Patreon vs Paypal: Which is better to receive donations?

Whether you’re a blogger, YouTuber, artist, or gamer, what all of your creative minds have in common is making a living online. You run ads, sell products, and accept donations from your readers, viewers, and fans for your work. People like to show their appreciation by paying creative people for their effort, which is great. Some of you use a subscription model with a members only area where content is locked behind a pay wall.

The real question is what service or platform should we use to allow our fans to send donations or subscribe to our services? Today, we’ll take a look at two of these services, each with its own set of advantages and disadvantages.

One is Patreon, which was developed by a musician and has since become a popular way of accepting subscription payments for paywall content. The other is PayPal, a behemoth of a fintech company that was created to process payments, including but not limited to subscriptions and donations / tips. Hard decision?

Patreon vs Paypal

1. Platforms

If you are a blogger you are most likely using WordPress, if you are a vlogger YouTube would be high on your list, and if you are an app developer it is Android or iOS. Both PayPal and Patreon are compatible with almost all popular platforms with custom plugins and scripts that you can use right out of the box.

Patreon has a application directory where you can find some of the most popular platforms listed, including Discord bots, MailChimp lists, and even Google Sheets. This makes Patreon easy to use across the board, and you can get paid from your clients pretty much everywhere.

Read also: How much does PayPal charge per transaction in India

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PayPal is just as popular, if not more so, and has pre-built plugins and apps for most platforms, including WordPress and other content CMSs, websites, popular email subscription services like MailChimp, apps on both Android and iOS. , etc. This is where PayPal takes the lead.

you guys you can’t use Patreon on your mobile apps to get paid, which is sad to see how people use apps for just about everything nowadays. PayPal bought Braintree which specializes in application payments and e-commerce.

Both have applications available for the Android and iOS platform with a very beautiful and functional web interface.

Result: tie

2. Rates

I guess this is what it all boils down to. As a creator, you want to use a payment processor that is trustworthy, trustworthy, easy to use, and affordable. The fee structure is important, but this is also where things get tricky. You see, if you are using Patreon, you can collect subscription payments from fans and followers, but you will need a payment processor like PayPal or Payoneer to withdraw them to your bank account.

US creators have the option of withdrawing money from Patreon via direct bank deposit, but international creators will need a payment processor. We’ll see how it works and why people still use Patreon over PayPal in the Features section below.

Patreon charges a fixed deduction of 5% regardless of the amount promised to you and the total amount you earn each month. Easy to understand. Then there are the payment fees. Direct deposits in the US will cost $ 0.25. For PayPal payments, it is $ 0.25 or 1% of the transferred amount with a cap of $ 20 per deposit. Payoneer seems to be more reasonable at $ 3 per deposit for international creators.

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Patreon uses Stripe and PayPal to process payments from your user account to your Creator’s Balance account. Patreon bundles these transactions together to lower the total fees paid by a customer, but it will vary greatly depending on who is paying and what the amount is.

Simply put, more users paying small amounts will lead to a higher processing fee, and fewer users paying higher amounts will lead to a lower processing fee. Click here for an always up-to-date rate structure.

It is important to note here that Patreon only allows, and even encourages, the meaning of the subscription model cannot accept one-time donations and tips. This is how it was built, so I don’t see them changing it anytime soon either.

PayPal’s fee structure has always been complicated, and unmentioned but significant currency conversion fees are well documented on the web. Let’s see. PayPal charges 2.9% + $ 0.30 per transaction. If you receive money in foreign currency, you pay a fixed fee which is usually less than $ 1.

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The problem occurs when you ask PayPal to convert it to the national currency of your country. The conversion rate is always around 2-3% lower than market rates and PayPal never provides any kind of receipt for it. I can personally confirm this because I have used PayPal to receive money in USD and convert it to INR every month. It can add up quickly. Also, there is the standard of $ 10 / month for creating and managing subscriptions using Virtual terminal or PayPal Payments Pro.

So if you are using Patreon, you are paying double fees. 5% to Patreon and then something to the payment processor (usually another 4-5%). While on the other hand, as your income increases, PayPal can be cheaper than Patreon, especially when your subscription amount exceeds $ 10. So, 2.9% of PayPal will seem low compared to Patreon.

Also Read: 6 Best PayPal Alternatives

Results: PayPal wins.

3. Features

The basic distinction between Patreon vs Paypal is that; Patreon provides an easy way to accept subscription based donation. While PayPal is a payment processor for individuals, merchants, and businesses, including businesses like Patreon. In addition to providing payment processing, PayPal also allows users to accept donations and subscription payments.

Patreon was built from the ground up for creative people as a way to accept subscriptions on their membership sites, communicate with their followers, and build a sustainable source of income. As such, by using Patreon, you can create posts or content that is only visible to your paying members or to everyone in general. Patreon offers creators a way to reward their followers with exclusive content hidden behind the paywall. They want to create a subscription-based crowdfunding platform.

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So what about one-time payments? If you’re hung up, here’s a way. Many Patreon users recommend Buy me a coffee accept one-time payments from your fans. You can also use PayPal for the same.

PayPal, on the other hand, offers features such as the ability to receive or make payments in multiple currencies, use the Bill Me Later feature, where buyers can purchase and pay later via a charge to their credit card, create invoices, and track inventory. As you can see, PayPal has a very different business model.

Another key distinction is that Patreon pays monthly, while PayPal withdrawals can be made daily, depending on the country you live in. This is important for those creators who are not earning enough and have liquidity problems. Patreon will also allow users to create a landing page, a kind of profile, that will help new fans understand what you are offering, how unique it is, and how much it will cost them.

Read also: 7 best small business accounting software (free and paid)

Patreon also has a community page where followers and subscribers can interact with the creator, ask questions, and provide feedback. On the other hand, its entire business model depends on a single source: Patreon. If something happens to Patreon or if they make changes that are not in your best interest, you risk losing everything.

Something similar has happened in the past with YouTube creators. Something similar also happened on Patreon when various creators lost subscribers at an alarming rate because they decided to change your fee structure.

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The creators still prefer Patreon to individual payment processors like PayPal and Stripe because it takes the guesswork out of the equation. No planning is needed. Just open an account and start creating. Focus on what you do best. For a 5% commission, Patreon will take care of payments, chargebacks, failed payments and payment without you having to lift a single finger. He is also very popular and familiar, instilling a feeling of trust and familiarity.

What does it mean for sponsors? If you are a sponsor or supporter who wants to pledge, say $ 500 per month, to various artists, how does it work? Well, if you are using a payment processor like PayPal or Stripe, you will make several small payments to different creators, leading to higher fees. If you are using Patreon, you will be charged only once and the payments will be distributed accordingly among all creators. This means less fees for you as a sponsor.

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At the same time, it is easy replicate most of the main functions from Patreon using a combination of PayPal and MailChimp. You have PayPal to receive subscription and one-time payments, and you have MailChimp to collect email IDs that can be used to send newsletters and collect feedback. This way, you have more control over your business, but there is a learning curve and you will have to spend some time managing both.

Results: Patreon wins

Patreon vs Paypal: Which one to choose?

Here is the summary. Patreon is a bit pricey for creators because you are paying double fees. One for Patreon and one for your payment processor, but Patreon offers a ready-to-use solution that just works with little to no knowledge. Best suited for regular content creators like YouTubers and writers looking for subscription payments, but as you earn more, you will pay more.

PayPal is cheaper, comparatively, but it comes with a small learning curve and technical knowledge, yet you have more control of your business. You will need an email subscriber or forum on your site to communicate with your followers here. You can also accept one-time payments, which are best for creators who host one-time events.

Which one do you prefer and why?

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