Comparing e-commerce providers Paypal + Gumroad

Gumroad PayPal
Based in US/San Francisco US
Founded 2011 1998
Fees 3.5% + 30¢ per sale, Free or $10 per month 2.9% + 0.30 USD (US based sales), 4.4% + currency fee + 2.5% conversion (international sales), Lower fees for high volumes, charities, ‘micropayments’
Has marketplace



Has affiliate network Yes No
Has SDK No No
Fund withdraw Bank transfer, PayPal Credit/debit card, Bank transfer

Super-simple e-commerce for creators. You can run all sorts of recurring subscriptions through Gumroad.

Includes a homepage and web posts that you can write about your software.

It has a marketplace, "Discover". Sales that come through Discover are subject to an additional 10% fee.

Accepts all major credit cards, including Visa, MasterCard, American Express, Discover, Diners Club, and JCB, as well as PayPal.

From Gumroad's tagline, you can see that the developers are missing from the categories of digital goods creators: "We have sent over $251M to artists, designers, educators, writers, podcasters and more."

PayPal is the most known online payment processors and online 'wallet' where you can store funds in multiple currencies. 
It supports online payments and money transfers and also serves as an electronic alternative to traditional paper methods like checks and money orders.
It is known not only to sellers but also has wide acceptance from the buyers. Because of this popularity, many physical stores accept Paypal payments, so that clients can use their PayPal balance.

PayPal is owned by eBay.

PayPal offers 3 Account Types which all allow you to send and receive payments.

  • PayPal Personal: With a Personal account, you can make payments to almost anyone with an email address. You can make and receive some types of payments without incurring fees, and pay low fees for others. For more information, see the fees section of the PayPal User Agreement.
    PayPal personal accounts are ideal if you want to shop online and send or receive personal payments to friends and family.
  • PayPal Premier: PayPal premier accounts are for people who may be casual sellers but are not registered as official businesses.
  • PayPal Business: Recommended for merchants who operate under a company/group name.
    Business Accounts allow you to display your Business Name or Business Logo Graphic on the PayPal Checkout Screens.
    It offers additional features such as allowing up to 200 employees limited access to your account (Multi-User Access) and customer service email alias for customer issues to be routed for faster follow-ups.
    If your business is setup, registered, etc., then go with a Business Account.

Seller name: In PayPal's buy page the customer sees the name of the seller and the name of the product or service they are buying.

PayPal payment - how to sell software online
PayPal has a very clean payment form,
showing the seller name and the product
or service sold.

  • Selling by an email address: If you have a PayPal personal account you can sell by an email address instead of your personal name. This provides a minimum of anonymity and protection of your personal data.
  • Selling by a business name (not by your personal name) can be done but this would need to be the name registered with your bank, i.e. the name verification is done via the bank's account name.

Issued debit card: PayPal Cash Plus account is required to get the Mastercard debit card. With the debit card you can use your account's balance like a normal bank account and make purchases from where ever the MasterCard is accepted. For example, you can use your account's funds to pay for your google adwords advertising. Google Adwords does not accept PayPal as a payment method and the debit card removes this barrier.
Note: this is probably a discontinued feature. Information about the PayPal debit card leads to pages that no longer exist.

Additional fees: In addition to PayPal's per-transaction fee, you will also incur the following fees:

  • $30 per month if you want to design and host your own checkout pages.
  • 1% cross-border surcharge if you want to accept payments from another country.
  • 3.5% transaction fee when your customers pay with American Express.
  • $0.30 per uncaptured authorization.
  • A fixed fee portion of the original transaction fee when you issue a refund ($0.30 for domestic payments).
  • Nice, modern platform.
  • Integrated affiliate network.
  • One of the best platforms for creators of digital goods (music, books, graphics, etc)
  • Simple to use.
  • Low fees.
  • Clients might already have a PayPal account and they will prefer to use their PayPal funds.
  • PayPal has an online dispute center where the buyer can request refunds. This formal procedure gives to the clients the reassurance that if their order is not completed as it was advertised, they have a way to request a refund.
  • It allows keeping of money balances in multiple currencies, e.g. Euro and USD. But the withdrawal is always in the currency of your country.
  • Not focused on software sales. This service was designed with digital works (books, art, etc) in mind. The software as a digital product was added probably later. As a result, the workflow and the setup of the sale page do not exactly match the needs of a software developer.
    For example, it requires that you upload your digital product (software) that will automatically be delivered to the paying customer. This means that you need to upload your software every time you release a new version and that it should be a "full" version so that the customer gets what he paid for. This is not convenient for software developers who distribute a trial version that can be activated to a "full" version.
  • Requires that the digital file is uploaded in Gumroad. This is not convenient when you sell software as the version will soon be outdated when you release your next version.
  • If you have a cross-platform software, it seems difficult (maybe cannot be done) to setup your software's order page to allow the buyer to select more than one edition (OS version) of your software for an extra price.
  • Not disclosed when the $10 montly fee is applied. Other software selling platforms do not have a monthly fee.