September 9, 2021

Square vs Stripe vs Paypal

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Square, Stripe, and PayPal are the most popular credit card processors for small businesses. What's the difference and which is right for you?

Starting your own business? Square, PayPal, and Stripe are three names you probably hear often.

All three payment processors have flat rate pricing, no contract, no monthly fee, and easy setup. In fact, it can be hard to tell the difference.

Find out which one is best for your business and the features to look out for in this guide.

Who Square, Stripe, and PayPal is Best For

  • Square is an all-around top choice if you take payments in different ways (in-person, online, invoices, over the phone). It offers lots of free features, a powerful POS app, and attractive equipment options.

  • PayPal is best if you also want to accept PayPal and Venmo payments. It offers the most payment options and lower in-person transaction rates. Also good for nonprofits.

  • Stripe is best for online-only businesses (eCommerce, startups, apps, B2B) that want to build a fully customized shopping experience. It offers advanced API developer tools.

 Square
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Square

Stripe

PayPal

SPECIAL OFFER
Free Mobile Credit Card Reader - Learn More

 

Benefits and Features

Customer ServicePhone, Email, Live Chat Support, Seller CommunityPhone (by request), Email, Live Chat, IRCPhone, Email, Live Chat Support, PayPal Community
Good ForMobile & small businesses with average transaction over $100Online businesses; Customized checkout experienceAccepting Paypal payments; Small businesses with average transaction under $100
EquipmentFree magstripe card reader; $49 for contactless + chip reader; Stand, Terminal, and Register available for purchase.Online Processing, Terminal, Stripe for Marketplace & Platforms, Billing Services (subscription & invoicing)POS (Chip, Swipe, Tap), Marketplaces & Partners, Invoicing, Online Processing
Pricing Model
Flat rate
Flat rate
Flat rate
Swipe Rate
2.6% + 10¢
2.7% + 5¢
2.7%
Online Rate
2.9% + 30¢
2.9% + 30¢
2.9% + 30¢
Monthly Fee
No monthly fees
No monthly fees
No monthly fees; $30/month for PayPal Payments Pro
Keyed-in Transaction Fee
3.5% + 15¢
2.9% + 30¢
3.5% + 15¢
Deposit TimePayments before 5PM PT / 8 PM ET is available the next business day7-14 days after the first successful paymentInstant access to the funds in your PayPal account; Or instant deposit to your bank account for 1% fee or 1-2 business days for no fee
Chargeback Fee
None
$15
$20
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Read on for the detailed comparison of the three companies.

Square Overview

When Square came onto the scene in 2009, it was a game changer for small businesses and indie sellers. It allowed anyone to accept credit cards straight from their phone via a mobile reader.

Since then, Square has expanded to offer payment solutions for all types of retail and online businesses.

The best thing about Square is the excellent POS. It offers the most free features. All users get a free mobile swipe reader, POS app, payment gateway, virtual terminal, and online store.

Plus, Square even offers specific POS plans for retail, restaurants, and appointment-based businesses. For example, the restaurant plan includes menu and table management. It provides an all-in-one solution for whatever type of business you have.

Square Pros:

  • Feature-rich, all-in-one system
  • A great lineup of processing equipment
  • Free swipe mobile reader for all users
  • Can accept offline payments
  • Offer installment plan to customers, but you're paid upfront
  • Add buy buttons, payment links, and QR codes to sell without a website
  • Integrates with popular eCommerce platforms
  • No chargeback fee

Square Cons:

  • Add-on services or advanced POS plans can get costly
  • Not for high-risk businesses

Which is better, Square or PayPal? Square is best for mobile and small businesses with average transactions over $100, while PayPal is best for businesses with average transactions under $100, or those who only want to accept PayPal payments. Read our full comparison for more.

PayPal Overview

PayPal offers the best range of payment options to customers. The biggest advantage is that you can accept PayPal and Venmo payments.

With hundreds of millions of PayPal and Venmo users, it can be a huge benefit to open these options to shoppers. Having a PayPal button can also inspire more trust in your business.

A Nielsen Report found that when PayPal is an option, customers were 2.8x more likely to check out. Merchants also saw a 13% increase in repeat purchases and larger orders.

If you take in-person payments, the PayPal Zettle POS app lets you take cards on your smartphone. You can even accept PayPal and Venmo payments via QR code scan.

PayPal also has lower processing rates for card-present transactions, making it the cheapest option for brick-and-mortar businesses.

PayPal Pros:

  • Accept PayPal and Venmo payments online and in-person
  • PayPal Zettle app for mobile processing
  • Reduced processing rates for PayPal and Venmo QR code transactions
  • Reduced processing rate for charities
  • Integrates with popular eCommerce platforms
  • Create shopping links on social media

PayPal Cons:

  • Higher online processing rates than Square and Stripe
  • Monthly fee for virtual terminal
  • Monthly fee for recurring billing

PayPal offers these plans:
  • PayPal Zettle (free)
    Free mobile POS app. Accepts all major cards, digital wallets, and PayPal and Venmo QR code payments.

  • PayPal Standard (free)
    PayPal button for your website. Transactions are redirected to be completed on PayPal's site.

  • PayPal Advanced ($5/month)
    Checkout remains on your own website for a more streamlined process.

  • PayPal Payments Pro ($30/month)
    API solutions for fully customized checkout experience on your site. Includes virtual terminal.

Stripe Overview

Stripe is the most powerful processor for online businesses. It has APIs and software solutions for you to completely customize your checkout experience. But it's best to have a developer to use Stripe to its full potential.

Stripe can support any kind of online business, including eCommerce stores, subscription services, apps, B2Bs, and even platforms and marketplaces. There are no limitations.

But it may be too much for simpler online shops. If you just need basic checkout buttons that you can implement yourself, Square or PayPal will be the better choice.

Stripe also offers a card reader if you occasionally sell in person. But in general, Stripe's focus is on online processing.

Stripe Pros:

  • Available in 44 countries
  • Supports 135+ currencies and dozens of global payment options
  • Advanced API developer tools
  • Integrations with hundreds of apps
  • Features for recurring billing
  • Can support marketplaces and platforms

Stripe Cons:

  • Only one card reader option
  • Limited POS features; not ideal for physical-only businesses
  • Need developer to make most use of Stripe

Did you know? Stripe users include Lyft, DoorDash, Slack, Instacart, and Booking.com.

Pricing and Fees Comparison

Square, Stripe, and PayPal all use a flat-rate pricing structure. Here's how the processing fees compare:

SquarePayPalStripe
Swipe, dip, tap2.6% + $0.102.29% + $0.092.7% + $0.05
Online2.9% + $0.30Credit and debit cards: 2.99% + $0.49
PayPal payment products: 3.49% + $0.49
2.9% + $0.30
Keyed-in3.5% + $0.153.49% + $0.092.9% + $0.30
Invoices2.9% + $0.303.49% + $0.492.9% + $0.30
Recurring Billing toolIncluded$10/mo0.5% additional
Virtual TerminalIncluded$30Included
ChargebacksNone$20$15

Quick verdict: PayPal offers the lowest rates for in-person transactions. However, for online transactions, PayPal is the most expensive option.

In general, Square offers the most free features out-of-the-box. So though Square's swipe rates may not be the lowest, you may still find it to be the best value overall. PayPal charges an extra monthly fee for some features.

Let's take a deeper look at how their pricing compares.

In-Person Processing Fees

Square and PayPal are the best options if you take payments in-person. So we're only comparing these two companies here.

PayPal's rate of 2.29% + $0.09 for in-person transactions through Zettle is lower compared to Square's rate of 2.6% + $0.10 per swipe.

And what's more - in-person payments via PayPal and Venmo QR code get a reduced processing rate. The rates for QR code transactions are:

  • $10.01 and above: 1.90% + $0.10
  • $10 and under: 2.40% + $0.05

For small vendors that only take cards physically, you can save more on processing fees with PayPal. It's a great choice for simple businesses that don't need too many features.

Square's per-swipe fee is higher. But the POS offers more features, so the higher price could be worth it.

PayPal used to offer the PayPal Here card reader along with the PayPal Here POS app. But that is no longer available to new merchants. Existing users can still continue to use it. The PayPal Here processing rate is 2.7% per swipe.

New merchants can only sign up for Zettle equipment (more later) and pay Zettle processing rates.

Online Processing Fees

Square and Stripe have comparable online processing rates. PayPal's online rates have increased to become the most expensive option.

As of August 2, 2021, PayPal raised PayPal digital payment rates to 3.49% + $0.49. This includes payments made through PayPal Checkout, Venmo, PayPal Credit, Invoicing, Pay in 4, PayPal Pay with Rewards, and Checkout with Crypto.

Other online debit and credit card transactions are 2.99% + $0.49, while Square and Stripe both charge 2.9% + $0.30.

PayPal also has the most expensive rates for invoices and keyed-in transactions. Overall, you'll pay more if you mostly sell digitally. But being able to accept PayPal and Venmo may be worth it to you.

Another benefit of PayPal is the reduced processing rate for charities. For receiving donations for confirmed charities, the rate is 1.99% + $0.49. So it's a great option for nonprofits.

Other Fees

Another thing to consider is what tools and features are offered. This could be the deciding factor.

The best thing about Square is that it offers a lot of features for free. All users get:

  • Free POS app
  • Free virtual terminal
  • Free payment gateway
  • Free online store
  • Free recurring billing for subscriptions

Square even has tools for restaurants and appointment-based businesses for free.

On the other hand, PayPal has an additional monthly cost for some of these features. Extra costs include:

  • Virtual terminal: $30 per month
  • Recurring billing: $10 per month
  • Recurring payment tool: $30 per month

Think about your needs. For example, if you occasionally take orders over the phone, you may prefer Square's free virtual terminal.

For online businesses, Stripe's basic free plan lets you customize your checkout with API solutions. But PayPal's free plan only lets you add basic checkout buttons. If you want to customize with API, that requires the Payments Pro plan, which is $30/month.

Hardware Options

Square offers a larger lineup of equipment, ranging from small mobile readers to countertop terminals to registers. All equipment is fully integrated with Square's excellent POS software.

Square's equipment options are:

  • Swipe mobile reader: free ($10 each additional)
  • Chip & Contactless mobile reader: $49
  • Square Terminal: $299
  • Square Stand (without iPad): $169
  • Square Stand (with 10" iPad): $498
  • Square Register: $799

You can also purchase accessories like receipt printers, cash drawers, barcode scanners, weight scales, and kitchen printer.

PayPal recently acquired Zettle (a processing company from Europe) and has switched to Zettle devices.

Zettle offers just 2 main devices: a card reader and iPad stand. The idea is that by combining with different accessories, you can create the system you need. The prices are:

  • Zettle mobile reader: $79 ($29 for the first one)
  • Zettle Stand 360: $159
  • Zettle Dock (for the mobile reader): $49
  • Receipt printers: $269 - $299
  • Barcode scanner: $299
  • Cash drawer: $119

PayPal also has pre-made bundles (called Store Kits) ranging from $249 to $699. They include the mobile reader, iPad stand, and various accessories. You can also add an optional 10" iPad.

Square offers more equipment options. For example, the Square Terminal (with full built-in POS) can be used as a portable and countertop machine. PayPal doesn't offer an in-between device like that.

Stripe currently only offers one mobile reader for in-person processing for $59. Stripe is not meant to be for only physical businesses.

Pros of all Three Companies

Square, Stripe, and PayPal are all third-party payment processors. This means you don't get your own unique merchant account ID. Instead, your transactions are processed together with many other businesses.

Third-party processors all have their set of benefits and downsides. Here are the pros:

  • Quick and easy setup
    There's no underwriting required for all three companies. Anyone can open an account in minutes and start accepting credit cards. You don't need to be an established business.

  • Simple flat-rate pricing
    Square, Stripe, and PayPal all use flat-rate pricing. All cards get the same processing fee, whether it's debit or credit, Visa or Mastercard or Amex. This type of pricing is easy to understand for new businesses.

  • No monthly fee
    The basic plans all have no monthly fee. If you don't have any sales in a month, you don't pay anything.

    There are advanced plans and extra features with additional monthly fees.

  • No contract
    All three offer month-to-month billing with no contract. You can cancel at any time with no termination fees.

  • PCI compliance
    PCI compliance is required to make sure that your customers' credit card information is kept secure. The good news is that all three processors take care of PCI compliance for you.

Downsides of all Three Companies

However, there are also some downsides to be aware of for Square, Stripe, and PayPal.

  • Processing rates can be high
    The flat-rate pricing is simple and predictable, so it's great for new and small businesses. But it can be expensive for high-volume businesses.

    If you're processing more than $5,000 per month, you can save on processing fees with interchange-plus pricing instead. In that case, it's best to look for a traditional merchant account.

    Very high volume businesses can talk to the companies about custom pricing.

  • Account stability issues
    Another downside to a third-party payment processor is that the account is not as stable. Since there's no underwriting for approval, instead, you'll be scrutinized more afterwards.

    They can hold or freeze your account if they see suspicious activity (like if you process a larger transaction than usual). And if you are deemed too risky (like getting a lot of chargebacks), they can even terminate your account with little warning.

  • Not for high-risk businesses
    Because of the account stability issues, they're not good for high-risk businesses. If your business falls in that category, it's best to go with a provider that specializes in high-risk processing.

  • Equipment can't be reused
    Square and PayPal equipment cannot be reused if you switch processors later. Mobile readers are cheap, so it's not too much if you switch. But other equipment could be a sizeable cost, so think about whether you'll stay with the company long term.

Which Is Best for Retail?

For physical businesses, your choice should only be between Square and PayPal (as Stripe is mainly for online businesses).

If you're looking for the cheapest processing rates, PayPal is the answer. Card-present transactions through Zettle are only 2.29% + 0.09 each, compared to Square's 2.6% + $0.10 per swipe.

Plus, you can even accept PayPal and Venmo QR code payments at even lower rates. You can offer customers more ways to pay, while saving on processing fees.

But Square offers better POS features and more equipment options. The swipe reader can accept offline payments, while PayPal's reader cannot. The POS has some other nice features like being able to create an installment plan for your customers.

Which is Best for Restaurants?

Square is the best option for restaurants. It offers three POS plans specifically for restaurants.

For simpler operations, the Free plan is enough. It covers basic day-to-day needs, like menu management, order and table management, and auto-gratuity.

For larger operations, Square also offers a restaurant-specific POS plan for $60 - $299 a month. You get access to the kitchen display system and more advanced tools.

Is Stripe or Square better? Square is great for its impressive lineup of in-person payment equipment. However, Stripe excels at offering powerful business software and APIs which are perfect for the tech-savvy business owner. For a more in-depth comparison, check out our guide.

Which is Best for Online Businesses?

This depends on how complicated your needs are. If you have a robust online store or unique type of business, Stripe offers the most powerful features. It can support any type of online business. But it's best if you have a developer on your team.

If you only need simple checkout buttons, Square or PayPal will take care of your needs. You can even add buy buttons to sell on social media without having a website.

PayPal's online transaction rates are the highest. But it has the benefit of accepting PayPal and Venmo, which could mean more business.

Which is Best for Subscription Services?

For simple subscription billing, Square offers this feature for free with the Square Invoices app. You can save cards on file and set up a recurring payment schedule. This works for a recurring billing amount that's the same each billing period. The processing fee is 3.5% + $0.15 per payment.

PayPal also offers simple recurring billing, but this tool is an extra $10 per month. The processing fee is 3.49% + $0.49 per payment.

Stripe is best for subscription services with more complicated needs. You can set trial periods, tiered pricing, and usage-based pricing. Customers can also manage their own subscription plan from a Stripe-hosted page.

Stripe charges an additional 0.5% - 0.8% for recurring billing, on top of the regular 2.9% + $0.30 per transaction fee.

Bottom Line

All three processors have their strong suits. The best one for you depends on your needs.

Square is a great all-around option. With powerful POS features, sleek equipment, and good online features, it covers the needs of just about all types of small businesses.

For more advanced online businesses, you will find more features with Stripe. It's the best option for online businesses that want complete customization.

The biggest advantage of PayPal is the ability to let your customers pay with PayPal and Venmo. In-person transactions through Zettle have the lowest processing fees, but online transaction rates are the highest amongst the three.

Anna G is a contributing writer at CreditDonkey, a credit card processing comparison and reviews website. Write to Anna G at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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