Six alternatives to PayPal are compared here for UK consumers and businesses, including Stripe, Wise Business, Square, GoCardless and bank transfer. Card processing fees across these providers typically range from around 1.4% to 2.9% plus a small fixed fee per transaction, with the right choice depending on whether payments are online, in person, or recurring.
TL;DR · LAST REVIEWED 21 July 2026
- This comparison splits consumer payment use from business payment processing, since PayPal serves both roles differently.
- Stripe is a developer-focused payment gateway with fees from around 1.4% plus 20p for UK cards, well suited to online-only businesses.
- Square combines point-of-sale hardware with online payments, useful for businesses that take both in-person and online card payments.
- GoCardless specialises in Direct Debit collection rather than one-off card payments, which suits subscription and recurring-invoice businesses.
- Bank transfer via Open Banking Pay by Bank services can undercut card-based fees, often starting from around 0.6% per transaction.
- For everyday consumer payments, bank transfer, debit card or a linked bank account remain fee-free alternatives to a PayPal balance.
PayPal alternatives compared by typical UK transaction fee and best use case
| Stripe | From ~1.4% + 20p (UK cards) | Developer-friendly, strong e-commerce integration |
| Square | From ~2.65% in person, ~2.9% online | Combines POS hardware with online payments |
| GoCardless | From ~1% + 20p, capped at £4 | Specialist Direct Debit and recurring billing |
| Wise Business | Variable, from ~0.35% to 0.41% for FX | Multi-currency accounts, strong for international invoicing |
| Pay by Bank (Open Banking) | From ~0.6% per transaction | Bank-to-bank, no card network fees |
KEY FACTS
- Stripe UK card fees: from around 1.4% plus 20p for UK-issued cards, higher for international cards
- Square: no monthly fee on its basic plan, with card fees from around 2.65% in person and 2.9% plus a fixed fee online
- GoCardless: from around 1% plus 20p per Direct Debit transaction, capped at £4, reducing at higher monthly volumes
- Pay by Bank (Open Banking) services: fees from around 0.6% per transaction plus a small authorisation fee
- PayPal's own standard UK transaction fees are broadly comparable to Stripe's for online card payments
What is a good PayPal alternative for an online-only business
Stripe is the most commonly recommended PayPal alternative for online-only businesses, with UK card fees from around 1.4% plus 20p per transaction, alongside strong integration with major e-commerce platforms and accounting software.
For a business selling entirely online, Stripe's developer-friendly API and broad e-commerce integration make it the most frequently cited PayPal alternative for this use case. UK card transactions typically cost around 1.4% plus a 20p fixed fee, rising to around 2.9% plus 20p for cards issued outside the UK, with no charge for failed payment attempts. Stripe integrates directly with platforms including Shopify and WooCommerce, and connects to accounting software such as Xero and QuickBooks, which reduces manual reconciliation work compared with managing a separate PayPal balance alongside a business bank account. The trade-off against PayPal is brand recognition at checkout: PayPal remains a widely trusted payment button for consumers who may hesitate at an unfamiliar payment form, so some businesses choose to offer both Stripe and PayPal as checkout options rather than replacing one with the other.
How does Square compare for businesses taking in-person payments
Square combines point-of-sale hardware with online payment processing, with fees from around 2.65% for in-person card transactions and around 2.9% plus a fixed fee for online payments, making it a strong PayPal alternative for businesses that take payments in more than one setting.
Square's core advantage is covering both physical and online sales through one system, which suits retail, hospitality and service businesses that take card payments in person as well as online. There is typically no monthly fee on Square's basic plan, with costs instead built entirely into the per-transaction rate, which starts from around 2.65% for in-person transactions and around 2.9% plus a fixed fee for card-not-present online transactions. Square also provides real-time sales reporting and inventory tracking as standard, which can reduce the need for separate point-of-sale software. Against PayPal, which is primarily built for online and invoice-based payments, Square's strength is specifically for businesses with a physical sales presence; a purely online business is more likely to find Stripe or a comparable online-only gateway a closer fit.
Why would a business choose GoCardless over PayPal
GoCardless specialises in Direct Debit collection for subscription and recurring-invoice businesses, charging from around 1% plus 20p per transaction, capped at £4, which typically undercuts card-based fees for regular, predictable payments.
PayPal and card-based processors charge a percentage fee on every transaction, which adds up for a business collecting the same, predictable payment from the same customers every month. GoCardless instead collects payments by Direct Debit directly from a customer's bank account, with fees from around 1% plus 20p per transaction, capped at £4 regardless of the payment amount, and this cap reduces further for businesses processing over £100,000 a month. The trade-off is customer experience: a Direct Debit mandate needs to be set up in advance rather than being a one-click checkout action, which suits subscription services, membership organisations and businesses invoicing regularly for the same amount, but is a poorer fit for one-off retail transactions where PayPal or a card processor's instant checkout is a better match.
How does bank transfer compare with card-based alternatives
Pay by Bank services built on Open Banking allow payments to move directly from a customer's bank account to a business's account using the Faster Payments network, with fees from around 0.6% per transaction plus a small authorisation fee, undercutting most card-based options.
Open Banking has enabled a newer category of UK payment providers that move money directly between bank accounts rather than routing payments through a card network, which removes the card network fees that make up part of the cost of every Stripe, Square or PayPal transaction. Fees for this type of Pay by Bank service start from around 0.6% per transaction plus a small authorisation fee, which is meaningfully lower than typical card processing rates. These providers are FCA-authorised for payment services in the UK, and payments settle using the Faster Payments network rather than card-scheme rails. The trade-off is checkout familiarity: bank-to-bank payment is a newer experience for many UK shoppers compared with tapping a card or clicking a PayPal button, so conversion rates at checkout should be monitored when introducing this option alongside more established payment methods.
What is the best free alternative to PayPal for everyday consumer payments
For everyday consumer payments rather than business transactions, bank transfer, debit card payment or a mobile banking app's own payment feature all work as free alternatives to holding and spending from a PayPal balance.
For an individual simply wanting to pay a friend, split a bill or pay an online seller without going through PayPal, standard UK bank transfer via Faster Payments remains free between UK bank accounts and settles within minutes for the vast majority of transfers. Most UK banking apps also include their own peer-to-peer payment features that work similarly to PayPal's send-money function without requiring both parties to hold an account with the same provider. Debit card payment is another straightforward alternative for online purchases where a merchant accepts card payments directly rather than only through PayPal's own checkout. None of these consumer-level alternatives carry the transaction or currency conversion fees that can apply to a PayPal balance held in a currency other than the one being spent in, which is worth checking for anyone who regularly receives or spends in foreign currency through PayPal. Businesses evaluating any of these providers should also factor in settlement speed and integration effort alongside the headline transaction fee, since a marginally cheaper rate can be offset by slower access to funds or a longer setup process, particularly for a business switching an established checkout flow to a new payment provider. Currency handling is a further point of comparison for any business trading internationally, since PayPal, Stripe and Wise Business all support receiving payments in multiple currencies, but the conversion fees and available settlement currencies differ enough between them to affect the true cost of accepting international customer payments.
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DISCLAIMER
This article is editorial information, not financial advice. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority. Figures were correct at the last review date shown above; verify current rates and rules with the primary sources listed below before acting.
Frequently asked questions
Is Stripe cheaper than PayPal for a small online business
Stripe's UK card fees, from around 1.4% plus 20p, are broadly comparable to PayPal's standard online transaction fees, so the deciding factor for most small businesses is integration with existing e-commerce and accounting tools rather than a large fee difference.
Can GoCardless replace PayPal entirely
Not for every use case. GoCardless is built for Direct Debit collection on recurring, predictable payments and is not designed for one-off retail checkout transactions, so many businesses use GoCardless alongside a card-based processor rather than as a full replacement for PayPal.
What is Pay by Bank and is it safe
Pay by Bank services use Open Banking technology, regulated by the FCA, to move payments directly between bank accounts using the Faster Payments network rather than a card network. Providers offering this service in the UK must hold FCA authorisation for payment services.
Does Square charge a monthly fee
Square's basic plan typically carries no separate monthly fee, with costs built into the per-transaction rate instead, though higher-tier plans with additional features may carry their own monthly cost depending on the specific package chosen.
What is the cheapest way to pay a friend without using PayPal
A standard UK bank transfer via Faster Payments is free between UK bank accounts for personal payments and typically settles within minutes, making it a free alternative to sending money through a PayPal balance for most everyday consumer payments.
SOURCES
- Stripe UK pricing – accessed 21 July 2026
- GoCardless UK pricing – accessed 21 July 2026
- FCA register of authorised payment institutions – accessed 21 July 2026
