PayPal vs Stripe for Freelancers: Which Payment Processor to Use
I lost access to $3,400 for 21 days because PayPal decided my account needed a “review.” No warning. No explanation. Just a frozen balance while I had rent due. That experience pushed me to Stripe, and I’ve been primarily there ever since.
But PayPal isn’t all bad. Some clients prefer it. International payments are easier. And the brand recognition means clients trust it instantly. Here’s the real comparison.
Fees: Nearly Identical
| PayPal | Stripe | |
|---|---|---|
| Credit/debit card | 2.99% + $0.49 | 2.9% + $0.30 |
| ACH/bank transfer | — | 0.8% (max $5) |
| International | +1.5% | +1.5% |
| Chargeback fee | $20 | $15 |
| Monthly fee | $0 | $0 |
On a $5,000 invoice:
- PayPal: $150.09
- Stripe (card): $145.30
- Stripe (ACH): $5.00
The ACH difference is significant for large invoices. If your client can pay via bank transfer through Stripe, $5 vs $150 is a no-brainer. I offer both options on invoices — ACH for clients who don’t mind the 3-5 day wait, credit card for those who want convenience.
Client Experience
PayPal
- Almost everyone has a PayPal account already
- Clients can pay without creating an account (guest checkout)
- The brand is trusted — clients feel safe paying through PayPal
- Mobile payment is smooth
- The invoice email looks like… a PayPal email (somewhat generic)
Stripe
- Clients don’t need a Stripe account (it’s invisible — they just enter card details)
- Payment page is clean and professional
- Supports more payment methods (Apple Pay, Google Pay, ACH, wire)
- White-label — your brand, not Stripe’s, is what clients see
- The experience feels more professional and custom
My take: Stripe provides a better client experience for professional freelancers. PayPal is more convenient when the client already has PayPal and wants to pay in 2 clicks.
Speed: When Do You Get Your Money?
| PayPal | Stripe | |
|---|---|---|
| Standard payout | 1-3 business days | 2 business days |
| Instant transfer | $0.25 flat (to debit card) | 1% (max $10) |
| New account holds | 21 days (common) | Rare |
| Fund access | After payout to bank | After payout to bank |
PayPal’s fund holding is the dealbreaker for me. PayPal can and does hold funds for new accounts, unusual activity, or dispute investigations. I’ve had it happen twice — once for 21 days ($3,400) and once for 10 days ($1,200). Both times I needed that money for immediate expenses.
Stripe has never held my funds. Their payouts are on a consistent 2-day rolling schedule. I know exactly when money will hit my bank account.
International Payments
If you have international clients, both processors work but with different strengths:
PayPal: Wider international reach. Available in 200+ countries. Many international clients already have PayPal accounts. Currency conversion is handled automatically (at PayPal’s exchange rate, which includes a 3-4% spread — not great).
Stripe: Available in 46+ countries. Better exchange rates through their Atlas product. Supports more payment methods (iDEAL, SEPA, Bancontact) that are popular in specific regions.
For international freelancers: PayPal wins on accessibility (more countries, more existing users). Stripe wins on fees and exchange rates.
Alternatives for international payments: Wise (TransferWise) offers the best exchange rates for international transfers. For clients who don’t use PayPal or Stripe, Wise is my recommendation.
Integration with Freelance Tools
| Tool | PayPal | Stripe |
|---|---|---|
| FreshBooks | ✅ | ✅ |
| Wave | ✅ | ✅ |
| QuickBooks | ✅ | ✅ |
| Bonsai | ✅ | ✅ |
| HoneyBook | ✅ | ✅ |
Both integrate with everything. This isn’t a differentiator.
My setup: FreshBooks processes payments through Stripe by default. I also have a PayPal.me link in my email signature for quick payments. Some clients — especially international ones — prefer PayPal, and I don’t argue. Getting paid through their preferred method is more important than saving $5 in fees.
The Dispute Risk
Both PayPal and Stripe process chargebacks (disputes), but they handle them differently:
PayPal: Notorious for siding with buyers. If a client disputes a payment, PayPal tends to favor the client. You can submit evidence, but the process feels stacked against sellers. I’ve had one dispute on PayPal — a client claimed they didn’t receive services. I submitted the contract, deliverables, and email communication. PayPal found in my favor, but it took 3 weeks and the funds were frozen during that time.
Stripe: More balanced dispute process. They guide you through evidence submission and the resolution feels more fair. The chargeback fee is lower ($15 vs $20). I’ve never had a Stripe dispute (knock on wood).
Protection for freelancers: Regardless of processor, keep signed contracts, delivery confirmations, and communication records. These are your evidence in any dispute.
My Recommendation
Primary processor: Stripe (through your invoicing software)
- Lower per-transaction fees
- Better client experience
- No fund holds
- ACH option for large invoices
Secondary/backup: PayPal
- For clients who specifically prefer PayPal
- For international clients in countries where Stripe isn’t available
- For quick, informal payments (PayPal.me links)
Don’t rely on PayPal as your only processor. The fund-hold risk is real, and when it happens, it happens at the worst possible time. Having Stripe as your primary means PayPal’s quirks are an inconvenience, not a cash flow crisis.
The Bottom Line
Stripe is the better primary payment processor for freelancers: lower fees, better UX, no fund holds, and ACH for large invoices. PayPal is a useful backup for its ubiquity and international reach.
Use both. Default to Stripe. Accept PayPal when clients prefer it. And always have your invoicing software handle payment processing rather than requesting payments manually — the tracking and reconciliation alone are worth it.