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Choosing the right PayPal for Business alternative

    Find the best PayPal alternative for your business and customers. Here are some of the best alternative approaches and solutions on the market.

    What is PayPal?

    Created in 1998, PayPal has a long history. It’s one of the oldest and most popular digital wallets in the world. PayPal has over 375 million users globally, uses all major currencies, and is one of the most trusted services of its kind, especially in the B2C market.  

    In fact, PayPal is the preferred payment method in Europe. People use it to shop online or to send money quickly to anyone with an email address. What's more, the number of physical retailers accepting PayPal is increasing. In 2013, PayPal acquired payments gateway provider, Braintree

    For small businesses, PayPal for Business offers an interesting payment processing solution. One of its main benefits is that customers don't need to have a PayPal account in order to pay you. But the downside is, you often need to set up PayPal separately from your payment platform, which adds unnecessary hassle to your workflow. 

    Who is PayPal good for?

    PayPal for Business is aimed at businesses that need to take payments online, especially for B2C and consumers. It's typically a good fit for: 

    • E-Commerce businesses or online stores. PayPal supports recurring payments, which is useful for subscription-based businesses.   
    • Marketplaces that need to manage transactions between buyers and businesses. This happens via Braintree Marketplace, now part of PayPal. 
    • Mobile. PayPal offers an efficient and popular solution for your customers to pay by mobile. 
    • SaaS businesses   

    In addition, PayPal is popular in markets with lower trust of credit cards, such as Germany, as well as for lower value transactions.

    Our data on sales made in Germany shows that 70% of transactions under $50 go through PayPal over card payment.

    Is PayPal the best option for selling SaaS?

    When it comes to selling SaaS, PayPal for Business has several benefits.

    It offers the useful PayPal Recurring Payments feature, so you can bill your customers on a regular basis for physical and digital goods or services.

    What's more, PayPal is the preferred payment method for B2C and lower priced B2B, especially in markets where credit cards are less frequently used or trusted. PayPal is relatively fast to set up and smooth for your customers to use. Paying via PayPal can also help improve payment success at the checkout, as it allows for multiple funding sources. 

    But despite these benefits, there are still some things to consider when using PayPal as a solution for selling SaaS. While payment processing is an important part of that workflow, it is only one part. Numerous other processes go into building a robust SaaS billing infrastructure.

    These include: 

    • Subscriptions and recurring billing 
    • Localization (covering multiple currencies, payment methods, and languages) 
    • Global sales tax compliance 
    • Data, reporting and analytics 

    PayPal is purely a payment processor and doesn’t offer a solution for SaaS businesses to deliver revenue effectively and compliantly. That means SaaS businesses using PayPal will have to find ways to incorporate these additional processes, to avoid leaving damaging gaps in their revenue delivery infrastructure. This has the potential to add significant extra work in-house.  

    Reasons to consider alternatives to PayPal

    We speak to SaaS executives all the time about potential  alternatives to PayPal for their payments infrastructure. 

    Based on these insights, these are the reasons that software executives look for PayPal alternatives. These challenges reach beyond SaaS and are also relevant for other types of online businesses.

    Complex integration of PayPal

    PayPal is one part of your payments infrastructure. To handle subscriptions and recurring payments, you'll need to integrate additional tools. This can be complicated as PayPal has complex APIs and documentation. 

    For purposes of global tax compliance, you'll also have to integrate your payment processor with tax solutions. But there is documentation on how to integrate with PayPal transactions. 

    B2B buyers will need additional payment methods and sales-assisted invoicing processes. As PayPal doesn't offer these, to meet the expectations of larger business customers in particular, your finance team will need yet another tool integrated into your stack, as well as new processes to issue invoices and reconcile payments effectively. If you don't offer the right payment methods, your conversion rates are likely to take a hit.

    To maintain high revenue performance, SaaS businesses typically need to offer sophisticated upgrades, downgrade, pausing, and cancellation functionality. This requires a subscription tool which would mean another integration on top of your PayPal solution.

    Difficult to implement SaaS growth strategies 

    SaaS growth has a clearly defined set of strategies. These include moving into new international markets, moving upmarket to serve teams or enterprise clients, moving down-market to add trials or self-serve options, and launching new products.  

    As a payment solution, PayPal can't support you with implementing these growth activities. Strategic growth generally sits outside PayPal’s main remit – payment processing.  

    To drive strategic growth, you’ll need different infrastructure. You'll likely have to build and optimize this in-house. What's more, you'll need specific expertise on hand to guide you in creating the right infrastructure to support your product and go-to-market strategy. 

    Tax and invoicing form another key part of the payments infrastructure, where you’ll need additional support, especially when moving into new international markets.  

    Patching together a billing infrastructure from multiple tools means you don't have a single source of truth when it comes to your revenue data. This lack of a 360° perspective may get in the way of your ability to execute strategic growth activities.  

    No sales tax compliance support

    Getting sales tax right is critical for SaaS businesses and the penalties for getting it wrong can be severe.

    As a software company, you owe sales tax where your customers are located, not where your company is based. As you can imagine, when you have customers buying from all over the world, sales tax compliance can get extremely tricky.

    PayPal doesn't deal with sales tax compliance. It's just a payment processor. It would need to be integrated with a sales tax calculator to correctly match each transaction to product and country-specific tax rules. This would need to be done correctly over the entire life cycle of all your customers – recurring payments included.

    These integration processes aren’t documented. You would need to figure everything out for yourself.

    One alternative would be to work with a tax accountant to retrospectively reconcile transactions from your PayPal reporting. But the downside here is the expense of this process. In addition, you can't charge the tax on top during a checkout, so you'll end up missing out on revenue.

    In short, maintaining sales tax compliance internationally is difficult when only using PayPal. That's why global SaaS companies are looking for alternatives to take this major burden off their hands.


    Constrained payment performance  

    Having your customers pay with PayPal often looks great at the checkout. With its wide range of funding sources, PayPal offers customers plenty of options. This leads to good levels of payment success.

    But there are several performance challenges with PayPal that are likely to affect SaaS businesses.

    For starters, customers can cancel their PayPal subscription payments from within their PayPal account. This creates a cancellation flow that you have zero control over. What’s more, if the customer chooses to chargeback their subscription too, PayPal usually favors the customer in this scenario. The outcome is a new source of churn for your SaaS business.

    What's more, PayPal doesn't route card payments through multiple payment gateways. To achieve this functionality, you'll need to integrate additional tools on your own – creating more of a burden on your time and resources.

    Costs mount up

    Because PayPal’s feature set is limited only to payment processing, SaaS businesses typically must use it in conjunction with other tools. As a result, costs quickly mount up until using PayPal is no longer cost-effective.

    Here’s a breakdown of some of the specific costs you can expect to find, both for PayPal itself and for associated tools:

    • You'll be charged 2.9% plus currency fees for receiving payments
    • PayPal charges additional fees for cross-border transactions
    • PayPal also charges a fee on payout, usually capped at 2%
    • You'll also need to factor in additional fees for additional tools
    • Finally, you'll need a team to integrate and manage this infrastructure as well as handling your global sales taxes and compliance.

    Choosing the right alternative to PayPal for Business

    Now that you have considered why SaaS businesses look for alternatives to PayPal for Business, what sort of alternatives to PayPal can SaaS businesses expect to find?

    What solutions are available on the market to address the revenue delivery infrastructure problem? And, most importantly, which one is the right fit for your business?

    Merchant of record (MoR) and payment gateways are the two main options for alternatives to PayPal. Let’s examine them both in detail.

    Option 1: Merchant of record

    Our experience in the market has shown us that SaaS businesses are looking for unified solutions rather than complex integrations involving multiple tools. They also want optimal performance, with infrastructure covering every step of the transaction, along with tools to help create this experience and expert advice on how to manage it.

    With the many challenges of global sales tax compliance, SaaS businesses want their sales tax handled for them, removing the risk of unexpected penalties. And they want to achieve all this at a single all-inclusive cost, which also incorporates the significant value of an enhanced sales performance.

    The answer to this unified solution is a​ merchant of record (MoR). This approach gives you the resources, support, and technology to improve your revenue across the entire payment process and each customer lifecycle, and ultimately optimize your business growth.

    Let’s break down this model for context:

    • It’s more than just a payment gateway: A payments infrastructure rooted in an MoR model gives you a unified solution for taking payments - from checkout and pricing to localization and subscription renewals (and more).
    • Say goodbye to dealing with sales tax: With this model, global sales tax is handled for you within the single integration, including full liability for tax compliance too.
    • Improve your business’ performance: This infrastructure sits across the journey of your payments which will be maintained for you - not to mention the tooling and support provided to help you easily build an experience specific to your business.
    • One single cost: A single cost that covers the $$$ you’d be spending on extra tools, integration processes, and extra employees, and brings in the value of higher performance.

    Here are the main MoRs you can consider:


    Paddle is an MoR and provider of payments infrastructure built specifically for SaaS businesses. Managing all aspects of payment infrastructure (aka, ticking all the bullet points above), Paddle covers everything from customer acquisition to renewals and expansions. Paddle enables SaaS businesses to scale quickly, compete globally, and stay compliant without any of the stress.

    Paddle, in fact, has Paypal integrated as a payment method, so you can easily cater to customers in markets where PayPal is the preferred option, without having to integrate it yourself.

    Paddle goes far beyond just being an alternative to PayPal. Here are some of the key features:

    • Managed Payments – Get instant access to established international banking infrastructure for optimized payments in every country and currency. 
    • Paddle Pilot – Ongoing testing process, which monitors where each dollar is routed, allowing you to operate with confidence and maximize every revenue opportunity. 
    • Paddle Checkout – Offering all the most popular global payment methods (including PayPal), Paddle’s checkout service helps you to maximize conversions. With 1-click currencies and your own branding, you can tailor the checkout to your precise business needs, without all the headaches of complex engineering dependencies. 
    • Boost your Net Revenue Retention with Paddle Subscribe, the complete package to shape every customer’s subscription experience. Covering not only acquisition, but also renewals and expansion, Paddle Subscribe is perfectly tailored to the unique needs of SaaS businesses.  

    Paddle is also easy to integrate. As an MoR, it covers a range of functionality and payment methods that you’d otherwise need to integrate on top of PayPal. But even if you just use PayPal, Paddle’s APIs are simpler and easier to use than PayPal’s own ones. Paddle comes with a comprehensive set of development tools, including the Paddle.js checkout, subscription APIs, and web hooks for delivering data.

    Paddle goes far beyond it in optimizing your entire payments process.

    Paddle has been serving over 2000 SaaS businesses for almost a decade.

    Our dedicated advisory support team partners with your business to provide insights for your go-to-market strategy – whether that's expanding up or down market or taking your business global.

    Get in touch and speak to an expert today.


    Cleverbridge is a cloud-based global ecommerce platform that provides billing solutions for digital goods, online services and SaaS companies in B2C and B2B markets.

    As a full-featured MoR platform, Cleverbridge is designed to offer global sales tax compliance and subscription payment capabilities. The platform offers a wide range of billing models and is well-suited to large companies with dedicated engineering teams handling their payments infrastructure.

    Cleverbridge is designed for global online businesses that serve customers all over the world and need sales tax compliance solutions.

    That said, Cleverbridge is not tailored for SaaS-specific features like key subscription and B2B models. That means there are certain limitations to how well it can support this particular business model.


    FastSpring is another MoR that handles online payments for businesses who sell both physical and digital goods with core features to support:

    • Subscription management
    • Sales tax compliance
    • Payments and billing
    • Fraud protection
    • Revenue recovery
    • Analytics

    Ultimately, FastSpring acts as a reseller, selling goods & services and handling online payments on behalf of its business customers. It can be used by SaaS companies looking for a way to manage payments and subscriptions.

    Managing sales tax compliance is also possible with Fastspring, which is of particular use for SaaS companies who operate internationally or domestically in regions like the US where sales tax legislation is particularly complex.

    FastSpring doesn’t specialize in SaaS, so you’ll still have work to do to build a payments infrastructure optimized for the SaaS model, including:

    Flexible subscription models and recurring billing

    Simple localization processes including local languages and currencies

    Efficient customer support and growth advisory services to help you execute SaaS strategies

    Unified data, reporting and analytics that enables you to respond to new market opportunities, quickly.

    Option 2: Other payment gateways

    When searching for an alternative to PayPal, you may also want to consider various payment gateways. These offer a like-for-like alternative to the PayPal service, enabling businesses to accept payments online.

    But there are some considerations to keep in mind, like PayPal, most payment gateways present similar challenges.

    • You’ll likely have to invest significant time and resources to integrate additional tools into your overall revenue delivery pipeline.
    • You'll need to build supporting infrastructure around your payment gateway.
    • Sales tax compliance won't go away when using a payment gateway – especially if you serve customers all over the world.

    1. Stripe

    As one of the most popular payment providers, Stripe allows businesses to take payments online. It’s suitable for businesses of all sizes selling physical and digital products via subscriptions or one-off payments.  

    Key features of Stripe:

    • Includes functionality for integrating payments and approving or declining transactions. 
    • Ability to connect your ‘acquiring’ bank to the customer’s ‘issuing’ bank, with no need to set up a separate merchant account. 
    • Developer-friendly API, which makes Stripe easy to integrate with other tools in your revenue delivery pipeline.  

    Things to consider with Stripe

    • No integration with PayPal, so you’d have to set up and manage both tools separately. Their functionality and data would be permanently siloed, making it more difficult to get a clear overall picture of transaction performance. 
    • Lack of buyer support beyond the basics; you’ll be on your own when using Stripe  
    • No capability for handling sales tax compliance around the world – so you’d still need to spend significant time, resources and energy on handling this tricky area.  

    Stripe is a valid alternative to PayPal for Business, offering a similar set of features. However, it's impossible to integrate the two tools together, which is a major downside. You'll need to run them alongside each other. 

    What's more, like PayPal, Stripe is only one small part of the revenue delivery pipeline. You'll still need to find other ways to deal with customer subscriptions and localization challenges, as well as the burden of sales tax compliance regulations.

    2. Adyen

    If your SaaS business serves enterprise clients, Adyen could be a good fit. It's an enterprise focused payments company with a powerful set of payment features.  

    Most of Adyen's customers are well-established businesses, with dedicated engineers to manage their payment and billing infrastructure. 

    Key features of Adyen:

    • Offers extensive documentation and various APIs for flexible integrations (including PayPal)  
    • Offers flexible fees according to the volume of your payments 
    • With its own banking license, Adyen can offer powerful payment options, such as routing and retries, for high performance.   

    Things to consider with Adyen:  

    • Setting up Adyen integrations is complex and can be time-consuming, requiring a large engineering team. Not well suited to smaller SaaS businesses or those just starting out. 
    • Adyen doesn’t handle global sales tax compliance, so you’ll still need to remit, file and otherwise handle any issues that crop up.  
    • Adrian's platform lacks the ability to route payments through other providers, maximizing acceptance rates.  

    Adyen is a good alternative to PayPal for Business, especially well-suited to large companies wishing to optimize their revenue delivery pipelines. Adyen offers a powerful platform with extensive documentation and modern, flexible APIs, but lacks tax compliance handling and requires substantial engineering resources – making it less ideal for smaller SaaS players.

    3. Braintree

    Braintree is a payment gateway for businesses looking to take online payments. Recently acquired by PayPal, Braintree offers native integration for PayPal.  

    This makes Braintree a good fit for businesses selling B2C and lower priced B2B. It's particularly well-suited for businesses with European customers, for whom PayPal is the preferred digital wallet. 

    But, like Stripe and PayPal, Braintree is only a payments provider. For the rest of your payments strategy, you'll need to incorporate other tools to handle tasks such as subscription billing, analytics and localization, as well as sales tax compliance.

    Braintree is a good alternative to other payment gateways, because it includes PayPal natively. However, many Braintree users report issues with tax compliance, subscription billing, and SaaS reporting. 


    This is a fast-growing payment service primarily used by midmarket and enterprise companies. offers a wide selection of payment methods, including PayPal. It also offers payment routing and has a transparent pricing structure.

    Like the other payment gateways that we outlined above, doesn't handle any other aspects of the payments infrastructure.

    You'll still have to spend time and resources integrating various tools to handle sales tax compliance, data analytics, and flexible subscriptions – and paying all the fees for these different tools. matches PayPal in terms of the wide range of payment methods it offers. This makes it a reasonable alternative to PayPal. However, like PayPal, it lacks functionality for other key elements in the payments infrastructure. It's more configurable than Adyen but still won’t cover you for essential SaaS processes, such as managing subscriptions or tackling taxes.