transfers.
Purchases made through PayPal show up on your credit or debit card statement as “PayPal,” which can make tracking your finances slightly confusing if you make multiple PayPal payments.
5 of the best alternatives to PayPal
If PayPal’s downfalls mean it falls short of your payment needs, you have other options. Here are five reliable apps like PayPal worth checking out.
Venmo, which PayPal owns, is a peer-to-peer payment app initially intended for quick, casual transactions, like friends and family members paying one another back for a split restaurant bill. Merchants can also use Venmo to receive payment for products and services.
Venmo can pull payments from a linked bank account, debit card, or credit card and only charges processing fees for credit cards.
The major downsides of Venmo are that it only works in the U.S. and that your transactions are public.
Like PayPal, Skrill provides a virtual wallet for online transactions and money transfers. You can pay for products and services without showing your credit card or bank account information online, send peer-to-peer transactions, and receive transfers from people worldwide.
Skrill also generates points through its loyalty program, offering perks like cashback. It might not be accepted by as many merchants.
3. Apple Pay
Apple Pay is a versatile, user-friendly virtual wallet that allows you to pay online or in countless physical locations and transfer money to others. You can make contactless payments using your iPhone or Apple watch, limiting your need to carry a debit or credit card.
Apple Pay also offers a feature called Later that lets you split payments into manageable installments. This makes Apple Pay an excellent choice if you need to make an expensive purchase but want to break it up over time. That said, this payment service is limited to iPhone and Mac users.
4. Google Pay
Google Pay is similar to Apple Pay, but it’s available on almost any device with an internet connection. This service is a virtual wallet you can use online and in brick-and-mortar locations. Google Pay also allows you to transfer money, making it a solid all-in-one option.
With Google Pay, enjoy contactless payments, quick transfers, and peace of mind thanks to its fraud protection feature.
Square is a powerful payment processing tool for businesses. This application allows virtual and physical retailers and service providers to receive quick, secure payments. Square offers card readers that integrate with its application, allowing anyone from food stall vendors to boutique owners to run a buyer’s credit or debit card just like a traditional card terminal. The tool processes chip cards, swipes, and contactless payments.
Square’s fees are also very competitive, with nominal transaction fees. This makes it an excellent payment solution for business owners who want to make the most of every sale.
When to choose a PayPal alternative
PayPal’s vetted, reliable services are a great option most of the time. But it could make sense to seek an alternative in certain situations:
The fees are too high for your purposes: If you receive a lot of transfers for the goods or services you sell using PayPal, you might dislike the sizable commission PayPall takes (1.90%-3.49%, plus a $0.49 transaction fee) on every sale. You should explore other payment options that charge fewer fees so you can keep more of your earnings.
You can’t get an account: PayPal may reject individual users and businesses if it suspects risky transaction behavior. The platform also reviews merchants’ financial statements, and they may deem your company not stable enough for an account. Some business users have trouble passing PayPal’s proof of identity process, too, creating administrative headaches.
You need timely customer support: PayPal’s customer support isn’t very efficient, so if you own a medium to large business that may frequently need help from your payment processor, using this platform might halt your workflow. PayPal’s poor customer service could also negatively impact your business as consumers get frustrated with the time it takes to resolve payment issues.
What to consider when choosing a PayPal alternative
If PayPal won’t work for you or your business, the good news is that you have a wealth of other reliable options. As you navigate the alternatives, consider these points:
Fees: If you want to find a service that charges less per business transaction, lean toward those that offer more affordable rates, such as Square.
Intent: PayPal focuses on online payments, so if you have a brick-and-mortar store, consider options like Venmo or Square that allow you to take easy, in-person payments. If you only need to make quick payments to friends and family, a free peer-to-peer service like Venmo is all the more desirable.
Reach: Not all payment apps allow transfers or payments to all countries. If you must pay freelancers in another part of the world, ensure the app you choose supports those transactions. For example, Skrill has low fees for sending money abroad, while Venmo’s limited to the U.S.
Enjoy safer online transactions with IronVest
Get IronVest and make safer digital transactions. IronVest's virtual credit cards allow you to make secure online payments, hiding your actual banking digits. After taking a quick selfie, you can also use the decentralized, biometrically-activated autofill feature to pay using saved information.
Regardless of whether you choose PayPal or an alternative service, you can keep your information more secure with each online transaction by using IronVest’s masked emails feature. You never have to give your real email to brands, and you can easily curb spam by turning off masked email addresses post-purchase.