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Comparing Transaction Fees With Paypal, Stripe, Square, Venmo Business, Etc

Comparing Transaction Fees With Paypal, Stripe, Square, Venmo Business, Etc

Transaction fees are charges a business has to pay every time they process an electronic payment through a third-party processing company. When starting a business, you should quickly decide which online payment processing company to use when accepting payments. But how do you choose? There are a few terms you should look for when deciding on your preferred company: online transaction fees, in-store transaction fees, fixed fees, and percentage fees. 

When using third party payment processors, there will be a percentage fee and a fixed fee for every payment you receive. This means the platform will deduct a certain percentage of the total sale AND a fixed fee. For example, if you process a payment of $100 with a percentage fee of 5% and a fixed fee of $1, your business will only receive $94 in income from that entire transaction. 

Businesses should choose their preferred payment processor based on whether their sales are online, in-person, or both. Remember, the goal is always to keep transaction costs low...but to use a legitimate payment processor that will help protect your business from chargebacks and other issues related to customer payments! 

The Most Used Payment Processors

The top four electronic payment platforms are PayPal, Stripe, Square, and Venmo Business. All of these companies are great choices when it comes to receiving electronic payments but there are some differences when it comes to fees. Each company breaks their pricing down by in-store purchases and online purchases with each transaction having slightly different percentages and fixed fees. When choosing a preferred company, a business should base it on whether they usually receive purchases online or in-person. 


First, there is Paypal, which is the most used platform by online businesses. Online purchases will be charged 2.9% of every purchase plus a fixed fee of $0.30 cents. In-store purchases will be 2.7% of every purchase plus a fixed fee of $0.30. Some benefits of PayPal is their simple and fast account setup, integrations to basically EVERY online store and website, and that funds are immediately accessible for you to transfer to your business bank account. For more information, here is the official PayPal Pricing Website.


Second, there is Stripe. A significant difference between Stripe and other third-party payment processors  is they offer two options for transaction fees depending on the business’s size and purchase costs. The first choice is the “Integrated Plan” with an online purchase price of 2.9% plus a $0.30 fixed fee, and in-store purchases of 2.7% with $0.05 fixed fee. The second choice is the “Customized Plan” where fees will be decided by the Stripe sales team. This is great for larger businesses if the typical percentage fee would cause a significant loss of profit. For more information, here is the official Stripe Pricing Website


Third, there is Square. Unlike the other platforms, Square bases their fees on contactless payment through swiped or inserted cards, and keyed-in or manual payments. For contactless payments, the transaction fees are 2.6% plus a $0.10 fixed fee. Manual or keyed-in payments are 3.5% plus a fixed fee of $0.15. Square is a great option for businesses with mainly in-person transactions however it has the highest transaction fee for online or manual payments. For more information, here is the official Square Pricing Website.

Venmo Business

Fourth and finally, there is Venmo Business. This is the newest of the four options but offers the same transaction fees for online and in-person purchases. The transaction fees for both purchase types is 1.9% plus a $0.10 fixed fee. The largest downside to Venmo Business is the company is very new and does not have as much experience or background as the other platforms, so utilizing Venmo Business for chargeback and legal issues related to customer payments could be an issue. For more information, here is the official Venmo Business Pricing Website


Here is the bite-sized breakdown: For overall costs, Venmo Business has the lowest transaction fees. For larger businesses or purchases, Stripe might be the better choice as it offers customized plans. For the company with the most experience, PayPal has been a top platform for the longest period of time. For mainly in-person purchases, Square might be the best. All four platforms have their own benefits and cons, but the final choice is ultimately up to you and should be based on what your business wants and needs. 

THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.

See our full disclaimer here.

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Ruby Sandoval - July 2, 2021

Such a great comparison! It’s nice to have somewhere to compare the different transactions fees without having like 5 tabs open.

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