Patreon vs Paypal – Best for Receiving Donations
If you guys are a blogger, YouTuber, artist, or gamer, then the thing that is common between all your creative minds is actually making a living online. You run ads, sell products, and also accept donations from your readers, viewers, and fans for your work as well. Folks like to show their appreciation through paying creative folks for their effort which is cool. Some of you also use a subscription model with a members-only area where content is lock behind a paywall. Let’s now discuss Patreon vs Paypal – Best for Receiving Donations. Let’s start
The question is what service or platform should we use to permit our fans to send donations or subscribe to our services? Today, we are going to take a look at two such services, each which it’s own set of benefits and disadvantages.
One is Patreon that was developed via a musician and has since then become a famous way to accept subscription payments for paywall content. The other is PayPal, a behemoth of a fintech company that was basically built to process payments. That includes, however, not limited to subscriptions and donations or tips. Tough call right?
Patreon vs Paypal – Best for Receiving Donations
If you are a blogger, the chances are really high that you are using WordPress. And if you are a blogger, YouTube would be high on your list, and if you guys are an app developer, it’s either Android or iOS. Both PayPal and Patreon support really much all of the famous platforms along with customized plugins and scripts. That you guys can use out-of-box.
Patreon has also an app directory where you can find some of the most famous platforms listed. That includes Discord bots, MailChimp lists, and even Google Sheets as well. This makes Patreon pretty easy to use across the board, and you guys can also receive money from your patrons pretty much everywhere as well.
PayPal is equally famous if not more and has pre-built plugins and apps for most platforms. Such as WordPress and other content CMS, websites, famous email subscription services such as MailChimp, apps on both Android and iOS, and so on. This is where PayPal actually takes the lead.
You can’t use Patreon in your mobile apps in order to receive payments which is sad seeing how apps are used by folks for pretty much everything today. PayPal bought Braintree that basically specializes in-app and eCommerce payments.
Both have apps available for Android and iOS platforms along with a very beautiful and functional web interface.
Fees | Patreon vs Paypal
Well, I think this is what it all boils down to. As a creator, you want to use a payment processor that is reliable, dependable, pretty easy to use, and affordable. Fee structure matters however, these are also where things get complicated. You see, if you guys are via Patreon, you can collect subscription payments from fans and followers. However, you will need a payment processor such as PayPal or Payoneer in order to withdraw it to your bank account.
US creators have the option to withdraw money from Patreon through direct bank deposits. However, international creators will need a payment processor. We will also see how it works and why folks still use Patreon over PayPal in the Features section below.
Patreon basically charges a fixed 5% deduction irrespective of the amount that is pledged to you and the total amount that you make every month. Really easy to understand. Then there are also payout fees. Direct Deposits in the US will actually cost $0.25. For PayPal payouts, it is $0.25 or 1% of the amount transfer capped at $20 per deposit as well. Payoneer basically seems to be more reasonable at $3 per deposit for international creators.
Patreon uses Stripe and PayPal in order to process payments from your patron’s account to your Creator’s Balance account. Patreon batches these transactions in order to decrease the total fees paid by a patron. However, it will vary greatly relying on who patrons are paying and what the amount is.
Simply put, more patrons paying small amounts that lead to a higher processing fee and less number of patrons paying higher amounts will then lead to a lower processing fee. Click here for always updated fee structure.
It is necessary to note here that Patreon only allows, and even encourages, the subscription model. That means you cannot accept one-time donations and tips. This is how it was actually build to be so I don’t see them changing it any time soon either.
PayPal’s fee structure has always been really complicated and currency conversion charges. Those are not mentioned, however, are significant have been well-documented on the web. PayPal charges 2.9%+$0.30 per transaction. If you are receiving money in a foreign currency, then you pay a fixed fee which is mostly under $1.
The problem happens whenever you ask PayPal to convert it to your country’s national currency. The conversion rate is always around 2-3% less than the market rates and PayPal never gives any kind of receipt for the same as well. I can confirm this personally as I have used PayPal to receive money in USD and also converted it to INR each month. It can instantly add up. Additionally, there is a standard $10/month to create and manage subscriptions via Virtual Terminal or PayPal Payments Pro.
So, if you guys are using Patreon, then you are paying double fees. 5% to Patreon and then some to the payment processor (mostly another 4-5%). However, on the other hand, because your income grows, PayPal can be actually cheaper than Patreon. Especially when your subscription amount is more than $10. Then PayPal’s 2.9% will seem low as compared to Patreon.
Results: PayPal wins.
Features | Patreon vs Paypal
The basic distinction between them is that; Patreon gives an easy way to accept the subscription-based donation. However, PayPal is a payment processor for individuals, merchants, and businesses including companies such as Patreon. In addition to giving payment processing, PayPal also allows users to accept donations and subscription payments.
Patreon was actually built from the ground up for creative folks as a way in order to accept subscriptions on their membership sites, communicate with their followers, and also build a sustainable source of income. As such, with Patreon, you guys can create posts or content that is only visible to your paying members or to everyone in general too. Patreon also offers creators a way to reward their followers along with exclusive content hidden behind the paywall. They actually want to create a subscription-based crowdfunding platform.
If you are hung up on it, then here is a way. Most of the Patreon users recommend Buy Me A Coffee in order to accept one-time payments from their fans. You can also use PayPal for the same.
PayPal, on the other hand, also offers features like the ability in order to receive or make payments in multiple currencies. Use the Bill Me Later feature where buyers can buy and pay later via a charge on their credit card, create invoices, and track inventory as well. As you guys can see, PayPal has a really different business model.
Also, another key distinction is that Patreon pays monthly, however, withdrawals in PayPal can be made daily. Relying on the country you guys live in. This is necessary for those creators who don’t make enough and are cash-strap. Patreon will also permit users to create a landing page, a sort of profile. That will help new fans understanding what you are actually offering, how it is unique, and how much it will cost them as well.
Patreon also has a community page where the supporters and subscribers can interact along with the creator, ask questions, and give feedback. On the flip side, your whole business model relies on a single source – Patreon. If anything happens to Patreon or should they make changes that are not in your best interests, then you run the risk of losing everything.
Something like this has happened in the past with YouTube creators. Something similar also happened at Patreon when many creators lost subscribers at an alarming rate as they decided to change their fee structure.
Creators still prefer Patreon over individual payment processors such as PayPal and Stripe. As it takes the guesswork out of the equation actually. There is no planning required. You just open an account and start creating as well. For a 5% commission, Patreon will take care of payments actually, chargebacks, failed payments, and payout without even you having to lift a single finger. It is also very famous and familiar which instills a feeling of trust and familiarity.
What’s More | Patreon vs Paypal
What does it mean for the Patrons? If you are a patron or a supporter who actually wants to pledge. Just say $500 per month, to many artists, how does it work out? Well, if you are using a payment processor such as PayPal or Stripe, then you will be making many small payments to different creators leading to higher fees actually. If you are using Patreon, then you will be charged only once and payments would be distributed accordingly among all of the creators. This means fewer fees for you as a supporter actually.
At the same time, it is pretty easy to replicate most of the core features of Patreon with a combination of PayPal and MailChimp. You have PayPal to receive both one-time and subscription payments, and then you have MailChimp to collect email IDs. That we can use to send newsletters and also collect feedback. This way, you guys have more control over your business. However, there is some learning curve and you will have to spend some time managing both.
Results: Patreon wins
Patreon is really expensive for creators as you are paying double fees. One to Patreon and also one to your payment processor. However, Patreon also offers an out of box solution that simply works with little to no know-how. More suitable for regular content creators such as YouTubers and writers who are looking for subscription payments, but as you make more, you will pay more as well.
PayPal is actually cheaper, comparatively, however, comes along with a little learning curve and technical know-how. But you are in more control of your business actually. You will need an email subscriber or a forum on your site in order to communicate along with your followers here. You can also accept one-time payments that are actually better for creators who organize one-off events.
You are good to go. If you have any queries and issues related to this “Patreon vs PayPal” article then let us know in the comments section below.