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Let me guess—you are a business owner, or about to be one, and you found this article because you’re searching online for the best way to process digital payments. You can’t get paid if you can’t process payments, now can you?
Well, you’ve come to the right place! Full disclosure: I am not in love with all things technology. I’m a business owner that sees digital payment processors as yet another start-up cost I need to incur on my way to making my millions. I’m also a writer with a business and sales background that loves researching and reviewing best-in-class products.
So, let’s get started:
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Digital Payment Processors (DPP) are just as they sound: digital services that enable you to invoice and collect account payments from customers both in person and online. This simple diagram from payroll blog Wagepoint shows where payment processors fit in the sales cycle:
There is no “typical” customer for these kinds of processors; you see freelancers and small business owners use them alongside mid-size businesses and the enterprise sector. With the prevalence of smartphones and tablet technology, these digital processors have become popular as the convenient, user-friendly, and cost-effective way to process transactions.
Many people love DPP because they are mobile, and much cheaper than the expensive digital payment processors used by big box stores.
How you use DDP technology depends on your business. Some cash-based businesses may only see charges occasionally, while others process hundreds each day. An owner must consider the overall cost including projected transaction fees based on transactions, and the anticipated accessories and support they will need before deciding on a system.
Let’s compare two popular digital online payment processors: Square and Stripe. Both companies offer digital payment processors among many other SaaS and hardware solutions, but to keep this article interesting and under 20 pages, let’s just compare their digital payment processors.
Before we get started, what’s your platform?
Both Stripe and Square are supported on web, iPhone, and Android platforms. Sorry Windows Phone app enthusiasts; it’s time to look elsewhere.
|Windows Phone app|
Square predominately markets to small businesses that want a digital processing solution like their larger counterparts without the big-time fees they pay. Known for their simple and straightforward pricing and design in comparison to Intuit GoPayment app, Square’s “Make Commerce Easy” slogan says it all: their mission is to provide simple ways to process online payment methods using smart technology.
The free Square magstripe reader (Square Reader) plugs into your smartphone or tablet allowing you to create a mobile point-of-sale all-in-one solution.
Using your smartphone or tablet, you download the free Square app and create your online storefront. As a Square customer, accepting Square cash, they allow you to sell online on their site, with third-party e-commerce sites, and on your own site (using integrations for Woocommerce, Shopify, etc..). Since your items are embedded on your site, your customers don’t have to leave to complete their transaction.
With all three options, you get next day deposits, can accept all major credit cards at one low rate, and you can integrate reporting and inventory with your offline sales.
Square charges 2.75% per swipe, dip, or tap; and 3.5% + .15 cents per keyed-in transaction. If you pay online, it’s 2.9% + .30 cents. Online reviews said there are some discounts for larger businesses with POS systems (point of sale) that guarantee more transactions, but Square does not list that pricing structure on its site.
It is free to launch your Square Online Store, and there are no monthly fees or hosting charges; you are only charged by transaction fee.
Square accepts Visa, MasterCard, Discover, ACH transfers and the American Express credit card for the same low rate.
Here are other benefits Square includes for free:
Stripe is a digital payment processor initially built to create custom online payment solutions for developers. Based in Ireland, the company operates in over 25 countries and allows both private individuals and large & small businesses to accept payments over the internet.
Stripe provides friendly APIs, or Application Programming Interfaces, that allow businesses to accept and manage payments using a mobile app. They do not require customers to open a merchant account or set up a credit card payments gateway. Their credit card processing is based on enabling your app to take in-app payments and in-app purchases from credit cards through a form.
According to online reviews, Stripe is known as known for its simplicity and ease of use.
Stripe claims on their website that:
AppCoda, a leading tutorial site for app developers, gives a great tutorial on how Stripe works and uses this infographic to illustrate the flow of information:
Phew. It’s a lot to digest for someone new to digital payment processors for the new digital wallet, but it helps you understand the difference between using Square’s magstripe reader to perform a transaction and manually entering a sale using Stripe.
Stripe’s fee is 2.9% + .30 cents per successful charge.
Stripe has no setup, monthly, validation, refund, card storage or failed payment platform fees. In other words, no extra account fees other than per transaction.
You’ll never have to decipher a complex statement because you know what you’re charged in advanced based on your transaction history.
Its features include integrated mobile payments for iOS and Android, checkout, recurring billing options, and the ability to add promotional codes and discounts.
Stripe is a global digital payment processing solution, working with over 100 currencies, bank account of all types, as well as Bitcoin and local payment instruments like Alipay. Payment services are also accepted like AmEx Express Checkout, Android Pay, and Apple Pay.
Here’s your cheat sheet:
|Free Trial Available||X||X|
|Third Party Integration||X||X|
Square is a good option for new business owners or those that don’t process charge cards very often. It is scalable, reliable since it can accept payments offline, and easy to use. For those unsure about how many debit card or credit card transactions to anticipate, and aren’t familiar with new technology, Square is the digital payment processor for them.
Stripe is the winner for more established businesses looking to tap into foreign markets by expanding their e-commerce platforms and e-commerce solutions. It accepts more than 100 currencies, features integrated mobile payments for iOS and Android, and is the best global payment option since it accepts over 100 currencies including Alipay, and Bitcoin. Its features and total integrations (such as a WooCommerce Stripe plugin) also win when stacked up against Square that is more simple and straightforward.
Both digital payment processors will get the job done; it just depends on how you use it and how vast your empire grows. Either one will help your business accept a credit card, close the deal, giving your customers a convenient, easy way to pay.
Related Comparison: I also compared Authorize.net to Stripe recently here, in case you were considering Authorize.net as well.