Square Fees vs Stripe: Why You're Paying 50% More Than You Should
Base rates all similar: Stripe 2.9% + $0.30, Square 2.9% + $0.30, PayPal 2.9% + $0.30. But: Square charges extra for invoices ($1/invoice). PayPal charges for transfers ($1 each). Stripe doesn't. On 100 invoices/month, Square costs $100 extra. Over a year: $1,200 difference. Choose the processor that fits your payment mix.
The Hidden Processor Costs#
Three payment processors, all advertise "2.9% + $0.30." But: Stripe invoices = free. Square invoices = $1 each. PayPal = charges for instant transfer ($1). If you send 100 invoices/month, Square costs $1,200/year more. Most businesses don't know this. They pick based on marketing, not actual cost.
Payment Mix Matters#
Different businesses have different payment patterns: (1) Retail: Mostly card-present (swiped). (2) SaaS: Mostly online cards, some ACH. (3) B2B Services: Mix of invoices, cards, ACH. (4) Subscriptions: Recurring cards. Processor cost depends on mix. Square is best for retail (cheap card processing). PayPal is cheaper for B2B (no invoice fees). Stripe is balanced.
Input your payment mix: (1) 60% card-present.
AskBiz Processor Comparison#
Input your payment mix: (1) 60% card-present. (2) 30% online card. (3) 10% ACH. AskBiz calculates true cost on each processor: Stripe: 2.9% + $0.30 per card = avg 3.2%. PayPal: 2.9% + $0.30 per card, plus $1 per ACH = avg 3.4%. Square: 2.9% + $0.30 per card, plus $1 per invoice (if invoiced) = avg 3.2%. For this mix, Stripe and Square are equivalent; PayPal is more expensive.
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Real Example: Consulting Firm#
A consulting firm invoiced clients for $500K/year (1,000 invoices, each ~$500). They used PayPal. Cost: 2.9% + $0.30 per card paid online (avg $145/transaction = $430 total) + $1,000 invoice fees (1,000 × $1) + $500 instant transfer fees (500 transfers × $1) = $1,930 total. With Stripe: 2.9% + $0.30 = $430 total. Difference: $1,500/year. They switched to Stripe, saved $1,500 annually. Small business, big impact.
- Base rates all similar: Stripe 2.9% + $0.30, Square 2.9% + $0.30, PayPal 2.9% + $0.30.
- But: Square charges extra for invoices ($1/invoice).
- PayPal charges for transfers ($1 each).
People also ask
Which processor is cheapest?
Depends on payment mix. Retail = Square. Online sales = Stripe. B2B invoicing = Stripe. Subscriptions = Stripe or Recurly.
Can I use multiple processors?
Yes, but complicates reconciliation. Pick one primary, use second only if first doesn't support a payment method.
What about interchange rates?
Visa/Amex/Discover charge interchange on top of processor fee. Same for all processors. Can't be avoided.
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