Which Payment Service Is Right For You?

So you’ve come up with a killer product that your audience will love. You’ve started a blog to tell the world about it. Now what? In most cases, if you sell a product or make money online, you’ll utilize a payment service like PayPal. A payment service is the final obstacle between you and your money. However, there are tons of services out there, and some are better than others. You’ll want one that doesn’t take a huge slice of the pie with its fees.

We’ve put together a comparison of some of the most popular payment services. While there’s pros and cons to each, it’s up to you to decide which is best.


PayPal touts their rate of 2.9% plus $0.30 per transaction. So if you sell $50 worth of product, you’ll get $48.25. That’s not too bad for a standard fee, and it decreases as your revenue increases. If you process $3,000 to $10,000 per month, you’ll only be charged 2.5% plus $0.30 per transaction. If you reach the $10,000 to $100,000 range, that’s further lowered to 2.2% plus $0.30. These fees are the same for invoicing clients. (Here’s the full list of their merchant fees.)

If you take payments in person using a credit card or PayPal, the fees are slightly higher. Swiped and check-in transactions are charged 2.7%, while keyed or scanned transactions get a hefty 3.5% plus $0.15 per transaction. International fees are higher as well: 2.9% plus “a 1% cross-border fee and/or 2.5% currency conversion.” If you conduct international business, you could see a much steeper loss than domestic sellers.

PayPal offers several options to receive your funds. Bank transfers are the most popular option and take 3-4 days on average. You can also opt to receive a check, which incurs a $1.50 fee and can take up to 2 weeks for U.S. users. If you use a PayPal debit MasterCard, you can spend your money immediately and also withdraw it from most ATMs.


Stripe’s fee is identical to PayPal’s basic fee: 2.9% plus $0.30 per transaction. And that’s it. Stripe says that their pricing is “transparent and crystal clear,” and indeed, their pricing page is as straightforward as it gets. Your money is transferred to your account on a 2-day rolling basis, and the automation of this feature might be appealing to some users.

If PayPal is Apple, then Stripe is Android. Stripe boasts developer-friendly APIs that are flexible to suit your needs. They’re available in several programming languages, so those familiar with coding will have some fun. Stripe also supports Bitcoin transactions.

For the non-techie crowd, Stripe also has a major advantage over PayPal: no international fees. Whether you’re accepting payment from a client in Kansas or in Finland, the fee is the same.


This is by far the most interesting payment service on the list and possibly the best. Until recently, Dwolla charged a mere quarter per transaction, no matter the amount. Now, Dwolla has no charge, making it completely free to send and receive payments. (Observer.com suggests that payments under $10 may incur a fee.) So you’ll get the entire $50 of a $50 sale. There are a slew of useful features, including custom fees and next-day transfers.

Like Stripe, Dwolla provides an API. They also offer premium plans that cater to higher-revenue companies. Freelancers and bloggers will most likely be fine with the basic plan. It’s an understatement to say that Dwolla is a complete game-changer. The only downside is that it’s only available in the States.


Square is rising in popularity for its miniature card readers that plug in to your devices. (They’re offering free readers, too!) Square stands using iPads are popping up at stores across the nation, especially at smaller businesses. They also feature the ability to invoice at a firm rate of 2.75%. That means you’ll get about $48.63 of a $50 sale.

One of the benefits of Square Invoices is its speed. Paid invoices are deposited directly into your bank account within one to two days. Your clients aren’t charged any fees, either. Overall, Square Invoices are a solid option.

Which Should You Use?

With its lack of fees, Dwolla seems like the obvious option. And while it’s worth exploring, it actually may not be the best choice. PayPal and Stripe are integrated into other online services and storefronts, whereas Dwolla isn’t. Other processors are also more widely recognized, so a client may prefer to pay via PayPal because it’s a well-known payment service that’s trusted across the world.

Our recommendations: For traditional payment, PayPal, Stripe, and Square Invoices are both great options. For the more adventurous, go with Dwolla. (But make sure your clients are comfortable using it.) If you take payments in real life, Square is your best option. No matter what payment service you use, make sure it meets your needs.

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