Ready to start collecting payments for your online courses? This comprehensive guide walks you through setting up payment gateways on Thinkific, comparing the pros and cons of Stripe vs PayPal, and helping you make the best choice for your course business.
Introduction: The Money-Making Foundation of Your Course Business
Let’s face it—you’ve put countless hours into creating your online course, perfecting your curriculum, and building your Thinkific site. Now comes the exciting part: getting paid for your expertise! But wait, what’s this about payment gateways? Suddenly, terms like “merchant accounts,” “payment processing fees,” and “currency conversion” are flooding your research.
Take a deep breath. Setting up payment gateways on Thinkific doesn’t have to be the headache-inducing process you might be dreading. In fact, with the right guidance (that’s what I’m here for!), you can have your payment systems up and running in less than an afternoon. Whether you’re team Stripe, team PayPal, or still on the fence, this comprehensive guide will walk you through everything you need to know to start accepting payments and watching your course business grow.
Understanding Payment Gateways: The Digital Cash Registers of Your Course Business
Before diving into the Stripe vs. PayPal showdown, let’s make sure we’re all on the same page about what payment gateways actually do. Think of a payment gateway as the digital equivalent of a cash register in a brick-and-mortar store—it’s the technology that allows you to accept credit cards and other forms of electronic payment from your students.
When a student decides to purchase your course, the payment gateway securely collects their payment information, verifies that the funds are available, and then transfers the money to your merchant account. According to Thinkific’s official documentation, this entire process happens in the background while providing a seamless checkout experience for your students. The better this experience, the higher your conversion rates will be—research from the Baymard Institute shows that a complicated checkout process contributes to the average 69.82% cart abandonment rate across industries.
Payment gateways also handle crucial behind-the-scenes tasks like encrypting sensitive data, preventing fraud, and ensuring compliance with financial regulations. Whew! That’s a lot of heavy lifting for one system. Now, let’s look at how setting up payment gateways on Thinkific works specifically with the two most popular options: Stripe and PayPal.
Setting Up Stripe on Thinkific: Step-by-Step Process
Stripe has become increasingly popular among course creators due to its sleek interface and comprehensive features. Let’s break down the setup process into manageable steps that even the most tech-averse course creators can follow.
First things first, you’ll need a Stripe account. If you don’t already have one, head over to Stripe’s website and sign up. The initial registration requires basic information about you and your business. Once your account is created, you’ll need to complete your profile with additional details including your business type, address, and banking information for receiving payouts. According to Stripe’s own statistics, they handle billions of dollars annually for millions of businesses worldwide, so you’re in good company!
Now, let’s connect Stripe to your Thinkific account:
- Log in to your Thinkific admin dashboard
- Navigate to “Settings” → “Payment Gateways”
- Click on “Connect with Stripe”
- You’ll be redirected to Stripe to authorize the connection
- After authorization, you’ll be brought back to Thinkific with Stripe now connected
- Configure your preferred settings, including statement descriptor (what students will see on their credit card statements) and payout schedule
Voilà! You’re now ready to accept credit card payments directly on your Thinkific site. One of the biggest advantages of setting up payment gateways on Thinkific with Stripe is the embedded checkout experience. This means students never leave your course site during the payment process, which according to conversion optimization research can increase conversion rates by up to 35% compared to redirected checkouts.
Setting Up PayPal on Thinkific: A Complete Walkthrough
Now, let’s talk about the payment gateway that needs no introduction—PayPal. With its widespread recognition and massive user base of over 400 million active accounts worldwide, PayPal offers instant credibility and familiarity for many potential students.
Setting up PayPal on your Thinkific site is similarly straightforward:
- Create a PayPal Business account if you don’t already have one at PayPal’s business site
- Complete your business profile and verify your account information
- In your Thinkific admin dashboard, go to “Settings” → “Payment Gateways”
- Find the PayPal section and click “Connect with PayPal”
- Log in to your PayPal account when prompted and authorize the connection
- Return to Thinkific and confirm your PayPal settings
One thing to note—and this is important—PayPal integration on Thinkific works a bit differently from Stripe. When students choose to pay with PayPal, they’ll be briefly redirected to PayPal’s site to complete their payment before returning to your course platform. While this extra step might seem like a disadvantage, research from Nielsen Norman Group suggests that seeing the familiar PayPal interface can actually increase trust for some customers who are wary of entering credit card information on less familiar sites.
Stripe vs PayPal on Thinkific: The Fee Structure Breakdown
Now, let’s talk money—specifically, how much of your hard-earned course revenue goes to payment processing fees. When setting up payment gateways on Thinkific, understanding the fee structure is crucial for your business planning and pricing strategy.
Stripe’s fee structure is refreshingly straightforward. For most transactions in the US, you’ll pay 2.9% + $0.30 per successful card charge. International cards typically incur an additional 1% fee, and currency conversion adds another 1% if applicable. What’s nice about Stripe is that there’s no monthly fee, no setup fee, and no hidden charges lurking in the fine print. According to Stripe’s pricing page, they offer volume discounts for businesses processing over $1 million annually, which might be something to look forward to as your course empire grows!
PayPal’s standard rate also starts at 2.9% + $0.30 per transaction for domestic payments. However, international payments through PayPal typically cost 4.4% plus a fixed fee based on currency. PayPal does offer micropayment pricing (5% + $0.05 per transaction) which could be advantageous if you’re selling very low-priced digital products, though this is less relevant for most course creators.
Let’s put this into perspective with some numbers. For a $100 course sale:
- With Stripe, you’d pay $3.20 ($2.90 + $0.30) in fees
- With PayPal, you’d also pay $3.20 for domestic customers
- For international customers, Stripe would charge approximately $4.20
- PayPal would charge around $4.70 for the same international transaction
These differences might seem small on individual sales, but they can add up significantly as your course business scales. A course creator selling $10,000 monthly could save around $50-$100 per month just by choosing the optimal payment gateway for their specific customer base.
Student Experience: How Payment Gateways Affect Conversion Rates
The technical aspects of setting up payment gateways on Thinkific are important, but let’s not lose sight of what really matters—creating a smooth, trustworthy purchasing experience for your students. After all, the best payment system in the world is useless if students abandon their carts before completing their purchases.
Stripe’s main advantage from the student perspective is the embedded checkout experience. Students never leave your branded course environment, which creates a cohesive purchasing flow. According to a study by the Baymard Institute, each additional step in the checkout process can increase abandonment rates by 10-30%. Stripe’s streamlined approach minimizes these friction points, potentially leading to higher conversion rates.
Additionally, Stripe supports a wide range of payment methods beyond just credit cards. Depending on your location and settings, students can pay using Apple Pay, Google Pay, and various local payment methods. This flexibility is increasingly important as research from Adyen shows that offering multiple payment options can increase conversion rates by up to 25%.
On the flip side, PayPal offers something that’s hard to quantify but incredibly valuable—brand recognition and trust. For many online shoppers, especially those who are hesitant to share their credit card information, seeing the PayPal option provides an immediate sense of security. According to Nielsen’s Consumer Trust Index, PayPal consistently ranks among the most trusted payment brands globally. This trust factor can be particularly important if your target audience includes less tech-savvy individuals or international customers from regions where credit card usage is less common.
International Considerations: Reaching a Global Student Base
If you’re planning to sell your courses internationally (and why wouldn’t you want to expand your potential market?), there are some specific considerations when setting up payment gateways on Thinkific that can make or break your global strategy.
Stripe currently supports businesses in 40+ countries and can accept payments from customers anywhere. One of Stripe’s strongest features for global course creators is its excellent multi-currency support. You can charge students in their local currency, which according to research by PPRO Financial, can increase conversion rates by up to 40% compared to forcing customers to pay in a foreign currency. Stripe also handles currency conversion and deposits funds in your preferred currency.
PayPal boasts an even wider global reach, operating in over 200 countries and regions and supporting 25 currencies. This extensive coverage makes PayPal particularly valuable if you’re targeting students in emerging markets where Stripe might not yet operate or where credit card penetration is low. According to World Bank data, in many developing economies, alternative payment methods are used by over 70% of the population who conduct online transactions.
Another important international consideration is payout timing. Stripe typically transfers funds to your bank account on a 2-day rolling basis in the US (longer in some other countries), while PayPal makes funds available immediately in your PayPal account (though transferring to your bank account may take additional time). This difference in cash flow timing could be significant depending on your business model and financial needs.
Tax Handling and Reporting: Keeping Your Course Business Compliant
One often overlooked aspect of setting up payment gateways on Thinkific is how they handle tax collection and reporting. As your course business grows, managing tax compliance becomes increasingly important—and increasingly complex, especially if you’re selling internationally.
Stripe has built its tax capabilities significantly in recent years. With Stripe Tax, the platform can automatically calculate, collect, and report taxes in various jurisdictions worldwide. This includes sales tax in the US, VAT in Europe, and GST in countries like Australia and Canada. According to Stripe’s documentation, they can help identify where you have tax obligations based on your sales and automatically register you in many jurisdictions.
PayPal’s tax handling capabilities are somewhat more limited. While the platform does allow you to add tax to your transactions, the calculation and reporting responsibilities fall more heavily on you as the business owner. PayPal does provide year-end summaries and reports that can help with your tax preparation, but you may need additional tools or professional assistance to ensure full compliance, especially for international sales.
For US-based course creators, both platforms provide 1099-K forms when you meet the reporting thresholds. However, these thresholds changed in 2022, so be sure to stay informed about current requirements to avoid tax surprises. When in doubt, consulting with a tax professional who specializes in digital businesses is always a wise investment.
Security and Fraud Prevention: Protecting Your Course Business
When you’re setting up payment gateways on Thinkific, you’re not just setting up ways to collect money—you’re also implementing systems that protect both you and your students from fraud and security breaches. This protection is increasingly important as online payment fraud losses are projected to exceed $206 billion between 2021 and 2025.
Stripe has earned a reputation for robust security measures and fraud prevention tools. Their system uses machine learning algorithms to detect and block fraudulent transactions before they process. According to Stripe’s security documentation, they are PCI Service Provider Level 1 certified—the highest level of certification available in the payments industry. For course creators, this means you get enterprise-level security without having to build or maintain any of it yourself.
Stripe also offers Radar, their fraud prevention system that automatically identifies and blocks suspicious transactions. For businesses with specific needs, Radar can be customized to set rules based on your risk tolerance and customer patterns. This can be particularly valuable as your course business scales and potentially becomes a target for fraudsters.
PayPal similarly offers strong security protections, including encryption, fraud monitoring, and 24/7 transaction monitoring. One unique aspect of PayPal’s security approach is their Seller Protection Program, which can protect eligible transactions from fraudulent chargebacks. This feature can be particularly valuable for course creators concerned about digital goods chargebacks, though it’s important to review the specific eligibility requirements for your business model.
Both payment gateways also offer various authentication methods like 3D Secure (known as “Verified by Visa” or “Mastercard SecureCode”), which adds an extra verification step for suspicious transactions. While this might occasionally add friction to the checkout process, research from Visa suggests it can reduce fraud by up to 40% while minimally impacting legitimate sales.
Integration with Other Tools: Building Your Course Business Ecosystem
Your payment gateway doesn’t exist in isolation—it’s part of a broader business ecosystem that might include accounting software, email marketing platforms, CRM systems, and more. How well your chosen gateway plays with these other tools can significantly impact your operational efficiency when setting up payment gateways on Thinkific.
Stripe shines in this department with an extensive API and pre-built integrations with hundreds of business tools. For example, Stripe connects seamlessly with accounting software like QuickBooks and Xero, making reconciliation and bookkeeping much more straightforward. It also integrates with popular email marketing platforms like Mailchimp and ConvertKit, allowing you to automatically tag customers or add them to specific sequences based on their purchases.
Beyond the standard integrations, Stripe’s developer-friendly approach means that custom integrations are relatively straightforward if you have access to development resources. According to Developer Economics, Stripe consistently ranks among the top payment APIs for developer satisfaction and ease of implementation.
PayPal also offers a solid range of integrations, though generally fewer than Stripe. Its longstanding market presence means
