Comparing the Top Online Payment Software Solutions: Stripe vs. PayPal vs. Square

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Sometimes you gotta compare apples to oranges. Not everything does the same thing and the same applies to online payment processors. It really comes down to what you’re doing and what you need. When comparing the Stripe, PayPal, and Square payments systems, here are the top things you need to know:

What is an Online Payment Processor?

An online payment processor is a company that handles transactions for you so that customers can purchase your product/service. This means that the payment processing platform will communicate and relay information from a customers’ credit card or debit card to both your bank account and theirs. If there are enough funds and it is valid, the payment will go through. All of these actions happen in real-time, which is just a matter of seconds. The payment information can include transaction types like:

  • E-check
  • ACH
  • Visa/Mastercard

Payment processing software also offers fraud protection. It will take security measures to ensure the customer’s card data is correct. It is their duty to make sure fraudulent payments do not happen to business owners. When they do, the company typically reimburses the company. The regulations are set forth by the Payment Card Industry (PCI) and are called the PCI DSS (Payment Card Industry Data Security Standard). 

Additionally, if a customer argues and proves that your company charged them incorrectly, the processor will take care of the accidental transaction. That doesn’t necessarily mean they will do it for free. Think of it as an overdraft charge.

Quick Summary

  • PayPal: This site offers online checkout experiences, in-person payments, and invoicing. It’s the best fit for eCommerce companies that are looking to provide their customers with easy online payments. 
  • Stripe: This is an online API that works best for high-tech B2C eCommerce companies.
  • Square: This platform is a POS system that offers online checkout experiences, invoicing, and a variety of other features. It’s a good fit for a small business that’s brick-and-mortar.

Overview of PayPal

PayPal was one of the first online payment processors and thus, there’s a lot that comes with the package. Since they have such broad offerings, it can sometimes be hard to understand the payment options. PayPal’s core product is the checkout experience. There are three options for this feature:

  • “Pay With PayPal” button that is integrated into a pre-existing checkout page.
  • PayPal Payments Standard offers a full checkout that is generic and free for your site.
  • PayPal Payments Pro is a customizable payments API (much like Strips basic product).

The PayPal platform also offers online invoicing. Creating and sending invoices through PayPal is always free. However, once the customer fulfills the invoice, you will be charged a transaction fee. PayPal also offers in-person payments through the app PayPal Here and mobile credit card readers. It will turn your smartphone or tablet into an entire point of sale system.

Overview of Stripe

The core of the Stripe platform is an online payment API for organizations and apps. The platform is an extremely developer-centric online payments website that offers customized payment styles like billing and platform payments. They also offer open APIs through the Integrated and Customized versions of the product. Overall, this solution is the one for creative businesses that crave customization. Integrations into 3rd-party sites are practically seamless. 

Oftentimes, it’s difficult to tell whether you’re using a Stripe payment API to checkout or not. The odds are, though, that you probably have. The Stripe brand automates payments for some of the largest brands out there, like Target and Lyft.

Overview of Square

Square offers a wide range of features. Even more so than PayPal or Stripe. Subsequently, this also means they will be a lot harder to understand. Square’s core product is the robust point of sale system. It is an in-store payment service that enables a customer to easily swipe their card. This is what the brand is known for. They were the first to deliver free hardware for a POS system on the market. The device can read both card and contactless payments and comes with the following equipment:

  • Card readers
  • Headphone jack magstripe reader
  • Headphone jack chip reader
  • Bluetooth contactless and chip reader

The Square app is also free. The company makes its money through payment processing fees. Any smart device can be turned into a powerful point of sale. They also offer the Square Stand which can integrate with an iPad into a countertop POS system. The Square Register and Terminal Register are fully self-sufficient POS systems with the countertop and mobile solutions. 

Additionally, Square offers e-commerce solutions if you need to set up an online shop for customers. The Weebly integration comes fully equipped with a built-in checkout experience from Square. If you already have a website with an online store, all you need to do is set up Square Checkout or a custom API.

Lastly, Square offers invoicing on its platform. Square Invoices allows you to send free invoices to your customers. They can be set up for a one-time payment, for repeat customers, or even on a recurring billing cycle.


Once you have an understanding of the payment methods, it’s time to start digging into the cost of maintaining a merchant account. Beyond the features that these three payment options offer, here’s what you can expect to pay:

The Price of PayPal 

  • The cost of hardware: From $14.99 to $99.99
  • Transaction fees: These range from 2.7% to 3.5% + 15 cents

The majority of payments processed through the platform will cost a business 2.9% of the transaction value, plus an additional 30 cents per transaction. However, there are some instances in which there are exceptions:

While the PayPal Payments Standard and PayPal Checkout will simply carry the default processing fee, PayPal Payments Pro will cost you $30 a month with the same 2.9% + 30 cents transaction fee. In addition, when using PayPal, payments processed with a card reader will only cost 2.7% of the transaction value. The card readers cost between $14.99 and $99.99 depending on the equipment that you choose.

It should be noted that if you process a keyed-in payment through PayPal Here, it will cost your business 3.5% of the transaction value, plus an additional 15 cents per transaction. Invoicing through PayPal will cost a business 2.9% + 30 cents payment processing fee when a customer fulfills the invoice with payment. 

Stripe Costs

  • There are no hardware options
  • Transaction fees: 2.9% + 30 cents

Stripe fees are 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. The company charges no monthly fees or set up fees whatsoever. For each payment that the Stripe API processes, you only pay 2.9% of the transaction value, plus 30 cents per transaction. 

If your business opts for the Customized API due to a unique business model or high transaction volume, you can access customizable rates too. To get an idea of pricing, you’ll have to contact a Stripe representative for further details.

Square Costs

  • The cost of hardware: Free to $799
  • Transaction fees: 2.5% + 10 cents to 3.5% + 15 cents

Since Square has a multitude of offerings, the pricing system can be somewhat complex. The amount a company pays per transaction will vary based on the hardware and the Square product being used. The Square POS system has a wide range of fees depending on the type of POS hardware you use. They range from from 2.6% + 10 cents to 3.5% + 15 cents. 

If a business processes a payment through the Square headphone jack or Bluetooth reader (cost ranges from free to $49) then it will cost the company 2.6% + 10 cents of the transaction value. The same goes for payments through the Square Stand (cost is $199). This does not include the cost of the iPad, which is needed to function.

For card payments through Square Terminal (retails at $299) it will cost the business 2.6% + 10 cents of the transaction value. For Square Register (cost is $799), it is the same. 2.6% + 10 cents of the transaction value.

It should be noted that whenever you have to key in the card information, the fees are more. Manual entry is at a rate of 3.5% + 15 cents. The cost of the Square POS app is free but the Square for Retail app is $60 per month.

If you choose the Weebly e-commerce route with the Square Checkout experience, you’ll need to pay both parties (Square and Weebly). A Weebly account starts at $12 a month but you will receive a year of domain services. It also comes with a$100 Google Ads credit. The Square Checkout experience for a Weebly store costs the same as the Square Checkout and the Square Payments API. Here are rates for the following transactions:

  • Online 2.9% + 30 cents
  • In-app: 2.9% + 30 cents
  • In-person: 2.6% + 10 cents

If you are using the Square Invoicing features, you’ll have to pay 2.9% of the invoice value, plus 30 cents if the customer pays with a card. If they choose to pay your invoice with cash or a check, there is no fee. Invoicing is free.

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Which Should you Choose?

So now that you are familiar with the offerings and cost of all three platforms, it’s time to delineate where this solution may work best, and in what situations. The following are the types of businesses that typically succeed with Stripe, PayPal, and Square respectively. Check it out:

Best for eCommerce Stores Looking for Easy Payments

That would be the PayPal platform. There is no need to hire a developer or engineer. The checkout experiences are simple to integrate directly into your e-commerce store and it’s incredibly inexpensive. It makes taking global payment easy. Even for a small business. The platform also adds to the customer experience in that it can take business off of e-commerce websites and straight in-person. 

However, if you are looking for a  payment technology that includes point of sale capabilities, PayPal might not be the right solution. It’s more for online business and online payment processing, rather than a fully functioning system in a brick-and-mortar store.

Best System for In-Person Business

Square still remains one of the best payment systems to streamline business in real life. If you’re running a brick-and-mortar, then this is the quick and simple solution for you. It offers up far superior in-person point of sale features than Stripe and PayPal combined. Square also facilitates mobile payments. It’s very popular in the food truck and pop-up space. 

If you decide to expand into offering online solutions and need a virtual terminal, Square integrates with e-commerce platforms like the Weebly online store, Square Checkout, and custom APIs to provide a processing solution with online shopping carts. 

Best for Custom Development and B2C e-Comm Businesses 

Stripe is the payment gateway that will require a developer but it is perfect is you need custom development. However, in order to set up a digital wallet and begin credit card processing, a business will probably need a web developer on your team. It takes a trained engineer to get Stripe up on the site and taking credit card payments. 

If you DO have a professional developer on your team, then the sky is the limit. This would be your best option. Since Stripe doesn’t offer any in-person payment, this is the best solution for an e-commerce business or a mobile app.

Additionally, it should be noted that Stripe currently does not offer any invoicing options. In terms of cash flow, this isn’t the best choice for business to business (B2B) organizations that need to invoice customers. If you are working directly with people, however, invoicing isn’t really necessary.

The Final Verdict

Now that you have a better understanding of how all three payment solutions operate, you’ll be better equipped to make the right choice. Understand there are options beyond Stripe, PayPal, and Square but we reviewed these for a reason. They all serve very different functions but are top of the market.

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