Payment methods: 10 alternatives to PayPal

17.08.2022
by Meike Müller
E-Commerce
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The PayPal payment method has now become standard in every online store. However, PayPal has some disadvantages, especially for merchants and online shop owners. We would like to present these to you in this article and suggest ten alternatives to the PayPal payment method that you can also integrate into your store. Do you need help creating or integrating a payment method in your online store? Feel free to contact us and we will be happy to assist you with our years of expertise in e-commerce.

Reading time 15 min

What to expect in this article:
  1. PayPal as a payment method
    1. The advantages that PayPal offers
    2. PayPal disadvantages that should not be ignored
      1. PayPal fees
      2. Account blocks
      3. Data protection
  2. Alternatives to PayPal
    1. Giropay (Paydirekt)
    2. Amazon Pay
    3. Sofort service
    4. Apple Pay
    5. Google Pay
    6. Skrill
    7. credit cards
    8. Masterpass
    9. Click-to-Pay
    10. barzahlen.de
  3. Mollie as a complete solution for your online shop
    1. What is Mollie?
    2. How does Mollie work?
  4. FAQS
    1. What payment methods are available?
    2. What options are there for paying online?
    3. Why should I use alternatives to PayPal?
    4. What are the requirements for using PayPal alternatives?
    5. What is better than PayPal?
    6. Can I pay with PayPal without online banking?

PayPal as a payment method in your online shop

PayPal is a very well-known online payment service that is also offered in almost every online store. According to the company itself, there are currently over 277 million active users worldwide. For buyers in particular, PayPal is a simple method of completing transactions without incurring additional costs. Due to the large number of PayPal users, it makes perfect sense to integrate this payment method into your online store. However, you also have to reckon with a few disadvantages, which are not so insignificant. In the following, we will show you the advantages and disadvantages of PayPal as a payment method in your online store.

Advantages of the online payment method

The big advantage of PayPal for online store operators is that many customers in Germany already use PayPal. Once the customer's account is connected to PayPal, a purchase can be completed in just a few seconds and without any effort. As an online retailer, you naturally also benefit from this: if the purchase can be completed quickly, it is more likely that a customer will do exactly that. If, on the other hand, the process takes a long time and data such as the IBAN may have to be searched for or checked again, the purchase may not be completed. There is a much greater chance that something will get in the customer's way - all they have to do is ring the doorbell. In Germany, PayPal is the most popular payment method for online shoppers. But PayPal is also very popular worldwide: the payment service provider is used in over 200 markets and in 25 different currencies. So it would of course be practical if you could also make this payment method available in your store.

Disadvantages of PayPal for online merchants

Unfortunately, PayPal as a payment method also has a few disadvantages for you, the online merchant. You should be aware of these disadvantages if you integrate PayPal into your store. They could also be the reason why you ultimately decide against it.

The costs of PayPal

How much does PayPal actually cost? PayPal is free for your customers. However, as an online merchant, you have to pay fees for every transaction. The PayPal fees are calculated according to your monthly turnover. If you have a turnover of up to 5,000 euros, you pay 0.35 euros and 1.9% of the purchase amount for each individual transaction. From 5,001 euros to 25,000 euros, the percentage drops to 1.7 percent and from 25,000 euros to 1.5 percent.

PayPal account blocking

As a rule, the PayPal account is not blocked. However, there are repeated reports from online merchants that they no longer have access to their account and therefore cannot access the money. It is difficult to say why the accounts are blocked. Blocked accounts are often linked to money laundering or terrorist financing. It is even enough that the names are similar to known and verified cases. In order to get the account unblocked again, official documents such as a copy of the identity card must be submitted. Sometimes even a credit card statement is required. Once you have submitted the required documents, this does not automatically mean that your account will be free again quickly: it may take several months.

Lack of data protection

Unfortunately, the issue of data protection is also not clearly regulated at PayPal. This is because your data is stored on various servers, some of which are located in the USA and may also be passed on to third parties there. According to the company's privacy policy, they reserve the right to pass on information about your account. Recipients of your data could be banks, marketing companies, analysis services, auditors and many more. Incidentally, you cannot object to your data being passed on, although this does not comply with European data protection law.

PayPal alternatives

There are also good alternatives for your online store if the disadvantages of PayPal have made you think twice. You don't necessarily have to use PayPal in your online store for customers to complete a purchase. In the following, we would like to introduce you to ten alternatives that you can integrate into your online store as a means of payment. If you need help integrating payment methods into your online store or if you need general support with creating an online store, we will be happy to provide you with advice and assistance.

The ten best alternatives to PayPal:

Giropay

An overview of the advantages and disadvantages:

Giropay advantages Giropay disadvantages
  • There is an app
  • Bank details are not forwarded to the online store, but remain with the bank. This is an additional security factor for your customers, which can be very convincing
  • There is buyer protection
  • Money can be sent to friends and family
  • Customers do not need their own account
  • The online retailer, in turn, has the advantage of receiving an immediate payment guarantee
  • No risk of non-payment as with other payment methods
  • Cannot be used worldwide
  • Not all credit institutions participate in Giropay
  • A payment default is only covered up to 10,000 euros
  • Fees are possible for individual merchants

Giropay is a good PayPal alternative. To use Giropay, your customers only need online banking via one of the participating banks and can complete a purchase directly. If Giropay is selected as the payment method, the customer only has to enter their bank sort code and is forwarded directly to their bank's online banking. Once the TAN has been confirmed, the transfer is sent directly.

Another option for payment with Giropay is the Paydirekt app. Giropay and Paydirekt have merged to form a single payment service. They are therefore one and the same payment method. Customers can use the Paydirekt app to make payments via their smartphone. It can also be used to send money to friends and family. This function is therefore very similar to PayPal.

YouTube Video von Giropay

Amazon Pay

The advantages and disadvantages:

Amazon Pay advantages Amazon Pay disadvantages
  • Payment data is not disclosed to third parties
  • Online checkout: Customers remain on your site and are not redirected to Amazon
  • Is mobile-optimized, no additional setup for mobile devices
  • Customer needs an Amazon account
  • Consumer protection is questionable
  • Fees of 1.9 percent and 35 cents per individual transaction
  • Poor customer service from Amazon can have a negative impact on you as an online shop owner

Amazon Pay is the marketplace and company Amazon's own payment method. You can use it in your online store so that your customers who already have an Amazon account can also complete their purchase with you via Amazon. Customers who want to pay with Amazon Pay only need to have an Amazon account with an email address and password to make a payment in your store. Sounds simple, doesn't it? The big disadvantage here is that the fees are just as high as with PayPal. Amazon Pay also doesn't score so well when it comes to consumer protection. By paying with Amazon Pay, the company knows about the consumer behavior of your customers and could also take advantage of this information. We doubt whether Amazon Pay is really the best alternative compared to PayPal. Take a look at our other alternatives.

YouTube Video von Amazon Pay

Instant service

Advantages and disadvantages:

Sofort service advantages Sofort service disadvantages
  • Customers do not have to create an account
  • Usually hardly any fees
  • Independent of banks
  • Online merchants receive a payment confirmation directly
  • Payment processing is fast
  • The Sofort service has insight into your customers' payments in your online shop
  • The Sofort service can also check whether your customer's account is covered
  • There are fees of 0.9% plus €0.25 (net) per successful payment processing - plus a one-off fee of €59.90 and a monthly basic fee of €4.90

For customers with online banking access, the Sofort service is a good option for completing a payment in your online store. The Sofort service, formerly known as SOFORT Überweisung, belongs to the payment service provider Klarna. If you have integrated it into your online store, your customers do not need to register to complete a purchase. With a secure data connection, your customer can go directly to their online banking and log into their account. The payment is verified by confirming with a TAN. However, during this process, Sofort GmbH checks whether the account is covered. The payment service provider can of course use this information for its own purposes. There are also costs for you as a merchant. The costs per transaction are lower compared to PayPal, but a monthly and a one-off fee are charged. However, if your online store has a high turnover, payment with Sofort will be cheaper than with PayPal.

Apple Pay

The advantages and disadvantages of Apple Pay:

Apple Pay advantages Apple Pay disadvantages
  • Apple Pay transactions are no more expensive than normal credit card transactions
  • Anonymous payments
  • Checkout process is quick and easy for customers
  • Integration effort in your German online store is low
  • Only suitable for customers who are Apple users

Another alternative that you can integrate into your online store is Apple's payment service provider: Apple Pay. Apple Pay was initially used in combination with the iPhone or Apple Watch to pay in brick-and-mortar stores. With the help of an NFC (Near Field Communication) option in the respective device, a contactless data transfer can be started or the payment can be processed.

Apple Pay can now also be integrated into your online store as a means of payment. Your customers need an account to pay in your store. The big advantage is that payments with Apple Pay do not cost you any more than a normal credit card transaction. The biggest disadvantage, however, is that you can only reach Apple users.

Google Pay

The advantages and disadvantages of Google Pay:

Google Pay advantages Google Pay disadvantages
  • Own app
  • Great importance is placed on security for customers
  • Fast payment
  • Free of charge for customers and merchants
  • Not many users yet
  • Only a few banks support Google Pay so far
  • Only for Android users

Google Pay is Google's payment service and has also been available in Germany since 2018. As a rule, Google Pay can be used for in-app payments. The payment method is also used in stationary retail. However, third-party providers also have the option of integrating the Google Pay function into their own online store. The biggest disadvantage so far is that Google Pay is supported by very few banks. Google Pay alone is not yet the solution for offering the broad mass of your customers a good payment option. However, it can be offered as an add-on to make it easier for a few customers to pay in your store.

Skrill

Skrill advantages and disadvantages:

Skrill advantages Skrill disadvantages
  • Account details remain with Skrill and are not passed on to the various online merchants when payments are made
  • Not widely used
  • Prepaid model is also a risk for customers, as the money could be gone if Skrill goes bankrupt

A less common option is Skrill. Skrill is a prepaid system from England. Your customers need an account with Skrill and can then deposit money into their Skrill account to have credit for payments in other stores. Deposits to the Skrill account are made either by credit card or via a current account. In itself, Skrill is a good payment method, as private shoppers' bank details are not passed on to any number of online merchants when purchases are made. However, very few online shoppers use this method and it is unlikely that they will create an account when they want to make a purchase. Skrill is therefore not a real alternative that can stand alone as a payment option in your store without any other payment methods.

Credit cards

The advantages and disadvantages of credit card payments in online stores:

Credit card advantages Credit card disadvantages
  • Good reputation, as a credit card acceptance contract is only created after a strict check
  • The possibility of reaching many customers, as there are many credit card holders
  • A transaction only costs around 7-9 cents
  • Payments can only be made by entering bank details, which most people do not know by heart
  • More complex to integrate into the online store (credit card acceptance contract + payment service provider)
  • Fees for the PSP

Many online stores offer credit card payment in their store. Approximately 36 percent of people in Germany have a credit card*. This means that a very large proportion of Germans can use credit card payment if you integrate it into your store.

However, this option can be inconvenient for payments in online stores. After all, your customers have to enter their bank details, which they probably don't know by heart. In addition, integrating credit card payments is somewhat more complicated than for other payment service providers. This is because, in addition to a credit card acceptance contract, you also have to take care of a payment service provider, or PSP for short, which acts as the interface between your store, your customers and the financial institution. The PSP provides the technical details required to integrate the payment system into your online store. As you can already guess, fees are payable here.

Click-to-pay

The advantages and disadvantages of Click-to-Pay:

Click-to-Pay advantages Click-to-Pay disadvantages
  • User data and passwords do not have to be entered again and again
  • Good security system
  • Free of charge for customers
  • Can be combined with all credit cards
  • Speeds up the payment process
  • Personal data is not passed on to merchants, customers can pay securely
  • Can only be used in conjunction with a credit card

Click-to-Pay is a really good alternative to PayPal that works in exactly the same way. This is because it is also an electronic wallet or so-called e-wallet that works in combination with a credit card. If your customers want to use this payment method, they must have a credit card from Visa, American Express, Mastercard or Discover, for example. They register once with Click-to-Pay and create their own account, which contains data such as their credit card number, etc. Once this has been done, paying in online stores with Click-to-Pay is super easy! This is because delivery and address information is entered automatically and the password no longer needs to be used if customers use Click-to-Pay as a browser application or iOS and Android app. This secure alternative to PayPal is therefore very easy to use and should be considered if you are equipping your online store with various payment methods.

Masterpass

Advantages and disadvantages of Masterpass:

Masterpass advantages Masterpass disadvantages
  • Masterpass can be used in combination with various credit cards such as Mastercard, American Express, VISA or Diners Club as well as with the Maestro Card debit card
  • Free of charge for customers
  • High security standards
  • Buyer protection is included
  • Can only be used with credit cards and/or Maestro Card
  • Can only be used in 600 stores in Germany so far and is even less well-known among customers

Masterpass is Mastercard's own payment method, but it can also be used free of charge by buyers of your products with other credit cards such as American Express or VISA. The transaction is usually completed in just a few clicks. The customer must first register with Masterpass and add their personal details and credit card. Then Masterpass just needs to be selected as the payment method in your online store.

Barzahlen.de

The advantages and disadvantages of Barzahlen.de:

Barzahlen.de advantages Barzahlen.de disadvantages
  • Is free of charge for customers
  • The data protection issue does not arise
  • High buyer protection
  • More effort due to payment in a store
  • Customers must have a participating local store
  • Fees for merchants

You may have heard of Barzahlen.de, which is a way of paying in cash when shopping online. The customer orders their desired items online and then pays for them in the store. This means that online banking functions and credit cards are not necessary for your customers. However, this option is not practical for all customers. There are a total of 10,000 stores where your customer can then go to the branches with a payment slip that they have received in your store. The prerequisite is, of course, to have a store nearby that supports this payment method. In addition to supermarkets such as Rewe or Penny, you can also pay at dm drugstores and many other stores. If you don't like paying online, you will certainly like this option. For all your other customers, this means a lot of extra work. If you want to integrate Barzahlen.de into your store, this only really makes sense if you sell products that are not available in every stationary store.

As a retailer, you also have to pay a fee for this payment method, but it is not known exactly how much this is. Your customers, on the other hand, use the function free of charge.

Mollie - the simple solution for your online shop

Now we would like to introduce you to Mollie. With Mollie, you actually have a complete solution for the payment methods in your online store, as it is a payment service provider. Mollie takes care of payment processing in online stores and is therefore the perfect tool for your own store!

What is Mollie?

Mollie was founded in the Netherlands in 2004 and is one of the best-known PSPs (payment service providers) in Europe. More than 130,000 customers already use Mollie to process payment transactions in the online world in a simple and uncomplicated way. Mollie is cloud-based and can be quickly integrated into any online store. This means you can offer your customers different payment methods in no time at all and only have to conclude a contract with Mollie itself rather than with each individual payment method.

How does Mollie work?

With Mollie, you can easily offer your customers a range of different payment methods. The most common types can be easily integrated into your online store with plugins. You can also use Mollie's API to build your own payment method.

The conditions are also simple. You enter into a contract with Mollie and have access to all common payment methods that Mollie offers. These include, for example, card payment with VISA, American Express or Mastercard as well as all payment options from Klarna (SOFORT Banking, Pay Now, installment purchase and invoice), PayPal, Apple Pay, Giropay, in3, SEPA direct debit, iDEAL, paysafecard and many more. The costs per transaction vary depending on the payment method that is ultimately used in your store.

Did you know that we are an official Mollie partner? We are familiar with the payment solution for your online store and are happy to help you integrate Mollie. You also have the opportunity to benefit from better conditions and pricing models with a free volume of up to €50,000. With us as a partner, this is even possible from the very first euro. Customers that we have supported and helped with Mollie integration so far include: Neues Schwarz and Bauportal24h.

Click here to go to Mollie

FAQ questions and answers:

To conclude our article on alternative PayPal payment methods, we would like to answer the most frequently asked questions on the subject. So you are well prepared. We hope that we have been able to answer all your questions. If this is not the case and a question about payment methods in the online store is still unanswered, you can contact our experts at EXWE at any time.

  • What payment methods are there?

    There are many payment methods, whether online or offline. Offline, cash payment, credit cards, debit cards and payment with vouchers are the most common. Online, other payment methods include direct debit, cash on delivery, e-wallets (i.e. electronic wallets such as PayPal), instant bank transfer, advance payment and purchase on account.

  • What options are there for paying online?

    If you want to store online, you also have to pay online. That's how it usually works. Various payment methods such as PayPal or credit cards are available depending on the online store. The online shop operator also has the option of integrating different payment methods into their online store. It is important for you as a buyer or retailer that the chosen payment method is secure. Options for paying online include, for example

  • Why should I use alternatives to PayPal?

    Paying with PayPal does not actually have any disadvantages for the buyer. The only problem associated with using PayPal is the issue of data protection. This is because it is not yet comprehensively regulated. Data collected via PayPal is stored on servers located all over the world, including in the USA. The data could also be passed on to third parties. This should be clear to you as a buyer if you use PayPal.

    As a merchant, PayPal also has the disadvantages that fees per transaction are relatively high and that an account can be blocked without justification. Lifting the block is often a lengthy process. It is therefore worth looking at alternatives to PayPal.

  • What are the requirements for using PayPal alternatives?

    The requirements for using some PayPal alternatives depend entirely on the type of alternative. For credit card payments, buyers need a credit card. Merchants, on the other hand, must have a credit card acceptance contract and use a payment service provider in order to be able to offer the payment option in their online store. With Apple Pay, on the other hand, the integration effort for merchants is very low. Customers can use Apple Pay if they have an Apple device.

  • Which is better than PayPal?

    It is impossible to say in general terms what is better than PayPal. It always depends on which features are particularly important to you. When it comes to fees, there are alternatives to PayPal that are significantly better, such as credit card payments or Google Pay.

  • Can I pay with PayPal without online banking?

    If you or your customers want to use PayPal, it is not necessary to have online banking. It is sufficient to enter the bank details once via PayPal. For successful registration with PayPal, a small cent amount is then transferred, the purpose of which is a code. This code must be entered at PayPal so that the verification and registration process can go through. The corresponding amount is then debited from the bank account each time a payment is made with PayPal. On the other hand, the respective merchant receives the payment from PayPal and not directly from the customer's bank account. When a transaction is completed, the buyer also receives a confirmation by e-mail.

*(Source: https://www.welt.de/finanzen/verbraucher/article176505524/Kreditkarte-Warum-die-Deutschen-bis-heute-die-Kreditkarte-verschmaehen.html

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Meike
Meike
from 17.08.2022

Hello, my name is Meike. I take care of the EXWE back office and am responsible for our social media channels. All of our articles are meant to make your life easier and help you make decisions. Nevertheless, it can happen that something remains unclear, so: If you have questions about this article you can easily reach me at +49 231 93149827.

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