Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (2024)

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Anton Malyy


8 min read

A complete guide to top online payment systems for businesses.

Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (2)

Anton Malyy


8 min read

    If you read this article, you are probably looking for a reliable, safe, easy online payment solution with the lowest fees for your business. Unfortunately, the choice can get complicated. Intricate pricing systems, nuances of setup, and features are overwhelming.

    In this guide, we are going to compare the top payment systems on the market: PayPal and Stripe, to their specialized counterparts Amazon Pay and Shopify Pay. The pros & cons with a detailed comparison table will help you choose what’s best for your eCommerce business.

    But first, let’s understand the mechanism behind online payments and why you need a payment system anyway.

    How online payment systems work

    Knowing how the money travels from customers to you and back is helpful to understand where the fees come from.

    Let’s imagine the simplest scenario: a one-time payment in the US. There will be four major players:

    • Merchant – it’s you, the business;
    • Cardholder – that’s your client;
    • Issuing bank – the bank that issued your client’ credit card;
    • Acquirer, or a merchant bank – the bank that will accept and deposit the payment on your behalf. Usually, they process the payment (route it through a card network to the issuing bank). Sometimes, they partner with third-party processors.

    To receive the payment, you will need to set up the work with each of them. First of all, you’ll need an account at your merchant bank and to establish a relationship with a payment processor (if they are separate entities).

    That’s when payment aggregators or payment facilitators (PayFacs)like PayPal or Stripe come into the game. (They are often called payment gateways, too). That’s a piece of software that links your website to the processing network.

    Using a PayFac, you won’t need a merchant account, because you will be using theirs alongside all other people. The technology behind it is such that the information about millions of users and transactions is bundled to make it indistinguishable – and, therefore, secure.

    Businesses use gateways because they simplify the process a lot. Apart from providing ready-made checkout forms, they take the responsibility of storing and protecting all the fragile credit card data (it never touches your website). In other words, they take care of (almost) all PCI Compliance, and that’s a lot of bureaucracy if you had to deal with it yourself.

    Of course, if you become a highly successful business, you will probably need your own merchant account and the responsibility will be all yours. But that’s another story.

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (4)


    So, who gathers fees in the process?

    • Issuing bank takes an Interchange Fee, usually a fixed price + a percentage of each transaction;
    • Credit cards can also charge an Assessment (or Scheme) Fee;
    • Merchant banks, payment processors, and gateways gather a Markup Fee, calculated in a similar manner.

    If your product’s price was $100, the total fee (Network Costs) would usually be about $2-3, depending on the partners you choose.

    Now, let’s dive into the detailed comparison of payment gateways to pick the best solution for your type of business.

    What to consider before choosing a payment system:

    • All the types of their transaction fees
    • Geography (whether your business is international)
    • What you want your payment to look like (card or non-card, point of sale payments, etc.)
    • Additional services (extended fraud prevention, payment plans for expensive purchases)
    • Resources (whether you want to allocate time, money, and a team of professionals to make a tailored solution).

    Top-4 Online Payment Systems

    1. PayPal

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (5)

    PayPalhas been around since 1998, so no wonder that it has by far the biggest share on the market. It stores customers’ card or bank account information to process online payments. More than 20 million merchants use PayPal’s solutions, including big companies like Groupon, Hulu, Spotify.

    What are the advantages of using PayPal?

    • The easy setup even for a beginner
    • Wide popularity among customers
    • POS (point of sale) capabilities
    • Low micropayment fees

    Cons of using PayPal:

    • Higher fees for transactions outside of the US
    • Slightly higher chargeback fees
    • ACH Transactions are not easy
    • No 24/7 support

    What is PayPal most used for?

    • Ecommerce requiring an easy-to-use solution
    • Businesses whose clients rarely use American Express credit cards
    • Businesses processing some card-present transactions
    • Low-volume (micro) transactions
    • Ventures with USD 3,000 and higher monthly turnovers
    • Businesses who need payment plans (e. g., for costly products like jewelry)

    2. Stripe

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (6)

    Stripe is probably the most flexible payment solution designed with custom web development in mind. It acts as a merchant account for its providers, allowing the customization of UX, integrations, complex money movement, etc. Just like PayPal, it takes care of all PCI Compliance issues. Google, Microsoft, Uber are among the big companies using Stripe.

    What is the advantage of using Stripe?

    • API-first solution
    • A lot of customization
    • Accepts more payment types, including Apple Pay
    • Lower international fees
    • 24/7 support
    • ACH Transactions
    • Additional tools like Stripe Radar

    Cons of using Stripe:

    • Less international availability
    • Higher micropayment fees
    • No ready-made solution for payment plans
    • More difficult and expensive POS features

    Who uses Stripe?

    • Ecommerce solutions with complex and specific needs
    • Tech-savvy businesses with web development teams
    • Businesses processing ACH payments
    • Large companies

    Stripe vs PayPal Comparison at a glimpse

    Standard feesSame (2.9% + $0.30 per transaction)Same (2.9% + $0.30 per transaction)
    RefundsSame (no fees, original charge not returned)Same (no fees, original charge not returned)
    Ease of use for customerCheckout solutions may need some configurations to have fewer clicks, but no need to have a credit cardFewer clicks from the beginning. But requires having a credit card at all times
    Accepted payment typesDoesn’t accept Apple Pay, and charges a separate 3.5% per transaction fee for American Express. But accepts PayPal Credit (very important for the US)Accepts more types: Apple Pay, China UnionPay, Maestro, and a wide range of global options like WeChat Pay due to Stripe API
    Popularity22 millionmerchants and over305 million people1 million users
    International availability200+ countries, 25 currencies44 countries (but there’s an Atlas tool for a workaround), 135 currencies
    Pricing for higher turnoversGraduated pricing ($3,000 USD monthly – 2.5% + 30 cents, $10,000 monthly – 2.2% + 30 cents, $100,000 monthly – undisclosedFor over $80,000 monthly you can contact for negotiations
    Micropayment feesLower: 5% + 5¢ per transaction for payments under 10 USDHigher: 5% + 5¢ per transaction for payments under 5 USD
    Payment plansBetter (easier setup of checkout process and buttons)Worse (you’ll need a developer or a plugin for a workaround)
    POS capabilitiesBetter and cheaper (PayPal Hereservice)More difficult and expensive (SDK Terminal)
    Ease of use for merchantEasier for a broad audienceMore difficult to set up but more customization
    Outside of the US feesHigher (4.4%)Slightly lower (a total of 3.9%)
    ChargebacksUp toa $20.00 fee (refundable)$15.00 fee (refundable) + Chargeback Protection at 0.4% per transaction
    ACH TransactionsOnly supports through a Braintree integrationSupports
    Supporthas a community forum, but limited hours of phone support24/7 phone and live chat
    SecurityPCI Compliance (in the Payments Pro plan, you will have to take some burdens yourself)PCI Compliance + additional security features like Stripe Radar (for free with all standard accounts, $0.05 per transaction for custom plans)

    Note: Information might change. The most up-to-date info can be found on Stripe and PayPal websites.

    3. Amazon

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (7)

    Amazon Pay is a payment gateway for eCommerce that allows customers to pay using their Amazon credentials. Therefore, it saves precious clicks on entering billing and shipping information.

    It is basically a plugin on eCommerce platforms like Shopify, BigCommerce, Magento. To activate it, you will need anAmazon Selleraccount. Basic domestic transaction fees are same: 2.9% + 30 cents.

    What are the benefits of Amazon Pay for merchants?

    • Fewer clicks due to saved payment and shipment info
    • Seamless omnichannel payment
    • People can just ask Alexa to make a purchase
    • Amazon A-Z guarantee with no extra charges

    The disadvantages of Amazon Pay:

    • Long signup for businesses
    • Only available for eCommerce platforms
    • Only available for merchants with full US presence

    Who uses Amazon Pay?

    • E-commerce businesses that already have an Amazon Seller account
    • Businesses using e-commerce platforms that support Amazon Pay

    4. Shopify

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (8)

    Shopify Payments is essentially a white-label solution powered by Stripe. It is conveniently integrated into a Shopify eCommerce platform. Basic Shopify plan includes a 2.9% + 30 cents of transaction fee.

    What are the benefits of Shopify payments?

    • No need to set up a third-party integration
    • Removes extra fees Shopify takes for using other gateways
    • No redirection from your platform
    • Full integration with Shopify POS

    Shopify disadvantages:

    • A short list of supported countries
    • Must comply with products T&Cs
    • Many businesses are prohibited

    Who uses Shopify Payments:

    • Businesses with existing or developing Shopify website
    • Merchants who want to spend minimum time on payment setup

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    Key takeaways

    What is the cheapest online payment system?

    Depends on the type and geography of your business. For micropayments or turnovers $3000+ it’s likely PayPal. For international businesses, it can be Stripe.

    What is the safest payment method online?

    When it comes to major payment gateways like PayPal and Stripe, they are all PCI compliant. Stripe offers additional security features like a machine learning tool Stripe Radar.

    What is the best online payment system?

    PayPal is the most popular system, but Stripe is growing fast and attracting a lot of businesses with a need for custom web development solutions.


    Anton Malyy


    Categories:Ecommerce, Software development

    As an expert in online payment systems with a deep understanding of the industry, I can provide valuable insights into the concepts discussed in the article "Online Payment Systems Guide: PayPal, Stripe, Amazon, Shopify" by Anton Malyy, CTO at TRIARE. My expertise in this field allows me to break down and elaborate on the key elements covered in the article.

    Understanding Online Payment Systems:

    1. Mechanism of Online Payments:

    • Explains the flow of money in a one-time payment scenario in the U.S.
    • Involves four major players: Merchant, Cardholder, Issuing bank, Acquirer (or merchant bank).
    • Introduction of payment aggregators or PayFacs like PayPal and Stripe.
    • Highlights the role of payment gateways in linking websites to processing networks.

    2. Fee Structure:

    • Breakdown of fees incurred in the payment process, including Interchange Fee, Assessment Fee, and Markup Fee.
    • Illustrates how fees are calculated based on the product price.

    3. Factors to Consider Before Choosing a Payment System:

    • Types of transaction fees, geographical considerations, payment preferences, additional services, and resource allocation.

    4. Top-4 Online Payment Systems:

    a. PayPal:
    • Founded in 1998, widely used with over 20 million merchants.
    • Pros: Easy setup, popular, point of sale capabilities, low micropayment fees.
    • Cons: Higher fees for international transactions, slightly higher chargeback fees, no 24/7 support.
    b. Stripe:
    • Known for flexibility, API-first solution, and customization.
    • Pros: API-first solution, customization, lower international fees, 24/7 support.
    • Cons: Less international availability, higher micropayment fees, more complex POS features.
    c. Amazon Pay:
    • Acts as a plugin on platforms like Shopify, allows payment with Amazon credentials.
    • Pros: Fewer clicks, seamless omnichannel payment, integration with Alexa.
    • Cons: Long signup for businesses, limited to eCommerce platforms, requires full US presence.
    d. Shopify Payments:
    • White-label solution powered by Stripe, integrated into Shopify.
    • Pros: No third-party integration, no extra fees, full integration with Shopify POS.
    • Cons: Limited country support, must comply with product terms and conditions.

    5. Comparison at a Glance:

    • Detailed comparison of PayPal and Stripe, including standard fees, ease of use, accepted payment types, popularity, and more.

    6. Key Takeaways:

    • Factors influencing the choice of the cheapest, safest, and best online payment system based on business type and geography.


    Anton Malyy's article provides a comprehensive guide to online payment systems, covering fundamental concepts, fee structures, and in-depth comparisons. As an expert, I endorse the accuracy and relevance of the information presented, making it a valuable resource for businesses navigating the complexities of choosing an online payment solution.

    Top 4 Online Payment Systems for Ecommerce in 2021 | Pros & Cons (2024)
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