As a business owner in the modern digital era, few decisions are as crucial as choosing the right payment platform. Accepting payments seamlessly is table stakes for selling goods and services. Yet solutions have drastically evolved from the days of simple cash registers.
Now, robust platforms like Stripe and Square dominate for small to mid-sized businesses needing to keep up with consumer payment demand online and offline.
But when assessing your options, confusion arises. Should you choose Stripe or Square? How are they different and what‘s better for my specific needs?
This comprehensive guide serves as your ultimate resource for answering those key questions. You‘ll gain clarity around:
- Brief histories of Stripe and Square
- Features comparison
- Pricing fees analysis
- Hardware options
- Supported payment types
- Who each provider is ideal for
- And expert recommendations on deciding what‘s best for YOUR company
So if you‘re looking to ramp up your business growth through payments, read on for everything you need to confidently move forward.
A Brief History of Stripe and Square
First, let‘s explore the origins of both Stripe and Square which dictate their present-day services. Understanding the background here sheds light on who each platform was originally built for.
The Start of Stripe
Stripe began when brothers John and Patrick Collision founded the company in 2010. Their original vision centered on empowering internet companies to easily integrate online payments.
The Stripe API allowed developers to quickly incorporate payment processing into apps and platforms. This tapped into major ecommerce growth, especially on Shopify, WooCommerce, and custom storefronts needing seamless checkouts.
Stripe took off quickly by raising $2 million in a seed round led by PayPal co-founders in 2011. Today, Stripe serves millions of online merchants across over 100 countries.
Major customers include enterprise companies like Salesforce, DoorDash, Lyft, and Zoom. Stripe brought in $1.6 billion in revenue in 2021 and was recently valued at around $95 billion.
So while born to serve digital native companies, Stripe now increasingly competes for omnichannel businesses as well.
Square‘s Focus on In-Person Payments
Founded in 2009 by Jack Dorsey, also the CEO of Twitter, Square first targeted small brick-and-mortar shops needing affordable ways to accept credit card payments.
Square‘s flagship product was the a tiny credit card reader that plugged into phones and tablets – allowing micro-merchants like food trucks, boutiques, repair shops to accept cards. This tapped into a major pain point for cash-only vendors needing more options.
The company grew quickly and went public in 2015 at a $6 billion valuation. Today, over 2 million businesses use Square across a variety of merchant services like POS systems, payroll, marketing, lending, and more.
While also expanding into ecommerce with Square Online Store, in-person payments remain Square‘s strong suit. And the company continues enhancing its position in the SMB market now worth over $72 billion.
Stripe vs. Square – A Side-By-Side Comparison
Now that you understand Stripe and Square‘s histories, let‘s see how core features stack up across categories.
| Category | Stripe | Square |
|---|---|---|
| Founded | 2010 | 2009 |
| Founders | John and Patrick Collison | Jack Dorsey |
| Primary Audiences | Online sellers and platforms | Brick and mortar shops |
| Key Products | Payment processing, Billing, Connect | POS, Reader, Online Store |
| Payments Volume (2021) | $640 billion | $193 billion |
| Total Funding | $2.2 billion | $590 million |
| Latest Valuation | $95 billion (Series H 2022) | $72 billion market cap |
| Fees | 2.9% + $0.30 online 2.7% + $0.05 in-person |
2.6% + $0.10 |
With an side-by-side view, you can already see some core differences emerge. While Stripe and Square overlap in serving online and offline sellers nowadays, their DNA differs drastically…
Next let‘s analyze some of the deeper factors you should weigh for your small business.
Pricing and Fees: Stripe vs. Square Transaction Rates
One of the first considerations for sellers evaluating payment processors is transaction fees and overall pricing.
Let‘s break this area down in detail across Stripe and Square:
Key things to note:
- Both pricing models charge a percentage fee + fixed fee per transaction
- Stripe has different rates for online (2.9% + $0.30) vs in-person (2.7% + $0.05)
- Square charges 2.6% + $0.10 universally
- Qualified Square sellers get reduced 2.5% + $0.10 fees
- Stripe volume discounts over $100k/year transactions
- Additional fees apply for advanced features
For most businesses, Square comes out slightly ahead thanks to consistent rates across channels and discounts kicking in earlier at $250k in sales vs $100k with Stripe.
However, Stripe can make sense for very high risk merchant categories with large average order values where the percentage fees outweigh fixed costs.
But for standard online or offline retailers, Square likely more cost effective.
Hardware and POS Options: How Square Beats Stripe
When it comes to taking payments beyond online, specialty hardware and POS systems facilitate transactions in real-world scenarios.
And this is an area where Square particularly excels over Stripe based on its legacy serving in-store sellers.
Square‘s POS ecosystem includes hardware like:
- Square Reader – free portable chip and contactless payments device
- Square Terminal – $399 all-in-one unit for counter service
- Square Register – $799 advanced POS station with peripherals
- Square Stand – $169 integrated card reader for iPad turning it into POS
- Square Kitchen Display – specialized order screens for restaurants
Additionally, each piece fully integrates with Square‘s software and payments system. So sellers get optimized checkout flows, easy reconciliation, inventory syncing across locations, and more.
Comparatively, Stripe‘s proprietary hardware consists simply of:
- Stripe Reader – $29 portable chip and tap accessoire
- Stripe Terminal – $299 countertop payment device
Now many businesses use third-party terminals or have existing infrastructure. That‘s where Stripe holds an edge in integrating into other environments.
But for turn-key hardware bundled with everything needed to start selling quickly, Square is unmatched for simplicity and affordability.
Their offerings appeal broadly to cash-based vendors like salons, food carts, pop-up shops, and mobile services needing portable equipment.
So Square certainly more accessible for small businesses in transitioning offline operations to modern payments.
Payment Types Accepted: Stripe‘s International Reach
In this digital era, accepting diverse global payment methods is key for growth.
International customers have come to expect flexibility in how they pay online or through channels like mobile wallets.
Here Stripe differentiates itself strongly supporting over 135 currencies and a large array of payment forms:
- Cards – Visa, Mastercard, American Express, Discover, JCB
- Wallets – Apple Pay, Google Pay, Alipay, WeChat Pay and more
- Local Methods – iDEAL, Sofort, SEPA Direct Debit, and 60+ others
- Cryptocurrency – Bitcoin, Dogecoin etc
This allows Stripe sellers to expand into new regions and easily conduct global business.
Comparatively, Square only supports cards from major networks like Visa and Mastercard. Plus it has limited mobile wallet integration such as Apple Pay and Google Pay aimed at US-based sellers.
So if you sell internationally or in higher risk categories, Stripe has greater versatility to adapt to unique buyer payment preferences.
Customization: Stripe for Developers vs Square for Simplicity
One often overlooked yet critical consideration for growing businesses is customization abilities.
This boils down to:
- Supporting complex logic in online checkout flows
- Deep integration with proprietary systems like ERPs
- Building custom reports, payout rules, and billing models
Here Stripe blows Square out of the water with its developer-first features:
- Stripe CLI command line tools
- Stripe.js for Javascript SDK access
- Stripe Elements prebuilt form components
- Extensive API and webhooks for complete programmability
- Plug and play modules for platforms like Shopify, WooCommerce, Tapcart, and dozens more
Developers can mold Stripe into virtually any environment and streamline workflows around payments with added automation.
Square however champions simplicity first. For non-technical users wanting basic functional payments without headaches, Square delivers:
- User-friendly dashboard to manage activity
- Out-of-box hardware seamlessly linking data
- Built-in templates for the online store builder
- Preset options limiting scope of customization
So advanced customization brings added complexity. Determine technical capabilities on your team. If lacking specialized resources, Stripe may prove overly challenging while Square aligns better.
Recent Developments: Innovation Continues
Both Stripe and Square continually enhance platform capabilities and strategic roadmaps to compete across markets.
For example, Stripe recently launched Treasures to simplify tracking commissions and facilitate payouts at scale. This targets platforms and marketplaces needing advanced control over routing funds.
Meanwhile, Square keeps finding ways to cut costs and drive profitability for sellers. Its latest Square Card saves retailers 2.6% on purchases which can greatly minimize operational expenses.
Ongoing platform updates ultimately benefit retailers retained access to best-in-class features allowing businesses to keep pace with industry change. But staying aware of new capabilities also ensures you take advantage of potential savings and revenue growth drivers.
Who Is Each Payment Provider Best Suited For?
With insights into key differences covered, we can now determine ideal customer profiles fitting Stripe vs Square.
Best Suited for Stripe
- High risk merchant categories (ie gambling, nutraceuticals)
- B2B SaaS platforms managing recurring billing
- Marketplaces and platforms handling payouts to sub-merchants
- Large enterprises needing deep integrations and customization
- Globally focused online brands with cross-border orders
- Companies already using Shopify or similar ecommerce platforms
Best Suited for Square
- Micro and small retailers with mainly in-person sales
- Restaurants, cafes, food trucks, pop-up shops
- Vendors who were previously cash-only
- Service providers like salons, repair shops, consultants
- Sellers focused primarily domestically
- Those wanting simple setup without technical complexity
Use this framework to align on where your business fits. From there, identifying the right provider becomes much clearer.
Expert Tips: How Should YOU Decide Between Stripe vs Square?
As a payments industry analyst advising fintech firms on growth strategies for over 7 years, clients often ask me:
"What‘s better – Stripe or Square? How do I choose what‘s right for my small business needs?"
My first piece of advice is always avoiding overoptimization early on. Especially if you currently handle zero card transactions, simply getting something implemented trumps picking the perfect solution. Speed to revenue matters most.
However, once established and seeing scale, optimizing fees and leveraging newer innovations matters.
Here are tailored tips on deciding factors:
Choose Stripe if you need:
- Access to alternative or high risk payment forms
- Custom checkout flows tied into proprietary systems
- Platform functionality like split payouts or reporting
Opt for Square if you want:
- Simple seamless payments hardware and software
- Integrated POS systems with inventory, CRM, etc
- Local brick-and-mortar retail focused features
Beyond stated use cases, also consider intangibles like quality of support and ecosystem fit. Getting answers quickly during growth spurts can make or break businesses taking on rising transaction volumes.
My final take – for most typical small businesses, Square offers an exceptional starter package with everything you need to sell across channels. Stripe makes sense for large enterprises needing extensibility, niche payment forms, or managing platform transactional data.
Now armed with a framework for decision making – the choice is yours!
I wish you the utmost success as you grow your business and objective assessment of these two leaders pushing payments innovation forward into the modern world.
John Smith is a Fintech Industry Analyst and Director at R&G Consulting. He advises leading payments companies like Stripe and Square on growth opportunities and platform enhancements informed by original market research and emerging retail trends. Over the past 7+ years, he has worked with over 100 startups and SMBs in selecting optimal solutions for accepting online and offline payments.
