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Stripe vs. Square: Which Online Payment Processor is Right for Your Business?

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When starting a business of any kind, the first step is finding a way to accept payments from customers. The internet breeds a variety of options that often leave first-time buyers confused and discouraged. Stripe and Square are two payment services that are at the top of their game—and for good reason.

Square and Stripe give small business owners a quick and easy way to process payments and accept credit cards without a lengthy process.

However, there are key differences between two of the best online payment software platforms. Stripe is developer-friendly while Square is more geared toward in-person transactions.

In this article we’ll look at how each platform works, the pros and cons, pricing, and other important aspects to help you make the right decision.

What is Square?

Launched in 2010, Square is a payments platform that helps millions of sellers run their businesses from point of sale (POS) solutions to secure credit card processing. The software facilitates money transfers of sales/service revenue amounts and offers fast payment processing for ecommerce and retail customers.

Square Payments includes both hardware and software, with the basic Square reader free with a subscription. The app is known for ease of use and can be downloaded on an iPhone, Android, or iPad.

The San Francisco-based online payments service is a SaaS with customizable ecommerce websites for accepting customer payments. Additionally, Square offers invoice templates as part of its invoicing and online payments service software.

What Does Square Do?

Square allows a business to receive payments on the next business day for free (as Square payouts). When a card is swiped, the technology transmits the bank data to the card reader, which it sends to the Square software. The information is then passed on to the acquiring bank.

The Square magstripe reader plugs into the headset jack of an iOS or Android device, so you can take credit card payments anywhere, at any time.

Pros of Square

  • Helps sellers coordinate the various retail sales and e-commerce sales channels.
  • Simplified inventory management from a mobile device.
  • Free chip card reader with no up-front costs for small business owners.
  • Allows you to create invoices with the customer name, payment amount, due date, etc.
  • The system is simple to use with a small learning curve and a variety of hardware options.

Cons of Square

  • Customer support could improve the response and resolution time, particularly with the payment gateway.
  • The cost is structured for startups and, according to user reviews, can get costly as you scale.
  • Square doesn’t handle cross-border payments for transferring revenue earnings to owners.

What is Stripe?

The Stripe platform functions as an online payment API for organizations and apps. It’s an extremely developer-centric payment solution that offers customized payment plugins for billing, international payments, contactless pay, and many other functions. The brand also offers open APIs through the Integrated and Customized versions of the product.

Stripe is POS software for a company that craves customization. The user-friendly payment processor seamlessly integrates with third-party sites like Woocommerce, WordPress, Shopify, Google Pay, Apple Pay, and more. The Stripe payment API is often used for checkout by an online business and automates payments for some of the biggest brands out there, like Target and Lyft.

What Does Stripe Do?

The Stripe platform powers payments for online and brick-and-mortar businesses, marketplaces, software platforms, subscription-based services, and everything in between. With the right developer tools, business owners can set up the system to accept dozens of payment methods, from credit cards to buy now, pay later (BNPL) services.

Stripe helps a company beat fraud, send invoices, issue virtual and physical cards, manage business spend, get financing, and so much more. 

A customer simply provides their card information, it enters the payment gateway, which then encrypts the data. Stripe sends this financial information to the bank, which processes the transaction on the merchant’s behalf. This means users don’t have to set up a merchant account, which can be cumbersome.

Once the payment passes through a credit card network, like Visa or Mastercard, the issuing bank approves the transaction. This message travels all the way back through Stripe, where the user can see that the transaction has been successful. Stripe acts as a custom intermediary between a vendor and its bank.

Pros of Stripe

  • The system is extremely easy to use and integrates with most major websites and apps.
  • Invoicing directly from the website is surprisingly easy, comes with several options, and is super safe.
  • Hundreds of integrations and API settings make the system very customizable to business needs.
  • Instant notifications when a payment has been made with deposits in a short amount of time.
  • Credit card refunds and chargebacks are fairly painless to process.

Cons of Stripe

  • There aren’t enough ways to input data from payments made outside of Stripe, which leads to inaccuracies.
  • No ability to offer discounted rates at a smaller threshold.
  • Reporting can be complex and confusing with some reconciliation glitches.
Receiving Cost2.9% + 30¢ per successful card charge (1% for international cards, additional 1% if currency conversion is required).
2.7% + 5¢ to accept in-person payments.
2.6% + 10¢ for contactless payments, swiped or inserted chip cards, and magstripe cards. 
Manually keyed-in, processed using Card on File, or manually entered using Virtual Terminal have a 3.5% + 15¢ fee.
50 international payment methods – cost varies.
Sending CostNo platform-specific fees unless multi-party, then starts at .25% of account volume.Next-business-day: free. Instant and same-day: 1.5% of the transfer amount.50 international payment methods – cost varies.
Speed2-3 days1-2 days0-2 days
Mobile AppYesYesNo
Debit CardVisaMastercardNo
International Payments30+ countries and languages in a single platform.US, Canada, Japan, Australia, and the United Kingdom.Pays to 196 countries.
TaxesAutomated tax calculation and collection on all transactions.Item-level tax rates for POS systems.There is built-in tax, VAT, and PCI compliance.
Mass PaymentsFully-customized, multi-party payments.YesGlobal mass payables automation solution.
Business CapitalStripe CapitalSquare CapitalNot yet

Stripe vs Square Fees

At times, two systems can be similar in what they offer, but it all comes down to the price for a final decision. In this section, we look at both platforms in terms of ongoing maintenance, transaction-related costs, and international fees.

Admin Fees

Stripe charges no monthly fees or set-up costs whatsoever. The pricing is easy to understand because the payments API is a very straightforward payment processing system. If a business chooses the Integrated Payments API, then they only have to pay for successful transactions.

When comparing Square vs Stripe, neither have any administration fees to speak of. Both brands sell themselves on free merchant accounts. There is no monthly fee to use the Square POS app either.

Getting Paid

The following transaction fees apply for both platforms:


  • 2.9% + 30¢ per successful card charge (1% for international cards, additional 1% if currency conversion is required).
  • 2.7% + 5¢ to accept in-person payments.

If your business opts for the Customized API due to a high transaction volume, there are customizable rates too. To get an exact idea of pricing, contact a Stripe representative for further details.


  • In-person purchases: 2.6% + 10¢
  • Online processing fee: 2.9% + 30¢
  • Manually keyed-in: 3.5% + 15¢

Paying Out

For Stripe, there are no platform-specific fees unless you are sending multiple payments out. Then, the price starts at .25% of the account volume.

Paying out with Square is free for the next business day. If you want instant ACH payments or same-day transfers, the cost is 1.5% of the transaction.

International Fees

Stripe has a 1% flat-rate fee for international cards, and an additional 1% if currency conversion is required (cards and wallets).

Square customers will have to bear the conversion costs with their bank for an international money transfer. The platform works with most card transactions with a Visa, MasterCard, AMEX, Discover, JCB, or UnionPay logo. The app will only accept currencies from the US, Canada, Japan, Australia, and the United Kingdom.

Pre-paid Card

The Stripe Corporate Visa Card has no annual fees, no foreign transaction fees, chargeback fees, and no late fees.

The Square debit card is free to order and has no monthly fees, minimum balance fees, overdraft fees, or any other recurring fees. Payment processing fees are separate and still apply.


The main difference between Square and Stripe lies in customization. Square works best as a startup POS system for an in-person business. If you’re building a brick-and-mortar company, this is the easiest solution for you. Square online is very popular in the food truck and pop-up space, when you need quick transactions…on the go.

On the other hand, Stripe is an online API that functions best for high-tech ecommerce companies and online stores. It’s the perfect service provider if you’re looking for custom development and already have a great IT team to back you up. Ecommerce platforms with a high volume of online transactions and mobile payments should look to Stripe for the most enhanced checkout experience.

It should also be noted that Stripe is a virtual terminal that makes invoicing difficult. If you are looking for a payment system that offers extended credit as a payment option, Square will be the best platform for the job.

Alternatively, Tipalti is another option that gives a business the best of both worlds. It’s a streamlined, global mass payment solution that easily automates the entire payables process. From self-service vendor onboarding to tax compliance, fraud controls. and mass international payments, it’s the perfect alternative to both Stripe and Square.

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