Stripe vs Square: Pros and Cons Compared

Key Points

• Stripe and Square are two POS and payment processing services for businesses.
• While Square has online options, it started as a POS provider for physical businesses and retains most of its market there.
• Stripe, on the other hand, caters mostly to online businesses and only recently began offering POS solutions.

Stripe and Square are some of the biggest players in the world of financial services and payment processing. Although both companies play in the same space and offer competitive products, they do have some distinct differences for business owners in various situations. Today, we are going to explore these two organizations, look at the basics of what makes them different, and give our recommendations for a variety of business owners looking to choose. Let’s get started!

Stripe vs Square: Side-by-Side Comparison

	Stripe	Square
What it is:	POS and payment processing for internet businesses	POS and payment processing for businesses
Primary use:	Accept and process payment from credit and debit cards. Primarily used online	Accept and process payment from credit and debit cards. Usually used in person
Date released:	Founded in 2010	Went public in 2015
Popularity level:	3.1 million active websites use Stripe	Over two million merchants. 24 million users of CashApp
Transaction fees (credit and debit card):	2.9% plus $.30 per transaction	2.6% plus $.10 per transaction
Hardware cost:	$59-$299	Free-$799
Valuable features:	Developer customization. A wider range of currencies and payment options	Scheduling and online booking. Simple and easy to manage the interface

Stripe vs Square: Nine Must-Know Facts

• Stripe was founded in 2010.
• Stripe is primarily used for online stores but has recently started developing physical POS hardware.
• Stripe has a massive user base of 3.1 million active websites.
• Stripe is highly customizable with developer tools and high-level applications.
• Stripe has a large array of accepted currencies and payment options making it great for international retailers.
• Square is owned by Block Inc., which also owns CashApp, Spiral, and TIDAL.
• Square is primarily used by business owners and physical retailers. Has an array of cheap POS equipment that uses mobile phones and tablets.
• Square has a large user base, mostly small-medium-sized businesses.
• Square is less customizable and more user-friendly. Utilizes a simple app with basic UI controls.

Stripe vs Square: An Overview

Stripe and Square are both companies that offer payment processing and POS software to businesses, but they both focus on different markets. Stripe is primarily an online-driven payment system that integrates into online websites and digital retail spaces. Square operates primarily in the physical retail space and has a popular line of cheap car readers and POS hardware.

Picking the right one can be tough for a business owner, especially since these two organizations overlap in many areas of business. In recent years, Stripe has even released their own POS hardware and has furthered the rivalry between the two by encroaching on Square’s historical market.

Today, we are going to take a look at these two and see which one is right for you. Let’s go into some of our data points in a bit more detail. Additionally, we will offer our suggestions on the type of person that should choose the service that is best for them.

Stripe vs Square: Primary Use

Both Stripe and Square offer customers the ability to pay with debit, credit, and gift cards in exchange for services and goods. Additionally, each company provides its own POS software (or extension ability) and hardware.

If you own a business and want to accept money that isn’t cash, you will eventually need a way to process those payments. At a foundational level, Stripe and Square offer businesses the ability to accept and process these forms of payment. Every time that you have swiped a card or typed it in online, you have been engaging in some form of the payment processing platform.

POS simply means Point of Sale. This is referring to the time and place where a transaction is happening. POS transactions can happen online or in person through the use of special hardware. Card readers, cash registers, and Square readers are all examples of POS hardware.

Both Stripe and Square can process payments, although they take a small fee each time a payment is processed. Stripe offers the ability to integrate POS software (things like inventory management and discount offers) into their system, although this would likely require a developer. Square offers its own POS software and inventory management features through its free app. 

Stripe vs Square: Transaction Fees

Both companies need to make money and the primary way they do this is through processing fees. Processing fees are fees that are charged when a payment is processed and they can come in a variety of structures.

Stripe offers a basic fee structure of 2.9% plus $.30 per transaction to accept payments online and 2.7% plus $.05 to accept payments in person. These fees are variable, however. Custom packages that take into account the volume of transactions, high-value transactions, or unique business models may be requested from their sales department.

Square offers a fee structure of 2.6% plus $0.10 per transaction and they don’t offer much variability in their rates.

Stripe vs Square: Hardware

When conducting business in person, a card reader or payment processing system must be present in order to take payment by card. Both Stripe and Square offer hardware to assist in physical retail POS, although Square is significantly more established in the space.

Stripe has only recently added its own POS hardware line known as Terminal. There are currently three hardware options from Stripe:

• Stripe Reader M2 ($59)
• BBPOS Chipper™ 2X BT ($59)
• BBPOS WisePOS E ($249)

Each of these options has its own features, with the BBPOS WisePOS E being the most advanced and full-service register. Stripe is newer in the hardware game, however, and their POS hardware isn’t as established or popular as Square. It’s important to note, however, that Stripe does offer hardware integration with many other POS hardware platforms, although it would likely require the help of a developer.

Square is probably the most popular POS hardware provider for small and medium-sized businesses. Their list of hardware starts with a free card reader and scales up to a complete POS register system:

• Square Reader for Magstripe (Free)
• Square Reader for Contactless and Chip ($49)
• Square Stand for Contactless and Chip, requires an iPad($199)
• Square Terminal ($299)
• Square Register ($799)

Each of these options has its own features and benefits. One of the best selling points for Square readers is that it utilizes phones and tablets that a business owner already owns. This allows them to keep the price for their hardware low, plus build software that works natively on the device.

Stripe vs Square: Unique Features and Benefits

There are some other features and benefits that both Stripe and Square have that a potential customer may find useful.

In our opinion, the best selling point for Stripe is its developmental tools. The platform allows for nearly unlimited customization, although some of that will likely require a developer. For large organizations with lots of particular needs and the capital to spend on coders, Stripe offers the ability to integrate nearly any other platform, API, or system. Additionally, Stripe natively has more currencies and payment methods that they accept.

Square has the exact opposite approach that Stripe does. As a platform, it isn’t as customizable as Stripe is, but that benefit is that it’s a cohesive platform that is easy to use for almost anyone. Additionally, Square offers small things natively that Stripe doesn’t, including scheduling and profile selection (perfect for anyone in the service industry), inventory management, and a few others.

Stripe vs Square: Our Recommendation

When looking at the two platforms, there isn’t a clear “better” between them. In fact, they are both pretty great and seem to have their own niche that they operate in. Here is how we would recommend choosing between the two:

We recommend Square if:

… you are a startup, small business owner, or individual who needs a way to accept payment for services, Square is probably your best bet. It’s intuitive, easy to use, and can be used with an iPhone for overnight readiness. Additionally, small business owners can utilize the tools that Square offers if they aren’t already using them (inventory management and the rest).

We recommend Stripe if:

…you are an online retailer or make the decisions for a large business with lots of existing platforms and systems, Stripe is probably best for you. They are more established when it comes to online payment processing and is used to working without any hardware or brick-and-mortar locations. Additionally, large businesses can be sure that Stripe offers integration with their existing systems and can be developed to work seamlessly with their current platforms.

The Pros and Cons

Stripe

Pros!	Cons!
Developer friendly and able to be integrated with existing platforms	Isn’t as user friendly when it comes to integration
Designed for use online	Has slightly higher transaction fees in some situations
Established and secure	Doesn’t have an established POS hardware line comparable to Square
Offers discounts and custom options for special situations

Square

Pros!	Cons!
Easy to use interface that can be up and running in minutes	Can’t be customized and integrated to the level that Stripe can
Easy to use interface that can be up and running in minutes	Isn’t great for online retailers
Offers great tools for smaller businesses and organizations

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