Payment Processing Decoded: Stripe vs Square vs PayPal vs Everyone Else
Payment processing is the plumbing of online business — nobody thinks about it until it breaks. But choosing the right processor affects your fees, customer experience, and cash flow.
Stripe is the developer's choice. It handles everything from simple checkout to complex subscription billing, marketplace payments, and international currencies. Pricing: 2.9% + $0.30 per transaction. Best for: SaaS, marketplaces, and anyone with a developer.
Square started with that little card reader and now does everything. Online payments, in-person POS, invoicing, and even banking. Pricing: 2.9% + $0.30 online, 2.6% + $0.10 in person. Best for: businesses with both online and physical sales.
PayPal is the name everyone knows. 400+ million accounts globally means some customers only feel safe paying through PayPal. Pricing: 3.49% + $0.49 for standard processing (higher than competitors). Best for: businesses where customer trust is a barrier.
Shopify Payments is Stripe under the hood but integrated into Shopify. If you use Shopify, this is the default and it waives Shopify's additional transaction fee. Pricing: 2.9% + $0.30 (Basic plan). Best for: Shopify store owners.
The fees that kill you aren't the percentage — it's the fixed fee per transaction. On a $5 sale, $0.30 is 6%. On a $500 sale, it's 0.06%. If you sell low-priced items, negotiate the per-transaction fee or find a processor with lower fixed fees.
International payments add complexity. Currency conversion fees (1-3%), cross-border fees (1-2%), and local payment methods vary by processor. Stripe and PayPal handle the most currencies.
PCI compliance is required if you handle credit card data. Using hosted payment forms (Stripe Elements, PayPal buttons) keeps you out of PCI scope because card data never touches your servers.
Chargeback rates above 1% can get your account terminated. Prevent chargebacks with clear product descriptions, easy refund policies, recognizable billing descriptors, and delivery confirmation.