Payment service providers are trying to simplify business credit card fees. You don’t have to purchase expensive merchant processing hardware to use a PSP, and you don’t have to sign a long-term contract or worry about hidden fees. You’ll pay the same flat-rate fee on every transaction of the same type.
PSPs charge a different fee for card-present payments, card-not-present payments, and online payments. For example, you’ll pay a lower fee when you accept a credit card at your retail shop. You’ll pay a higher fee if a customer wants to shop online on your website, or if you’re using information from a card that’s stored on file. Additionally, payment service providers generally provide greater business protection from chargebacks in comparison to merchant processors.
Square Credit Card Processing Fees
Square has quickly become one of the most popular credit card processing companies. The company facilitates $50 billion in transactions every year. In large part, Square is so popular because they offer one standard rate—2.6% + $0.10—to any business that signs up, no matter how big or small the company and no matter what their payment volume is. Although business owners appreciate this simplicity, Square is costlier for most businesses than a traditional merchant account provider.
The only difference is that fees are slightly lower for brick-and-mortar merchants who use one of Square’s point of service solutions, such as Square Register or Square Terminal. Like most credit card processors, Square charges a higher rate to process manually entered card payments (e.g. with phone payments) and invoice payments. The invoice fee comes into play when you send your customer an invoice via Square that they pay online.
Note: The function to pre-authorize transactions is not supported with Square
|Type of Transaction||Square Fee|
|Swiped, Inserted, or Tapped Card||2.6% + $0.10|
|Manually Entered Card||3.5% + $0.15|
|Invoices and Online Payments||2.9% + $0.30|
Stripe Credit Card Processing Fees
Stripe takes a different approach from Square and PayPal, charging 2.9% plus $0.30 on every type of transaction. However, Stripe is primarily designed for online businesses, so if you’re a brick-and-mortar shop, you will save money by opting for a different processor.
Shopify Credit Card Processing Fees
Shopify rounds out the most popular payment service providers. On top of credit card transaction fees, Shopify charges a monthly fee. The monthly fee ranges from $29 to $299 depending on which Shopify plan you sign up for. Given the monthly fee, Shopify ends up as a good deal really only if you’re doing enough volume to justify the monthly price. Businesses that accept a high volume of payments will pay a higher monthly fee but lower per-transaction fees. If you already have a credit card processor, then you can use Shopify just as your ecommerce solution, but they’ll charge an extra 0.5% to 2% per transaction.
|Type of Fee||Basic Shopify||Shopify||Advanced Shopify|
|Online Payments||2.9% + $0.30||2.6% + $0.30||2.4% + $0.30|