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Best European Alternatives to PayPal
EU-regulated payment processors with strong data protection.
Adyen
Global payment platform headquartered in Europe
Key takeaways
- For European users the contracting entity is PayPal (Europe) S.à r.l. et Cie, S.C.A., a Luxembourg credit institution supervised by the CSSF — not an American company.
- Dutch commercial transactions cost 3.40% + €0.35, plus 1.29% from UK buyers and 1.99% from the rest of the world.
- A chargeback costs €16 and currency conversion is charged at 3% above the base rate, both of which sit outside the headline percentage.
- You can keep the PayPal button while changing who acquires everything else, because European processors offer PayPal as one payment method.
- For recurring billing, a SEPA mandate at around 1% with a cap is a different rail from a PayPal subscription, and it does not expire.
Why people leave PayPal
Begin with the thing most comparison pages get wrong. For European users, PayPal is a European bank: PayPal (Europe) S.à r.l. et Cie, S.C.A. is a credit institution authorised and supervised by the CSSF in Luxembourg, registered as R.C.S. Luxembourg B 118349. Your merchant relationship sits with that entity, under European banking supervision, and it has done for years. Only the ultimate parent, PayPal Holdings, Inc., is American.
So the reason to move is not that your money leaves Europe. It is what the money costs on the way through. In the Netherlands, a commercial transaction costs 3.40% plus a fixed €0.35, with a further 1.29% when the buyer is in the United Kingdom and 1.99% when they are anywhere else. A chargeback costs €16, and currency conversion is charged at 3% above the base exchange rate.
Hold that against the alternatives on this page and the gap is not a rounding error. A €50 order paid by iDEAL costs €0.32 at a Dutch processor and €2.05 at PayPal. On a thousand orders a month, that is the difference between €320 and €2,050 for the same money arriving in the same bank account.
- The rate is the highest in this market PayPal’s 3.40% + €0.35 on Dutch commercial transactions is roughly double a European card rate and several times the cost of a bank-transfer method. It is priced as a consumer wallet with buyer protection attached rather than as acquiring, and that is a coherent product — it is simply the most expensive way on this page to be paid.
- Cross-border is charged twice A buyer in London adds 1.29% to your rate and a buyer outside Europe adds 1.99%, before any currency conversion. If the payment also needs converting, that is another 3% over the base rate. For a business selling across borders — which is the business most likely to have chosen PayPal for its reach — the effective rate lands well above five per cent on a meaningful share of orders.
- The buyer relationship is PayPal’s, not yours A PayPal checkout takes the customer into PayPal’s flow, under PayPal’s buyer protection, with PayPal deciding disputes. That familiarity is exactly why shoppers trust the button, and it is why merchants feel they cannot remove it. What it costs you is the ability to shape your own checkout and your own dispute policy, and €16 each time one goes wrong.
- The parent is still in San Jose The Luxembourg entity answers the licensing question, not the group one. PayPal Holdings, Inc. is a United States corporation, so the CLOUD Act reaches the group even where the regulated European subsidiary holds the relationship. That is a narrower exposure than a purely US processor presents, and it is not nothing. State it precisely or not at all.
What you have to replace, not just match
PayPal is three jobs in one button, and the four providers here split them up rather than matching them.
The first job is acquiring: taking the money and settling it. The second is trust — a logo the customer recognises, which is why removing the button feels riskier than the spreadsheet says. The third is recurring billing, the subscriptions and billing agreements a surprising number of businesses run through PayPal because it was there.
Mollie and Adyen replace the first job and can keep PayPal as one method among several, which is how most merchants should handle the second. GoCardless replaces the third outright, and does it on a different rail. Klarna competes for the same basket as PayPal’s pay-later products and costs money to win it.
The alternatives compared
| Position | Tool | Headquarters | Pricing | Jurisdiction |
|---|---|---|---|---|
| #1 | Mollie | Amsterdam, Netherlands | Per method, from €0.29 (iDEAL); cards from €0.29 + 1.8% | EU (Netherlands) |
| #2 | Adyen | Amsterdam, Netherlands | Interchange-plus; about €0.11 + scheme fee per transaction | EU (Netherlands) |
| #3 | Klarna | Stockholm, Sweden | About 2.5%–5.99% + a fixed fee, by market and product | EU (Sweden) |
| #4 | GoCardless | London, United Kingdom | From 1% + about £0.20 per transaction, capped | United Kingdom (adequacy decision, outside the EEA) |
How each alternative compares to PayPal
- Which law reaches it. EU (Netherlands). PayPal is run from the United States, so the CLOUD Act obliges the provider to hand over data on a valid order regardless of which country the servers are in.
- Where the data sits. EU data centres.
- Source code. Closed source, as PayPal is.
- Independently checked. PCI DSS, PSD2/SCA.
Best for: Merchants who cannot remove PayPal but should stop paying PayPal rates on every order
Mollie, from Amsterdam, offers PayPal as one payment method in its checkout alongside cards, iDEAL, Bancontact, SEPA Direct Debit and the buy-now-pay-later options. That single fact makes it the most useful tool on this page, because the hardest part of leaving PayPal is not the migration but the fear of losing the shoppers who look for the logo.
The money then moves where it should. A Dutch customer paying by iDEAL costs €0.32 instead of 3.40% + €0.35, a European consumer card costs 1.8% + €0.25, and the customers who genuinely insist on PayPal still get it. You have not removed a payment method; you have stopped using the most expensive one as your default.
Mollie B.V. is licensed to provide payment services under the Dutch Financial Supervision Act and supervised by De Nederlandsche Bank, and it holds customer funds through a separate foundation, Stichting Mollie Payments. That is a lighter status than PayPal Europe’s banking licence. If the thing you value is that your balance sits with a supervised credit institution, that is a real difference and it runs in PayPal’s favour.
What Mollie does better than PayPal
- A €0.32 fixed fee on an iDEAL payment, against 3.40% + €0.35 on the same order
- PayPal remains available as one method, so the recognised button does not disappear
- No extra 1.29% or 1.99% surcharge based on where the buyer happens to be
- Per-method pricing published openly, where PayPal’s effective rate depends on buyer location and currency
- Dutch company and Dutch supervision, with no US parent above the processing relationship
Where Mollie is a step down from PayPal
- A payment-services licence and a client-funds foundation, rather than PayPal Europe’s full banking licence
- No buyer-protection brand of its own, which is part of what the PayPal fee buys
- Coverage outside Europe is thinner than PayPal’s near-universal reach
- Your existing PayPal billing agreements still cannot be transferred
Standout against PayPal. It is the only provider here that lets you keep PayPal in the checkout while taking it off the majority of your volume, which turns an all-or-nothing decision into a routing change.
- Which law reaches it. EU (Netherlands). PayPal is run from the United States, so the CLOUD Act obliges the provider to hand over data on a valid order regardless of which country the servers are in.
- Where the data sits. EU data centres.
- Source code. Closed source, as PayPal is.
- Independently checked. PCI DSS Level 1.
Best for: Larger merchants who dislike holding a balance with their payment provider
PayPal Europe is a bank you keep money with; Adyen is a bank that settles money to you. Adyen N.V. holds a full banking licence from De Nederlandsche Bank and keeps merchant funds in segregated accounts, paying out on a schedule rather than into a wallet balance you withdraw from. For a finance team, that is a different relationship with the same regulatory weight.
The pricing is the other half. Interchange-plus at roughly €0.11 plus the scheme fee shows you what the card networks charge and what Adyen adds, against a PayPal rate that changes with the buyer’s country and currency and never explains itself. At the volumes where Adyen operates, the gap against 3.40% is not a saving, it is a different order of magnitude.
The honest limits: onboarding runs through a sales process rather than a signup form, historically with a minimum volume, and the platform assumes a business with several channels and someone to integrate it. A merchant taking a few hundred orders a month is better served higher up this page.
What Adyen does better than PayPal
- Interchange-plus pricing at roughly €0.11 plus the scheme fee, against a flat 3.40% + €0.35
- Funds settle to your bank from segregated accounts rather than sitting in a provider balance
- No surcharge tied to where the buyer is, where PayPal adds 1.29% or 1.99%
- One platform for online and in-store with its own terminals, which PayPal does not match in Europe
- Local payment methods on Adyen’s own acquiring licences across European markets
Where Adyen is a step down from PayPal
- No self-serve signup, where a PayPal business account takes minutes
- Aimed at mid-market and enterprise, so small merchants are the wrong fit
- No consumer-recognised checkout brand to reassure shoppers
- Interchange-plus is harder to budget than one published percentage
Standout against PayPal. It is the only provider here that holds a full banking licence and still settles to your own account, which is the structural opposite of a wallet balance.
- Which law reaches it. EU (Sweden). PayPal is run from the United States, so the CLOUD Act obliges the provider to hand over data on a valid order regardless of which country the servers are in.
- Where the data sits. EU.
- Source code. Closed source, as PayPal is.
- Independently checked. Swedish banking licence.
Best for: Retailers whose PayPal traffic is really pay-later traffic
Klarna Bank AB in Stockholm operates under a Swedish banking licence, so the choice between Klarna and PayPal is not a jurisdictional one at all: both are European banks under EU supervision. The comparison is about what happens in the basket.
PayPal’s pay-later products and Klarna’s Pay in 3, Pay in 4 and thirty-day options are aimed at the same hesitation at the same moment. Klarna’s case is that it is a specialist at it — the shopping app puts merchants in front of consumers who begin their search inside Klarna, and instalment products are its whole business rather than an addition to a wallet.
It is not the cheaper option. At roughly 2.5% to 5.99% plus a fixed fee it can cost more than PayPal’s 3.40%, and rates are negotiated by market and product rather than published. Klarna is a revenue decision, and it is the only tool on this page where paying more can be the correct choice.
What Klarna does better than PayPal
- A specialist in instalments rather than a wallet with a pay-later option attached
- Swedish banking licence, so European supervision without a US parent above it
- Credit and fraud risk sit with Klarna, which pays the merchant regardless of the consumer
- The consumer app is a distribution channel, which PayPal does not offer merchants in the same way
Where Klarna is a step down from PayPal
- Can be more expensive per transaction than PayPal’s 3.40% + €0.35, not less
- Rates are negotiated rather than published, so comparison is harder than it should be
- Adds a method rather than replacing your acquiring, so something else still processes cards
- Only pays for itself in categories where basket size and completion actually move
Standout against PayPal. It is the one comparison on this page where both companies are European banks, so the decision has to be made on conversion and cost rather than on jurisdiction.
- Which law reaches it. United Kingdom (adequacy decision, outside the EEA). PayPal is run from the United States, so the CLOUD Act obliges the provider to hand over data on a valid order regardless of which country the servers are in.
- Where the data sits. UK/EU.
- Source code. Closed source, as PayPal is.
- Independently checked. FCA-authorised payment institution.
Best for: Businesses whose PayPal volume is recurring billing that nobody has revisited
A large share of PayPal merchant volume is subscriptions set up years ago because PayPal was already there. GoCardless, from London, collects by Direct Debit and SEPA mandate instead, at 1% plus about £0.20 with a per-transaction cap, which against 3.40% + €0.35 is a different cost base rather than a discount.
The more valuable difference is that a mandate does not expire. Card-based and wallet-based subscriptions fail when a card is reissued or an agreement lapses, and the customers lost that way are lost without ever deciding to leave. Removing that failure mode is usually worth more than the fee saving.
Two honest limits. GoCardless processes no cards at all, so it sits alongside a card provider rather than replacing PayPal’s checkout, and settlement takes three to five working days. It is also British: the United Kingdom holds an adequacy decision from the European Commission, so transfers are lawful without standard contractual clauses, but this is not intra-EEA processing and it belongs in the data processing agreement.
What GoCardless does better than PayPal
- Around 1% plus about £0.20 with a cap, against 3.40% + €0.35 on every recurring payment
- Mandates have no expiry date, so the involuntary churn of reissued cards disappears
- SEPA Direct Debit across the eurozone from one integration and one mandate flow
- No monthly fee on the standard plan, and no surcharge based on where the payer is
Where GoCardless is a step down from PayPal
- No cards, wallets or one-off checkout, so it cannot replace the PayPal button
- Direct Debit clears in three to five working days rather than immediately
- UK-established, so an adequacy decision rather than processing inside the EEA
- Mandate setup is slower than clicking a familiar checkout logo
Standout against PayPal. It is the only provider here where a customer’s payment instrument cannot expire, which addresses a loss PayPal merchants absorb without ever measuring it.
What actually breaks when you switch
The subscriptions are the migration. PayPal billing agreements are authorisations held by PayPal and cannot be handed to another provider, so every recurring customer has to act. Move new subscribers first, migrate the existing book in waves with real notice, and accept that some of it will not come. Anyone promising a silent transfer has not done one.
The second problem is the button. Shoppers look for it, and removing it from a checkout that has always had it changes completion rates in a way no spreadsheet predicts. Keep PayPal as one method through your new provider and route everything else elsewhere, then measure. That is a routing decision rather than a leap.
The third is reconciliation. PayPal money arrives in a balance you withdraw from; an acquirer settles to your bank on a schedule with its own fee deductions and payout reports. Bookkeepers who have only ever worked with the first shape need a month to be comfortable with the second, and that month is best spent before the year-end close, not during it.
Is PayPal an American company or a European bank?
Both, at different levels, and the distinction decides which objections are valid. The entity you contract with as a European merchant is PayPal (Europe) S.à r.l. et Cie, S.C.A., authorised as a credit institution by the CSSF in Luxembourg. It is supervised under European banking rules and registered in the Luxembourg trade register as B 118349.
Above it sits PayPal Holdings, Inc., a United States corporation. The CLOUD Act attaches to providers subject to US jurisdiction and reaches data within their control, so group-level exposure exists even though the regulated relationship is Luxembourgish.
The practical consequence is that "PayPal is not European" is wrong as stated and "PayPal is entirely outside US reach" is wrong too. If jurisdiction is your reason for leaving, say precisely which layer you mean, because a procurement questionnaire answered sloppily here will come back.
How much more does PayPal cost than a European processor?
Between two and six times, depending on what your customers use to pay. Against a European consumer-card rate of 1.8% + €0.25, PayPal’s 3.40% + €0.35 is a little under double. Against a bank-transfer method priced at €0.32 flat, it is more than six times on a €50 basket and worse as baskets grow, because a percentage keeps climbing where a fixed fee does not.
Then add the parts that never appear in the comparison. UK buyers cost 1.29% more, buyers outside Europe 1.99% more, conversion 3% over the base rate, and each dispute €16 whatever the outcome. A merchant selling internationally can find the blended cost approaching six per cent without a single line of the rate card being wrong.
The counter-argument is conversion, and it is a real one: if removing the button loses more orders than the fee saves, PayPal is cheap. That is a measurement, not an assumption, and it is the single test worth running before this decision.
Can I keep PayPal as a payment method without using it as my processor?
Yes, and for most merchants that is the right answer rather than a compromise. European processors offer PayPal as one method in the checkout alongside cards, iDEAL, Bancontact and the rest, so the logo your customers look for stays where it is.
What changes is who acquires everything else. Cards and local methods settle through the European provider at European rates, PayPal handles only the customers who insist on PayPal, and you have moved the majority of your volume off the most expensive line on your statement.
The reconciliation gets slightly more complicated, because PayPal payments routed through another provider land in that provider’s payout rather than in a PayPal balance. Most finance teams consider that an improvement.
What happens to my subscriptions if I leave?
They do not move. A PayPal billing agreement is an authorisation your customer gave PayPal, not a token you can export, so every recurring customer has to authorise the new arrangement themselves. That is the single largest cost of leaving PayPal and it is the one merchants discover late.
The mitigation is to stop adding new subscribers to PayPal first, migrate new business to the replacement, and move the existing book in waves with real notice rather than in one announcement. Expect to lose some of it; plan for how many.
It is also the moment to ask whether cards were ever the right rail. A SEPA Direct Debit mandate does not expire and cannot be reissued by a bank halfway through the year, which removes the involuntary churn that quietly costs subscription businesses more than processing fees ever do.
Which one to pick
If the reason you were given for leaving was that PayPal is American, check it before spending money. For European merchants the counterparty is a Luxembourg credit institution supervised by the CSSF, and only the group parent is in San Jose.
If the reason is the rate — and it should be — Mollie is the answer for most merchants, because it takes cards and local methods at European prices while keeping PayPal available for the customers who insist on it.
At larger volume, Adyen replaces the balance with real settlement and replaces a flat 3.40% with pricing you can audit, at the cost of self-serve onboarding.
And if what you actually run through PayPal is a subscription book, GoCardless is the change that matters: cheaper per collection, and built on a mandate that cannot quietly expire. Klarna is the only entry here you should buy for revenue rather than cost, and only after measuring the uplift.
Frequently Asked Questions
Mollie if you want European methods at published per-method prices and would like to keep PayPal as one of them. Adyen if your volume is large enough for interchange-plus and you want your own banking-licensed settlement. Klarna if the thing you value about PayPal is the pay-later option in the basket. GoCardless if what you run through PayPal is really a subscription book.
The entity that contracts with European users is. PayPal (Europe) S.à r.l. et Cie, S.C.A. is a credit institution authorised and supervised by the CSSF in Luxembourg, registered as B 118349. Its ultimate parent, PayPal Holdings, Inc., is American, so the group remains within reach of US disclosure law even though the regulated relationship is Luxembourgish.
In the Netherlands a commercial transaction costs 3.40% plus a fixed fee of €0.35. Payments sent from the United Kingdom add 1.29% and payments from all other markets add 1.99%. A chargeback costs €16, and where currency conversion applies PayPal charges 3% above the base exchange rate. Rates differ by country, so check your own market’s fee page rather than assuming.
Considerably, because the pricing shape is different. A bank-transfer method is typically a fixed fee — €0.32 for an iDEAL payment at a Dutch processor — while PayPal charges a percentage of the basket. On a €50 order that is €0.32 against €2.05; on a €200 order it is €0.32 against €7.15. The larger your average basket, the wider the gap.
It can, and this is the only argument for PayPal that survives the arithmetic. Shoppers recognise the button and some will not complete a checkout without it. The sensible approach is not to remove it but to demote it: move cards and local methods to a European processor, keep PayPal available as one method among several, and measure completion before and after rather than guessing.
No, not directly. Billing agreements are authorisations held by PayPal, and each customer has to set up the new arrangement themselves. Migrate in waves with clear notice, start new subscribers on the replacement immediately, and budget for a share of the existing book not making the move. This is the real cost of leaving, and it is a customer cost rather than a technical one.
The European entity is a Luxembourg credit institution operating under EU supervision, with a data processing agreement and the usual apparatus. Compliance is not the weak point here. The exposure worth documenting is that the group parent is a US corporation, which means the CLOUD Act can reach data within the group’s control, and no European licence changes that.
Bank-to-bank collection, by a wide margin. A SEPA Direct Debit mandate collected at around 1% plus a small fixed fee with a per-transaction cap costs a fraction of 3.40% + €0.35, and it does not fail when a card is reissued. The trade is that Direct Debit takes three to five working days to clear and covers no one-off card payments, so most businesses run it alongside a card provider.
Funds arrive in a PayPal balance held by the Luxembourg credit institution and are withdrawn to your bank, rather than settling into your account on a fixed payout schedule the way an acquirer settles. That is a structural difference from the providers on this page, and it is worth understanding before you compare only the percentages.
Who worked on this review
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