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Handling online payment processing: the alternatives to PayPal

Since it was founded in 1998, PayPal has grown to be one of the most widely accepted online payment processors and a leading mobile payment platform on a global scale. 

As one of the first companies to simplify payments online for both customers and businesses, it’s a name that buyers and sellers trust when it comes to shopping or sending money online. 

But what is it that makes PayPal and PayPal for Business so popular? And does it remain the best and most cost-effective option for SaaS businesses?

Let’s take a look at the good, the bad, and the alternatives of PayPal for Business. 

The advantages of using PayPal for Business

When something is so popular and well-known, it must be doing something right.

Here are the main benefits of PayPal for Business:


PayPal’s ‘plug and play’ model means new businesses can get started in no time at all by just linking their business bank account - there’s no need to have a merchant account in place. Simple.

It’s for this reason that PayPal is used by a variety of businesses globally, from ecommerce to online stores and SaaS companies. 

Subscription payments

B2B and B2C

The disadvantages of using PayPal for Business

Complex integrations

You’ll need additional support and integrations with other platforms to complete your revenue stack, including subscription management and financial compliance tools. You’ll probably need at least another payment processor alongside PayPal to support other payment methods.

PayPal’s complex APIs and documentation make your life more difficult. Integrations are far from straightforward, and you’ll need to create and manage a lot of them. 

On the other hand, you can go for an all-in-one revenue solution, where you'd still keep PayPal as a payment option, but you wouldn't have to manage the account yourself. More on this approach further down. 👀

No sales tax compliance

Given its accessibility and simplicity as a payment solution, your software business can get customers buying your product from pretty much anywhere in the world. This is key to your growth potential. 

But there is a downside: needing to comply with SaaS sales tax regulations, in whatever locations your customers are - or could - buy from. 

If you don’t get this right, you risk heavy penalties and maybe even prison. More on the pains of global sales tax , here. 

Risk to your payment performance

First up, at any vague sign of suspicious activity, PayPal can cancel orders and freeze your account. This can result in frozen funds for months. 

Another thing you have zero control over is the fact your customers can cancel their PayPal subscription payments from within their account. Ideally, you’d want to be involved in the cancellation process to find ways you can persuade these customers to continue their subscriptions.

On top of that, PayPal manages chargebacks, and they tend to favor the customer in this scenario.

Hello churn, churn, churn. 


As we’ve mentioned already, PayPal needs to be supported by additional tools and platforms to complete your revenue delivery infrastructure, meaning some extra $$$ there too. 

Online payment processing alternatives

1) E-wallets

2) Payment service providers 

You’ll need to add a Payment Service Provider (PSP) to your checkout to handle the exchange of money. A PSP acts as both a merchant account and the payment gateway, meaning that your business doesn’t need to have its own merchant account to get started. 

This might sound a lot like PayPal too. But again, there are other PSPs out there to consider, including Stripe , Adyen, and Braintree - and you will need to use one of these alongside PayPal anyway. 

Opting for a part-by-part solution is a good option for a company that only needs to focus on a checkout. But for scaling companies, especially ones that sell software, this approach doesn't offer you a comprehensive solution. You need additional features that a payment plug-in can’t provide, including reporting, subscription management, and security, amongst other things.

3) Merchant of record

A merchant of record acts as a reseller in any transaction. For businesses that choose to sell through one, there are two transactions that take place during a sale: the first, between the end customer and the MoR, and the other between the MoR and you. 

When the transaction is complete, the MoR’s name will show up on the customer’s credit card statement. They also become the liable party as they are technically making the sale with the end customer, meaning any kind of customer dispute will be handled by them.

Find out more in our full guide on merchants of record .

4) Revenue delivery platform 

Not only does a revenue delivery platform handle the entire checkout experience for you, but it handles your entire payment and billing process, leaving you nothing to worry about. 

It includes:

  • Checkout : Managing the moment your users go from prospect to customer 
  • Payments : Giving both one-off and recurring payments the best chance of success, covering every aspect from banking to payment gateways, payment methods, and currency conversion 
  • Sales tax compliance : Registering, filing, and remitting sales tax in every location your customers are based
  • Subscription management : How you retain the customers you’ve acquired, including upgrading their subscriptions 
  • Financial compliance : Keeping up to date and compliant with ever-changing, local regulations 
  • Fraud prevention : Protect your business and customers from fraudsters, while making sure you don’t lose any revenue to false payment declines
  • Buyer support : Retaining more customers by providing them with best-class support if they have any queries about their order, subscriptions, or payments
  • Reporting and analytics : Visibility into your user and revenue performance so you can make data-driven decisions for your business, and respond quickly to new opportunities

Related reading

What is a merchant of record and why use an MoR as a solution for payments and sales tax?
Local currencies and global payments
How local currencies and payment methods impact revenue growth
6 reasons your SaaS payments are failing and what you can do about it