Switching from PayPal to Stripe: Impact on decline rates

Recently at Spreedly we had the opportunity to “drink our own champagne” (or eat our own dog food). As our customer’s know, we help merchants and marketplaces minimize PCI compliance scope via secure credit card collection, tokenization and then routing that card for a transaction against your preferred financial partner. This could be a payment gateway or a third party API. Storing cards in Spreedly means you can reuse a card against a different gateway provider. This ability to route a card against any end point, and to keep it and re-use it against a different payment endpoint, is a big part of our value.

A common concern we hear is “What happens to a stored card in Spreedly if I run it against more than one payment provider?” This reflects the fact that no one in the industry is allowed to store a CVV code. That in turn can lead to the erroneous conclusion that a card presented without a CVV will fail. We know that’s not true, but this was a chance to put that to the test via a fairly simple experiment and track the data.

Since our inception we used PayPal Websites Payment Pro for credit card processing. Despite all the PayPal horror stories, this had worked fairly well for us for a long period of time. However, one day our PayPal account stopped accepting all American Express (AMEX) cards. PayPal told us it was a known issue impacting some PayPal merchants. They did not have a timeline on when it would be fixed.

Within a couple of minutes, we opened up a Stripe account and routed all American Express cards into Stripe. Problem solved. We then learned some long time customers were being prompted by AMEX to verify our renewal/charge (AMEX had worked out this request was now traveling via a different route) so we checked back with PayPal, but the issue was still not fixed. Therefore, we left Visa/MC going into PayPal and AMEX going into Stripe. After about a month, we found out the PayPal/AMEX issue had been resolved. However by now our finance person had spent a month looking at PayPal reporting and a month looking at Stripe reporting. Let’s just say the interest around getting back to a single provider was no longer focused on PayPal. We decided to move our credit card processing to Stripe.

Most of our customers see our value come from having simple PCI compliance while working with numerous gateways or API’s. We weren’t really doing that, rather we were just doing a static switch from one gateway to another. Nevertheless, the key concept we were going to test was the same. What happens when a single stored card at Spreedly is run against two or more different financial endpoints?


– Only Visa and Mastercard cards. (we had moved AMEX over earlier and didn’t track)
– We blended new wins and renewals together. Being a SaaS service the bulk of our monthly transactions are renewals vs first time charges.
– We tracked two months prior and two months post the switch
– Our average ticket size fluctuates pretty wildly but nearly all are more than $100, some in the $1000’s.
– We have a pretty good blend of US and international customers – we’re definitely not 100% focused on any one region so that shouldn’t be a factor in our decline rates. We only support one currency ($US)

The Data

Our decline rates by month and provider:

PayPal July PayPal August Stripe September Stripe October
11.5% 11.1% 13.6% 10.3%

As expected, there was some uptick in decline rates by switching providers. But at worst it impacted 2 – 3% of our transactions. We didn’t see a corresponding increase in churn, meaning those people who failed either updated or re-entered their card data. Interestingly, with a full month of credit card transactions cycled through, October on Stripe was the lowest month of the four for declines. We’ll continue to watch that to see if that holds.

This was a simple experiment lacking the rigor of a full blown comparison. Still, our data largely backed up what we knew – switching from one payment processor to another had little material impact on our processing success rates. We saw a small blip and then settled down at the same (slightly lower) decline rate.

If you’re interested in learning more about payment gateways and decline rates in general, our recent post on Is your gateway good enough? is worth reviewing.