Which Payment Processing Solution Should You Choose?

Updated February 20, 2021

Whatever kind of retail operation you’re running, whether it’s a new online store or a local brick-and-mortar, you need a way to process payments. That’s how you make money, after all!

Choosing the right payment processing solution for your business takes careful consideration. You want the one you choose to be easy for you to use. At the same time, you want it to be just as easy for your customers, and accept whatever type of payment they’d like to use. Most importantly, you want it to do all this — while charging you the lowest transaction fees possible.

Ready to choose your payment processor? Read on. We tell you everything you need to consider, and share our review of today’s best payment processing software.

What is a payment processor?

When you accept cash, it’s as easy as opening up your till, taking your customer’s payment, and giving them their change. But cash is on its way out. 50% of Americans don’t even carry cash with them half the time they go out, and 30% of Americans have gone completely cashless. Moreover, many of them are turning to eCommerce instead. 

When people buy something from your store, you need a way to accept their payment, whether they’re paying with a credit card, cash, Apple Pay, or PayPal. A payment processor helps you do just that.

Payment processing software acts like a middleman between your store, your customer, and their bank or credit card. It verifies that they can indeed pay for their purchase, sends that confirmation through to your POS or eCommerce website, and enables them to complete their transaction. Generally, this process takes three steps:

  1. First, the payment processor checks that your customer has enough funds in their account to make their purchase. 
  2. Once that’s been authorized, the bank places a hold on those funds. 
  3. Finally, the funds are moved from your customer’s account to your merchant account. 

What should you look for in a payment processing solution?

Here’s what you need to keep in mind when selecting a payment processing platform.

Ease of use

You don’t want to be pulling your hair out anytime you try to process a transaction on your website or in your store. every time you try to process a translation at the register. A good payment processing solution should be super simple to set up, with a customer support team you can contact easily anytime.

Availability and supported currencies

If you’ll be accepting payments from other countries, you’ll want to ensure your payment processor supports global currencies. If you operate in multiple regions, or plan to, you want your payment processor to be available everywhere you sell.

Accepted payment types

Ideally, your payment processing solution can process any type of payment your customers wish to use. For most customers, that may be the “big four” credit cards (Visa, Mastercard, Discover, American Express). 

However, more than half of Americans now use contactless payment, which includes options like Apple Pay, PayPal, and G Pay. Whatever payment processor you choose, make sure it accepts the common payment types your customers use.

Fees

This one is a biggie. Like you, payment processors gotta make money. So, they’ll charge a fee for every transaction, typically between 2% to 3%. Additionally, there may also be a flat monthly fee to use their service. Finally, many also have separate fees for chargebacks, refunds, and other incidentals. 

Before making your final decision, run the numbers to ensure it makes financial sense.

Security

Security is of paramount importance when you're dealing with people’s money. Whatever payment processing solution you choose should be PCI-compliant, and have other fraud prevention and encryption security practices in place. Some, like Stripe, may offer additional security features for businesses who deal with sensitive transactions. 

Point of Sale (POS) integrations 

If you manage a retail location, you’ll need more than just software. You’ll need hardware, too — namely, a credit card terminal, point of sale (POS) system, and mobile or tablet readers if you want to accept mobile wallet payments. 

Many payment processors will offer options for you to process their payments in person. For others, you’ll need to purchase equipment separately (and ensure it’s compatible).

Extra features

Finally, consider if anything else is particularly important to you. Do you want a brandable checkout experience, or are you okay with how the payment processor’s built-in one looks? If you operate an eCommerce site, are you comfortable installing the required plugins or software to integrate with your payment processing solution? 

Best payment processing solutions of 2020

Below we review today’s best payment processing solutions. For each, we review their fees, availability, accepted payment types, and POS features. 

best payment processing software

1. Stripe

Best for: eCommerce businesses who want to build their own customized payment experience

best payment processing software

Launched in 2011, Stripe started out as an eCommerce payment startup. Today, it processes payments for millions of companies around the globe, including Instacart, Lyft, Shopify, Under Armour, Glossier, and even Amazon. Stripe is so universal, the company claims 90% of American adults have purchased something using the Stripe payment platform.

Fees

It’s completely free to set up an account with Stripe, create invoices, and transfer money into your bank account using the standard delivery time. For everything else, you’ll have to pay. Here’s a quick rundown of Stripe’s fees:

  • Transaction fees: 2.9% + $0.30 per transaction (2.2% if you’re a nonprofit)
  • International transaction fee: 1% for international cards and 1% for currency conversion
  • Recurring billing fees: 0.5%
  • ACH direct debit, credit, or wire transfers: 0.8% with a maximum fee of $5
  • Instant payouts: 1%
  • Chargeback fees: $15 for U.S. transactions
  • POS fees: 2.7% + $0.05 per transaction, plus applicable international transaction fees

Save with these Stripe promo codes.

Availability and supported currencies

Stripe is available in 39 countries and supports 135 currencies. 

best payment processing software

Stripe’s current global footprint supports a significant amount of online transactions, but in case your business operates outside of their current country list, you might be interested in their Atlas service, designed for aspiring entrepreneurs. Atlas lets you incorporate a U.S. business online. Stripe takes care of all the legal paperwork for you, and gets you up and running in just a few days — all for just a one-time fee of $500.

best payment processing software

Accepted payment types

Stripe accepts payment from all the standard options, including:

  • Visa
  • Mastercard
  • American Express
  • Discover
  • JCB
  • Diner’s Club
  • Google Pay
  • Apple Pay
  • China UnionPay
  • Maestro

If you want to support even more payments, you can set up your Stripe API to accept Sofort, Giropay, and WeChat Pay. 

Ease of use

Here’s where things get a bit less rosy for Stripe. It’s not the easiest payment processor in the world to set up. However, they’ve got a customer service team available 24/7 by phone if you ever find yourself stuck. 

The basic Stripe setup is pretty straightforward, although it can get tricky once you get into more customizations — which is one of the major selling points of Stripe for brands. You can use their API to accept more payment options, customize your checkout experience, and integrate with your other software. 

From a customer perspective, Stripe offers an extremely clean interface that’s easy to use. Form fields are simple to fill out, with big buttons that drive them towards checkout:

best payment processing software

POS features

While Stripe has the technological pieces for you to create your POS checkout, it doesn’t come put together out-of-the box. You’ll have to piece it together yourself using Stripe Terminal

If you have a tech team on hand, this shouldn’t be a problem. In fact, you might be thrilled, since Stripe Terminal allows you to custom-build nearly every element of the POS experience, including:

  • Reconcile retail sales with online sales for easy reporting come tax time
  • Accept in-store payments
  • Offer buy online, pick-up-in store
  • Track customers across their online and offline purchases
  • Create branded email receipts and splash screens
  • Manage card readers across brick-and-mortar locations

Speaking of card readers, Stripe’s got them. They process chip and magstripe cards, as well as contactless payments like Google Pay or Apple Pay. Stripe offers two readers that work with the Stripe iOS and Android mobile apps, as well as one reader for those using the desktop version of Stripe Terminal. 

best payment processing software

Stripe’s POS fees are 2.7% + $0.05 for every successful swipe (which is slightly lower than their online transaction fee). The pre-certified card readers cost $59 for the mobile version and $299 for the desktop.  

2. PayPal

Best for: eCommerce businesses who want a straightforward payment processing solution, especially those that sell lower-priced items at a high volume

best payment processing software

PayPal is perhaps the most well-known payment processing solution on our list. Founded in 1998 as Confinity, it’s become famous as the place where businesses and people can send money online, whether by using a credit card, bank account, or PayPal balance. 

PayPal has steadily picked up more users year and year, with the latest count reaching 325 million active users. That number includes the 22 million businesses who use PayPal as their payment processing platform, including eBay, Walgreens, and Adidas.

best payment processing software

Fees

It is free to sign up and create a business account on PayPal. You can also create invoices and transfer money to your bank for free (using standard delivery time). Other than that, here’s what you can expect to pay:

  • Standard transaction fee: 2.9% + $0.30 per transaction (2.2% if you’re a nonprofit)
  • International transaction fee: 4% for international cards and a variable rate for currency conversion 
  • Micropayment fees for transactions under $10: 5% per U.S. transaction or 6.5% per international transaction, plus a fixed fee depending on the currency
  • Instant payouts: 1% with a maximum of $10
  • Chargeback fees: $20 for U.S. transactions
  • POS fees: 2.7% per U.S. transaction, 4.2% per international transaction, 3.5% + $0.15 for manual transactions

PayPal’s micropayment fees make it a very attractive payment processing option to businesses that primarily sell a lot of low-priced items (specifically, items that are $10 or less). While 5% sounds high, it’s actually much lower than paying 2.9% plus 30 cents on every transaction. 

Save with these PayPal promo codes.

Availability and supported currencies

Given its tenure, it’s no surprise PayPal is available almost anywhere. As of this writing, PayPal is available in over 200 countries. Despite its wide availability, however, PayPal only supports 25 global currencies. 

Accepted payment types 

PayPal accepts the following payment types:

  • Visa
  • MasterCard
  • Discover
  • American Express
  • JCB
  • Diner’s Club
  • UnionPay
  • Google Pay
  • PayPal Cash or Cash Plus balance
  • Debit cards
  • Connected bank account

What’s unique about PayPal is that it allows customers to pay using their connected bank account or PayPal Cash balance. This enables a significant number of customers to shop with you, even if they don’t have a credit card or cash on hand. 

However, PayPal does not currently support Apple Pay, and American Express transactions carry a higher 3.5% fee than the standard 2.9%.

Ease of use

PayPal is extremely easy to set up. If you host your eCommerce website on WooCommerce, it’s as easy as installing the PayPal Checkout plugin. This PayPal plugin supports all of PayPal’s standard payment types, including Venmo. 

best payment processing software

Other website platforms also offer support for PayPal. In fact, Shopify offers PayPal as one of their default payment options. All you have to do is set up your PayPal account.

No matter what type of website you have, you can quickly add PayPal with one of their PayPal buttons. These can be customized with different functions (recurring purchases, donations, and traditional checkout). Just copy the code and paste it into your website.

best payment processing software

You can also enable PayPal One Touch, which lets your customers check out with — you guessed it —  “one touch.” (After customers sign in to the service and opt in, they don’t have to re-enter their password or credit card for 6 months). 

As you’ve probably caught on, PayPal is extremely user-friendly. But, if you need help, you can always reach out to their customer support team (available 6am to 6pm Pacific every day), or their massive community-run forum:

best payment processing software

POS features

PayPal offers a variety of ways to process in-store payments. One unique option is their touch-free payments, which are powered by QR codes. Print out your QR codes for display in-store, and customers can quickly scan and pay.

If you’d prefer physical hardware, you’ve got options. PayPal offers a traditional chip and swipe reader for $24.99, and a chip and tap reader to support contactless payments for $59.99. 

best payment processing software

Purchase their Chip and Tap Bundle for $79.99, and you can turn your smartphone into a POS — able to process nearly any form of payment type (credit, debit, and contactless), as well as manually accept cash and checks.

3. Authorize.net

Best for: Small businesses who want a traditional payment gateway

best payment processing software

Established in 1996, Authorize.net is one of the most tenured payment processors on our list. Over 430,000 merchants use Authorize.net as their payment processing solution, including California Party Bus, Bluedoor Veterinary, and Amy’s Gourmet Apples.

Fees

Like Stripe and PayPal, it’s free to create an account and send invoices with Authorize.net. However, there is a $25 monthly gateway fee to use Authorize.net. 

Businesses can choose between two plans when they sign up with Authorize.net:

  1. The All-In-One plan includes both the creation of a merchant account to hold your funds, a payment gateway, and access to the Authorize.net platform. 
  2. The Payment Gateway Only plan purely provides access to a payment gateway and a platform. You must already have a merchant account set up to use this plan. 

Transaction fees vary depending on the plan. The All-In-One plan charges 2.9% + $0.30 per transaction, while the Payment Gateway Only charges $0.10 per transaction, plus a daily batch fee of $0.10.

That’s it. There are no other fees!

Note: At the time of writing, Authorize.net is waiving the monthly gateway fee due to the COVID-19 crisis.

Save with these Authorize.net promo codes.

Availability and supported currencies

Authorize.net is not available everywhere. Your business must be based in the U.S., Canada, UK, Europe, or Australia to use it. 

Thankfully, their list of supported currencies isn’t as limited. As long as your business is based in one of these countries, you can accept payments from anywhere.

Accepted payment types 

Authorize.Net accepts the following payment types:

  • Visa
  • MasterCard
  • Discover
  • American Express
  • JCB
  • PayPal
  • Visa Checkout
  • Apple Pay
  • Chase Pay
  • E-check

The great thing about Authorize.net is that it’s not competitive with PayPal, so you can easily add PayPal Express Checkout as an option (unlike Stripe). However, you will still have to pay for standard PayPal fees. 

Authorize.net also stands out for its e-check support.

Ease of use

What’s incredible about Authorize.net is that you can use it even if you don’t have a website. Authorize.net is built to handle payments for eCommerce sites, traditional point of sale, as well as those who conduct business on-the-go or even over the phone. 

best payment processing software

Authorize.net isn’t necessarily difficult to set up, but the registration process can take longer — particularly if you don't already have a merchant account set up. The Authorize.net customer support team is available by phone 24/7, with the exception of major holidays.

POS features

Businesses have their pick of options for processing payments “offline” with Authorize.net. You can connect their secure card reader through the headphone jack on any iOS or Android phone or tablet. Card readers range from $65 to $85 each. The Authorize.net mPOS app is free. 

best payment processing software

Authorize.net also sells card readers to work with your PCs.

4. Square

Best for: Brick-and-mortar retailers that want a comprehensive solution for all their retail and eCommerce needs, including payment processing, marketing, and website hosting

best payment processing software

Square was co-founded in 2009 by Jack Dorsey of Twitter fame before going public in 2015. It was one of the first companies to allow businesses of any size to process payments using nothing but a mobile phone. Since its 2018 acquisition of Weebly, Square has become a full-service solution provider to small businesses, offering payment processing, website building platform, point of sale, and more. 

Fees

Square’s target customer is a small business owner who sells $250,000 or less a year, with an average sale total of under $15. Their standard pricing is designed for businesses who fit that description, although custom pricing is available as well. 

Here’s what’s free with Square:

  • Their Point of Sale app
  • Your first Square reader (This is a basic magstripe reader that fits into your iOS or Android device via the headset jack)
  • Next-business-day transfers

From there, Square’s pricing depends on the plan you choose: 

Square Point of Sale has no monthly fee. You’ll pay 2.6% + $0.10 per transaction (tapped mobile payment, chip card, or magstripe). 

Square for Restaurants is a separate POS software built for restaurants. You can choose between a free plan or their Plus plan, which costs $60 per month per location, and $40 per month per device. The Plus plan includes more advanced features, like close-of-day reports, shift reports, seat and course management, and auto 86ing. With either plan, you’ll pay 2.6% + $0.10 per transaction.

Square Appointments is an all-in-one scheduling, booking, and payment software for service businesses like hair salons, fitness studios, mental health practitioners, and more. You can choose between three plans:

  • Individual plan: Free, plus 2.6% + $0.10 per transaction
  • 2 to 5 employees: $50 per month, plus 2.5% + $0.10 per transaction
  • 6 to 10 employees: $90 per month, plus 2.5% + $0.10 per transaction

Regardless of plan, every Card on File or manual transaction has a fee of 3.5% + $0.15.

Square for Retail is a POS designed for Retail. You can choose between two plans:

  • Free plan: 2.6% + $0.10 per in-person transaction, 2.9% + $0.30 for online
  • Plus plan: 2.5% + $0.10 per in-person transaction, 2.9% + $0.30 for online, plus $60 per month per location

Regardless of plan, every Card on File or manual transaction has a fee of 3.5% + $0.15.

As you can see, there are different fees for online transactions, in-person transactions, and anything that needs to be manually keyed in or processed using a customer’s card on file. Square stays competitive by offering free dispute management and chargebacks — for which Stripe and PayPal charge $15 to $20, respectively. 

Square is unique in that it offers many other small business solutions besides payment processing. Fees for these include:

  • Employee Payroll: $29 per month + $5 per employee per month
  • Contractor Payroll: $5 per contractor per month
  • Customer Loyalty: Starts at $45 per month
  • Email Marketing: Starts at $15 per month
  • Gift Cards: Starts at $0.80 each (or free, in the case of eGift cards)

Save with these Square promo codes.

Availability and supported currencies

Here’s the big gotcha with Square. At the time of writing, it’s only available in the U.S., UK, Canada, Japan, and Australia. 

Also, you can only charge customers using the currency of the country where you’re based. Square currently does not support multiple currencies.

Accepted payment types

Square was a trailblazer when they made mobile payments a thing. Accordingly, their software is built to accept a dazzling range of payment types, including in-person at your POS (whether that’s a phone, tablet, terminal, or register), on your website, over the phone, or even via a mobile app using their API.

Square accepts any U.S. or international card with the following logos:

  • Visa
  • MasterCard
  • American Exp[ress
  • Discover
  • JCB
  • Union Pay

All card types are accepted at the same rate, including credit, debit, corporate, prepaid and rewards cards. With Square, you can also accept cash, checks, or gift cards and certificates.

best payment processing software

Ease of use

Square’s mobile-friendly interface makes it easy for customers to buy — and for you to process their payments — on any device. Plus, it’s very easy to get set up and running within minutes. 

Square’s customer service team is available by email 24/7, with phone support from 6am to 6pm Pacific. They also have an engaged Seller Community where you can get help from peers.

best payment processing software

POS features

Square’s POS apps are all free. Each plan includes one free Square Reader for magstripe. If you need to purchase additional readers, here’s what you’ll need to pay:

  • Square Reader for magstripe cards: $10
  • Square Reader for chip card and mobile payments: $49
  • Square Stand for chip card and mobile payments (a countertop device designed to be used with your iPad as a POS): $169 or $16 per month for a year
  • Square Terminal to print out receipts: $299 or $27 per month for a year
  • Square Register (includes a tablet and customer display): $799 or $39 per month for 2 years

best payment processing software

5. 2Checkout

Best for: Global eCommerce businesses with customers in multiple countries

best payment processing software

2Checkout aims to be more than a simple payment processor. It’s a digital commerce platform that handles payments, as well as everything else related to your bottom line, from recurring revenue and subscription billing to global tax services. 

2Checkout was launched in 2006. Today, it’s used by over 17,000 companies in 180 countries, including HP, Canon, and White Shark Media.  

Fees

2Checkout offers three pricing plans:

  • 2Sell is their starter plan, designed for businesses who need to sell online instantly to customers located in 200 countries. With this plan, it costs 3.5% + $0.35 per transaction.
  • 2Subscribe includes everything from 2Sell, along with additional features designed to maximize revenue from subscription billing, such as renewals, upgrades, analytics, and more. The fee is 4.5% + $0.45 per transaction.
  • 2Monetize includes everything from the other two plans, plus the ability to sell digital goods online, ensure global tax compliance, improve conversion rates, and manage invoices. It costs 6.0% + $0.60 per transaction. 

You can sign up for any plan for free. 2Checkout's fees seem pricey at first, until you consider that they’re the same worldwide. The fees are standardized no matter where you sell. This standardized pricing is ideal for sellers with global customer bases located, who don’t want to have international transaction fees eating into their profits. It’s truly global payment processing. 

Save with these 2Checkout promo codes.

Availability and supported currencies

2Checkout was designed first and foremost as a global payment processing solution. As such, it’s available in over 200 countries, and supports 100 currencies and 30 languages.

Their website provides a detailed overview of what’s supported in each region. For example, here’s a quick look at what’s available for businesses in North and Central America:

best payment processing software

Accepted payment types 

2Checkout accepts 45 payment types in 200 countries. You can view the full list of accepted payments and currencies here, but generally, most credit cards are accepted, including:

  • American Express
  • Discover
  • Visa
  • MasterCard
  • JCB
  • PayPal
  • Apple Pay
  • ACH and bank transfers

Ease of use

2Checkout is simple to set up. Once you create your account, you’ll be taken through a series of steps to complete your merchant information, add your products, and place test orders:

best payment processing software

Like Authorize.net, you can choose to use 2Checkout only for its payment processing platform, or you can use them as your merchant of record. With the latter option, they manage payment processing as well as sales tax management, local compliance, and invoicing. 

As a global payment processing provider, 2Checkout offers integrations with 120 eCommerce solutions, including BigCommerce, CS-Cart, Magento, PrestaShop, WooCommerce, and Shopify.

2Checkout also has a 24/7 support team, ready for either your or your customers to contact whenever you need them. 

POS features

2Checkout is an eCommerce-focused payment processing solution. It does not offer support for POS at this time.

Now over to you. Which payment processing solution will you choose?