Stripe vs. Square: What Are the Differences? And Which is Better?

Banking
Updated: 29th Sep 2021
Written by Jordan Blansit
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In the world of ecommerce, it’s no longer enough to partner with a payment processor that does one thing.

For small- to medium-sized businesses to remain competitive, an affordable, fully featured software packed with customizations and scalable tools is often the only way forward.

That’s where Stripe and Square come in. These disruptive, (not-so) small businesses have upended the world of high transaction costs and lackluster products with their flat-rate processing fees, feature-rich platforms, and open-source APIs.

But although Stripe and Square offer many of the same features, they’re not 100% comparable – especially when it comes to their target demographic.

Stripe vs. Square Overview

Stripe and Square were both founded in 2009, and both quickly rose to prominence in their respective niches as the go-to payment processors.

Stripe quickly gravitated toward tech-savvy companies that transacted primarily online. At the same time, Square’s iconic, plug-in reader became recognizable almost overnight.

But while Stripe focused on bettering its online offerings, security, and international relationships, Square built a robust POS tailored to individual industries and well-suited for small businesses working to scale upward.

What is Stripe?

Stripe is an online card processor renowned amongst developers for its robust API, comprehensive documentation, and powerful tools.

Stripe vs. Square
Image Source: Stripe.com

Although Stripe has branched out into a full-service payment processor, it remains a favorite for tech-savvy companies to make the most of their ecommerce experience.

Snapshot: Stripe Pros and Cons

Pros:

  • Developer-friendly API to build custom ecommerce experience
  • Quick, easy card processing
  • Predictable pricing
  • International and multicurrency support

Cons:

  • Not compatible with PayPal
  • Account stability concerns
  • Doesn’t contract with “high-risk industries”
  • Requires some technical skills

Read Full Stripe Review

What is Square?

Square primarily serves small businesses who do the bulk of their payment processing in person.

Since its conception, the company has grown into a modern, full-service POS system that also offers online payment processing.

Its free, scalable platform, pay-as-you-go pricing model, and affordable add-ons make it ideal for small businesses looking to scale up.

Snapshot: Square Pros and Cons

Pros:

  • Free POS software and affordable hardware
  • Scalable and tailored to individual industries
  • Comprehensive payment, personnel, and marketing tools for small businesses
  • Upfront pricing

Cons:

  • Hardware required to get the most out of your experience
  • Not suitable for high-risk industries
  • Account stability concerns
  • Some software packages run pricey

Read Full Square Review

Square vs. Stripe: Setup

Setting Up Stripe

To get started with Stripe, all you have to do is make an account online and embed their prebuilt checkout module into your website.

Or you can put your developer to work designing a full-fledged payment system from scratch with Stripe’s well-crafted developer tools, extensive documentation, code snippets, and more.

Setting Up Square

Getting started with Square is even easier: just sign up for their free POS, download their mobile apps, and order your free magstripe reader.

You can also browse their selection of full-featured hardware devices (or buy one at your local Office Depot), embed their prebuilt checkout page into your ecommerce website, or use their open API to design your own system from scratch.

What are the Differences Between Stripe and Square?

Stripe and Square share several commonalities – but it’s their differences that determine whether they’re suitable for your small business.

Target Customers

Stripe primarily targets small-to-midsize ecommerce businesses with some technical savvy (or the funds to hire a developer).

And due to their international business structure and currency conversion features, they’re well-suited for businesses that venture outside domestic sales.

Square, on the other hand, typically targets small brick-and-mortar businesses in the retail and restaurant industries. Their free POS system, payroll and team management tools, and slightly cheaper in-person pricing model make them ideal for customers who need less online functionality. (Though they offer that, too.)

Supported Countries

Square is only available in a handful of countries, including the United States, Canada, Japan, Australia, the Republic of Ireland, and the United Kingdom. Additionally, the company does not process international or currency conversion transactions.

But Stripe is all about international business. This payment processor is available in 44 countries, supports conversion between 135 currencies (for a small fee), and even offers currency routing.

Developer Tools and Capabilities

Of the two payment processors, Stripe is built for developers who like to get their hands dirty.

Businesses can use Stripe to craft a unique payment framework for their ecommerce site with their copy-paste coding snippets, full documentation library, boilerplate projects, and server-side language support.

On the other hand, Square offers several APIs for different functions, including payment processing, inventory and reporting tools, and employee and team management. While their API isn’t less functional, it’s not a core feature, either.

Hardware and In-Person Payment Tools

Stripe is best known for its online ecommerce solutions, but the payment processor has also begun development of some basic hardware for customers, as well. However, the company is only exploring mobile options at this time.

But Square is renowned for its in-person payment terminals. Since their first basic magstripe device, they’ve expanded into a variety of all-in-one mobile payment processors and countertop systems, all compatible with their free POS software.

Billing and Invoices

Stripe Billing is the company’s add-on billing and invoicing service, which lets users manage one-time and recurrent billing and subscriptions.

You can also send invoices, offer coupons and promotional payments, and reduce your churn rate with smart retries and internal workflows.

Square’s billing and invoices, however, come baked into the free product. You can use these tools to send digital estimates, invoices, and reminders, track paid and unpaid accounts, and accept payments.

Plus, you can even build custom contracts with no experience necessary.

What are the Similarities Between Stripe and Square?

But it’s not all about the differences: these two payment processors have a lot in common, as well.

Baked-in Security

Stripe and Square both come with security baked into their hardware and software.

For instance, both companies are fully PCI compliant and use end-to-end encryption to protect customers’ payment data.

Additionally, while Square handles all SAQ requirements and audits, Stripe’s AI-based Radar system detects fraud with dynamic learning and international data collection.

Tailored, Scalable Solutions to Meet Business Needs

Both Stripe and Square offer plenty in the way of tailored and scalable solutions.

For example, Stripe lets you cherry-pick many advanced functions so you can add the tools you need and drop the ones you don’t.

Some examples including their Billing, marketplace, and corporate card tools.

On Square’s side, they offer a free, basic software that you can customize with tools such as

Appointments, POS systems tailored by industry, and employee benefit and management software.

Plus, Square offers several pay-for-what-you-use style features like gift cards, loyalty programs, and email and text message marketing.

Various Integrations

When it comes to integrations, Stripe offers more than 300 partnerships with systems like CRM software, invoicing platforms, analytics tools, and more.

Square, on the other hand, offers admittedly fewer integrations at 180 partnerships – but the list is growing. Whether you need accounting, healthcare, or data reporting integrations, Square has you covered.

Scalable APIs

While Stripe is more well-known for its open-source API, Square offers its own – slightly more targeted – API designs, too.

With a little technical knowledge, your business can harness either system to integrate and customize your payment processing software to your needs.

Capital and Financing

Lastly, Stripe and Square both offer business financing opportunities with no interest, no late fees, and no credit check or lengthy application process.

Your eligibility is determined by your history with either company, while repayments are automatically pulled as a small percentage of your daily sales.

Stripe vs. Square Benefits

Now that we’ve compared the differences and similarities between Stripe and Square, let’s take a deeper dive into what they have to offer your small business.

Stripe Benefits and Solutions

Here is where Stripe stands out and distinguishes itself from Square.

Developer-Friendly

While you can use Stripe without coding, it’s ultimately designed for developers who want to customize their payment system from the inside-out.

To facilitate your creativity, Stripe provides:

  • Exhaustive documentation and tutorials
  • Security keys and fake credit card numbers
  • Server-side language support and code snippets
Strip Developer Tools
Image Source: Stripe.com

Robust Security

Stripe’s Radar system is designed to protect your business from fraudulent practices with machine learning and a 3D Secure verification system.

And that’s on top of PCI compliances and an automated dispute network.

Identity Verification

Stripe Identity provides an extra layer of security for international and onboarding businesses.

For a nominal fee, you can reduce scams and fraud, prevent account takeovers, and ensure you know who you’re hiring.

Reliability

Stripe has a reputation for reliability as a payment processor, and is trusted by the likes of Amazon, Kickstarter, and Lyft for their expansive features and customizations.

Scalable Solutions

Nearly every tool Stripe offers can be scaled to your business – even if you don’t know how to code.

Whether you need Billing capabilities, corporate debit cards, or the ability to open your own online marketplace, Stripe can make it happen.

Billing and Invoicing

And speaking of billing: though it costs extra, Stripe’s add-on billing service makes managing your payments, promotions, and invoices even easier.

Plus, with smart retries and internal workflows, you can increase productivity while reducing client churn.

Designed for Online Businesses

At the end of the day, Stripe is designed for small online businesses who need a full-service payment processor.

Whether you use their prebuilt checkout system, open-source API, or just their Payment Links, ecommerce sites will always get the most out of Stripe.

Square Benefits and Solutions

Like Stripe, Square comes with various solutions and benefits all designed to enable businesses to scale and prosper.

Payments Terminals

Square became famous for their mobile payment terminals, and for the most part, their bread-and-butter clientele continue to rely on mobile and in-person solutions first.

Square vs Stripe Terminals
Image Source: Squareup.com

Currently, Square offers five hardware terminals, a virtual terminal, and its ecommerce solution, so your small business can take payments no matter who – or where – you sell to.

Business Financing

Square offers business loans up to $250,000 based on your Square profile. With no interest rate, late fees, or ding to your credit score, you can greenlight the expansions and renovations you need – without breaking the bank.

Banking Products

Aside from financing, Square provides a small number of business banking products, such as:

  • A checking account linked to your payment portal
  • Savings accounts, or folders, that earn 0.50% APY
  • No opening deposit, monthly account, overdraft, or minimum deposit requirements or fees – ever

Social Media

Square also gives you the SEO tools you need to raise your rank – and your social media awareness.

Now, you can build your email list, promote your brand, and sell products via Facebook, Instagram, and Pinterest – all with the help of your Square Dashboard.

Stripe vs. Square: Fees and Pricing

Stripe’s pricing falls roughly in line with many of its peers at 2.9% plus 30 cents per transaction.

You can also expect a 1% charge for both international card processing and currency conversions.

But this price isn’t all-inclusive – you can also add features such as billing, enhanced security, payment terminals, and even premium customer support for an extra cost.

Alternatively, there are ways to use Square’s hardware and software completely free – aside from the transaction costs. If you go the cheapest route, you can expect to pay:

  • 2.6% plus 10 cents per transaction for all mobile card payments
  • 2.9% plus 10 cents per online payment
  • 3.5% plus 15 cents per keyed or card-on-file payment

And, like Stripe, you can purchase additional functionality for a tidy monthly sum.

For a comprehensive summary of Stripe vs. Square’s prices, check out the chart below:

Stripe Fees

Service:Fee(s):
Cards and Wallets2.9% + $0.30
Bank Debits and Transfers0.80% (Capped at $5.00)
Additional Payment MethodsStarts at $0.80
Adaptive Acceptance0.08%
Instant Payouts1.0%
Billing (Starter)0.50%
Billing (Scale)0.80%
Invoicing (Starter)0.40% (First 25 Invoices Free Per Month)
Invoicing (Plus)0.50%
Connect (Standard)Free
Connect (Express + Custom)0.25% + $0.25
Tax0.50% Per Transaction
Radar Machine Learning Starts at $0.05
Radar for Fraud TeamsStarts at $0.07
Chargeback Protection0.40%
ID Document & Selfie Verification $1.50 Per Verification
ID Number Lookup $0.50
In-Person Card Processing2.7% + $0.05
Card Reader (BBPOS Chipper 2X BT)$59
Card Reader (BBPOS WisePOS E)$249
SIGMAStarts at $0.02
ATLASOne-Time $500 Fee
Card Creation$3.00
Card Transactions Free for the First $500,000 then (0.20% + $0.20)
International Payments1.0% + $0.30
Disputes$15 Per Lost Dispute
Premium SupportStarts at $1,800

Square Fees

ServicesFee(s):
Square Point of Sale (Mobile Card Reader)2.6% + $0.10
Square Point of Sale (for Retail)2.6% + $0.10
Square Point of Sale (Restaurants)2.6% + $0.10
Square Terminal2.6% + $0.10
Square Appointments (Individual)2.6% + $0.10
Square Appointments (Teams)2.6% + $0.10
Keyed-In Transactions3.5% + $0.15
Card-On-File Transactions3.5% + $0.15
eCommerce Transactions2.9% + $0.30
Invoices2.9% + $0.30
Square Online Checkout 2.9% + $0.30

Is Square or Stripe Cheaper?

Square is typically cheaper for in-person transactions with lower per-transaction fees and its free, comprehensive POS system.

But if the bulk of your business is done online, Stripe’s 2.9% plus 30 cents per transaction might be worth it for the extra functionality and security.

What Businesses Should Use Stripe?

Typically speaking, Stripe is better for ecommerce and online businesses with a developer on hand.

They also serve organizations that require international compatibility and currency conversions.

What Businesses Should Use Square?

Square’s full-service POS and employee management ecosystem is best suited for small businesses and individual contractors who do the bulk of their business in person.

This payment processor also works well for businesses that need some ecommerce or online functionality.

Square and Stripe Alternatives

#1. Payment Depot

Payment Depot provides no-contract, membership-based pricing for high-volume businesses that require small transaction fees.

The company also offers easy integrations and an unlimited subscription for $199 per month plus five cents per transaction.

However, if you don’t opt for the unlimited plan, your business will be subject to monthly processing limits.

#2. PayPal for Businesses

PayPal has the benefit of name recognition, but its fee schedule is often harder to navigate than either Stripe or Square.

That said, it’s popular with online shoppers, offers plenty of functionality, and comes at a comparable cost for domestic-only card transactions.

But if you want to natively integrate PayPal into your website, you’ll be on the hook for an additional $30 per month.

#3. Clover POS

Clover POS is an affordable alternative to both Square and Stripe, though it’s primarily suited for in-person transactions.

You can jumpstart your business with $600 upfront for a register plus $14 per month for the software to run it. But the system isn’t perfect – on the whole, it provides less functionality and customizability.

#4. Stax

Stax is another subscription-based payment processor that offers higher monthly costs in exchange for lower transaction costs.

This software works best for higher-volume customers with simplified processing needs who want to cobble together their ideal solution at checkout.

But if you’re looking for the ultimate package, you may be better off sticking with Stripe’s volume discounts.

#5. Authorize.net

Authorize.net is an online-only card processor whose major benefit is its fraud detection suite and support team.

If you’re in a high-risk industry or otherwise concerned about your security, this payment processor may work for you.

That said, Authorize.net charges more overhead costs for less functionality than either Stripe or Square – though it does accept PayPal payments.

Are Stripe and Square Safe to Use?

Stripe and Square are both fully PCI compliant with end-to-end encryption, fraud detection tools, and two-factor authentication options. On the whole, this makes them just as safe as any other major third-party payment processor.

Is Stripe or Square Better?

As a rule, Stripe is better for online and ecommerce businesses, as well as those that deal with international purchases. On the other hand, Square’s free POS and hardware solutions make it the better choice for small businesses that primarily transact in person.

Bottom Line: Stripe vs. Square

Stripe and Square are both third-party payment processors that offer a specialized suite of tools to small businesses.

Additionally, they both provide full-service APIs, tailored and scalable features and add-ons, and a suite of hardware and online solutions.

That said, neither is well-suited for high-risk industries, as both have overzealous fraud protection safeguards that lead to locked funds and account closures.

Moreover, Stripe tends to market itself toward businesses with a little tech savvy, while Square is the ultimate one-stop-shop processor for mobile and in-person payments.

At the end of the day, the product that works best for you is the one that can be better customized to your unique needs.

Jordan Blansit
Jordan Blansit
Jordan is a freelance writer with an inexplicable predilection for investing and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her (or not) craftily avoiding human contact in the California redwoods or Oregon Siskiyous with her black cat, Bean.