For e-commerce business owners, choosing the right payment processor can improve both cashflow and the profitability of your business and also feeds into the overall customer experience. Two popular options you’ve likely heard of before are Stripe and GoCardless. In this article, we’ll compare the two payment gateways to help you arrive at an informed decision on which to move forwards with.
What is Stripe?
Stripe is a payment platform that allows businesses to accept payments. It can be used to accept payments both online and in person. Stripe was established in 2007 and quickly became one of the leading payment gateway solutions for e-commerce businesses due to its versatility and ease of use including a checkout experience that is familiar to so many online shoppers. Stripe supports a wide range of payment methods, including credit cards, digital wallets, and bank transfers. Stripe can also be integrated with your website as a checkout payment gateway but also can be linked to an accounting system like Xero to enable invoices to be paid using Stripe.
What is GoCardless?
GoCardless specialises in recurring payments and direct debits. GoCardless was established in 2011 and has a niche in the market by focusing on bank-to-bank payments. This makes it particularly attractive for subscription-based businesses and those dealing with regular invoicing. It isn’t on the other hand a solution that you’re likely to use as part of your website checkout process, but more likely for any non e-commerce aspects of your business. It’s particularly useful if you’re wanting to give customers the option to pay an invoice over time, as it provides the option to split an invoice out into instalment payments, which are then automatically collected through GoCardless’ direct debit solution.
Comparison for UK Businesses
Security
Both options (Stripe and GoCardless) provide high security solutions which is of course essential given the nature of the financial data that they’re handling and the potential implications of a data breach at their end.
Stripe is PCI DSS Level 1 certified which is the highest level of certification available. They use robust encryption and offer features like 3D Secure for added protection against fraud.
GoCardless is also fully compliant with PCI DSS requirements and uses bank-level encryption.
Ease of Use
Stripe is known for its developer-friendly approach. It offers extensive documentation and APIs, making it relatively easy to integrate into various e-commerce platforms. However, this can be a bit daunting for non-technical users. For many e-commerce businesses, Shopify is the platform of choice. Shopify comes with Shopify Payments baked into it, which is powered by Stripe.
GoCardless, while also offering robust APIs, is generally considered more user-friendly for those without technical expertise. Their dashboard is straightforward, and setting up payments is a breeze.
Payment Methods
Stripe supports a wide array of payment methods, including:
- Credit and debit cards
- Digital wallets (Apple Pay, Google Pay)
- Bank transfers
- Local payment methods
GoCardless primarily focuses on direct debits and bank-to-bank transfers. While this might seem limiting, it’s worth noting that bank transfers are incredibly popular in the UK and Europe for B2B transactions.
Integrations
Stripe boasts an impressive list of integrations with e-commerce platforms, accounting software (including Xero), and CRM systems. This makes it a versatile choice for businesses using multiple tools.
GoCardless also offers a good range of integrations, particularly with accounting software like Xero and QuickBooks. However, their list is not as extensive as Stripe’s.
Currencies
Stripe supports over 135 currencies, making it an excellent choice for businesses with a global customer base.
GoCardless supports fewer currencies but covers all major ones used in their operating countries, including GBP, EUR, USD and AUD.
Fees
When it comes to Stripe vs GoCardless fees, there are some notable differences:
Stripe charges:
- 1.4% + 20p for European cards
- 2.9% + 20p for non-European cards
- 0.4% for European bank transfers
It’s worth noting though that for many e-commerce businesses using Shopify, the fees are set by Shopify Payments and differ to those above.
GoCardless charges:
- 1% + 20p per transaction, capped at £4
- No setup fees or monthly fees
The above fees for GoCardless are based on the Standard plan, however there are also Advanced and Pro plans available with higher fees but additional features that will help to increase the number of successful payouts and reduce the risk of fraud. It’s worth noting that GoCardless’s fee structure can be more cost-effective for businesses processing larger transactions or dealing with recurring payments.
Can You Use Stripe And GoCardless Together?
Yes, you can! In fact, many businesses use both Stripe and GoCardless to offer a wider range of payment options to their customers. Stripe can handle one-off payments and credit card transactions, while GoCardless can manage recurring payments and direct debits.
Which is Best For Your Business?
The choice between Stripe and GoCardless largely depends on your business model and customer base.
Stripe might be the better option if:
- You need to accept a wide range of payment methods
- You have a global customer base
- You’re comfortable with a bit of technical setup
GoCardless could be the way to go if:
- Your business model is based on recurring payments or subscriptions
- You primarily serve customers in the UK and Europe
- You want a straightforward setup process
Final Thoughts
Both Stripe and GoCardless are excellent payment processors with their own strengths. Stripe offers versatility and global reach, while GoCardless excels in handling recurring payments and direct debits.
As e-commerce accountants, we’ve seen businesses thrive using either platform – and sometimes both. The key is to choose the one that aligns best with your business model, customer preferences, and growth plans.
Need help deciding which payment processor is right for your e-commerce business? Or perhaps you want to optimise your current setup? Book a meeting with us today, and let’s get your payment processes working seamlessly for your business.