Square vs. Stripe Terminal: for entirely different businesses

Similar terminals, but Stripe more complicated

Square’s card readers (one for magnetic stripe, another for EMV and NFC) and touchscreen terminals (a portable Terminal, and Register for a stationary setup) are out-of-the-box ready for card payments, fully integrated with Square’s own software.

Stripe Terminal is actually a choice of two card terminals: a stationary Verifone terminal and mobile BBPOS card reader. Only the mobile card reader can be connected without code with a choice of simple, third-party payment apps (it can also be coded with custom POS software). The Verifone terminal has to be manually coded with a POS system, requiring development resources.

Let us compare the models, starting with the terminals ideal for a fixed location: Square Terminal and Stripe’s Verifone V400 terminal.

The main difference between the two is that Stripe’s Verifone V400 terminal has to be programmed with a set of APIs and SDK before it can work. Square Terminal comes ready with POS features, making it a fully functioning point of sale from the get-go.

Another key difference is that the Verifone model works with a 4G network, so you are not limited to a local WiFi network that has to be set up. This could make it usable on the go and not just in a limited area, whereas Square Terminal only works with a secured WiFi network you’re logged into, i.e. you can’t just use it anywhere.

If you contrast Square’s app-based card readers with Stripe’s mobile card reader, there are also differences. Square has two card readers, Square Reader for magstripe and Square Reader for contactless and EMV chip, both working with the free Square Point of Sale app on iPhone, iPad and Android devices.

Stripe Terminal’s mobile card reader is BBPOS Chipper 2X BT and – like Square Readers – it works in conjunction with an iOS or Android app.

Charges

Stripe and Square fees are generally similar, but for in-person payments, there are more costs involved with Stripe. Online payments cost the same with both providers: 2.9% + 30¢.

Square Terminal and Verifone V400 (Stripe) both cost $299 upfront, and Square Reader for contactless and chip and BBPOS Chipper 2X BT (Stripe) cost $49. The Square Reader package includes a free Square Reader for swipe, so you can accept all types of cards for the same price as Stripe’s reader that accepts contactless, chip and magnetic stripe in one device.

With Square, the transaction fee is simple: you pay 2.6% + 10¢ for every card accepted through the card reader. There’s only an additional 1% charge if Instant Transfers are activated; an optional setting that transfers payments to your bank account immediately rather than the day after (the latter is free).

There are no additional Square fees for international or premium cards, or currency conversion.

Stripe Terminal’s base transaction fee is 2.7% + 5¢ for all cards, but international cards cost 1% extra, with currency conversion incurring an additional 1%. Bank account payouts are free, but like Square, Stripe offers optional instant payouts for an additional 1% fee.

Now, if you choose Stripe Terminal’s mobile card reader and use one of the ready-made payments apps, you also have to add an extra transaction fee for your chosen app: 1% to the Payment app, or 1.3% to the Collect for Stripe app.

That means you pay a minimum of 3.7% + 5¢ with Payment, and 4% + 5¢ with Collect. If you accept an international card, it’s 4.7%-5% + 5¢, or 5.7%-6% + 5¢ with currency conversion too.

Integrating a Stripe reader with your own app shouldn’t incur app-based transaction fees, but there may be costs for other compatible payment apps not mentioned here. Square has no such app fees – it is completely free to use Square Point of Sale with Square Reader, and the same goes for Square Terminal’s software.

Payouts faster and simpler with Square

Stripe and Square offer automatic payouts to your business bank account, but Stripe’s processing time is more variable (and longer).

Square uniformly advertises next-business-day transfers, but deposits can take up to two business days to clear. With Square’s ‘Instant Transfers’ activated, you will receive transactions within a couple of hours.

The Stripe payout schedule, on the other hand, depends on “a number of factors such as the industry and country you’re operating in, and the risks involved”. The first payout will take 7-10 business days to process, subsequent transfers being faster.

US Stripe transfers typically take two business days to reach your bank, whereafter the bank may deposit the money in your account immediately or within a few extra days. In reality, many Stripe users receive transactions within a week. It can take multiple days longer to receive payments if Stripe considers your business high-risk.

With Stripe’s ‘Instant Payouts’, you can receive transactions within 30 minutes regardless of what day or time it is.

Both solutions let you choose manual payments (same processing times apply).

What kinds of payments are accepted?

Given Stripe’s developer-centric – and therefore highly adaptable – platform, it comes as no surprise that Stripe has the widest range of accepted cards too.

Here’s an overview of the card brands and mobile wallets accepted in person.

US Square merchants can only accept payments in US dollars, whether that’s a card reader or online payment. Stripe can accept over 135 currencies online, but Stripe Terminal only accepts payments in US dollars.

Software and app features

Square Point of Sale is the app connected to Square Reader. It works as a complete POS system with the ability to link to e.g. a cash drawer and receipt printer. Suffice to say, it has a well-rounded breadth of features pertaining to payments, staff management, inventory management, marketing and more.

Stripe’s BBPOS card reader can be connected to one of two apps for free: ‘Payment’ or ‘Collect for Stripe’. These apps are clearly made with Stripe in mind, as you can subscribe customers to your services/products, subscriptions of which are managed in the online Stripe account.

Below are some of the key features of the apps.

Online payments

Stripe provides the foundation to build any kind of online payment system, but it requires development resources. The platform has some of the best API (application program interface) documentation on the market, enabling internet companies to custom-code solutions like:

• Subscriptions/billing based on factors like usage, type and location
• One-off invoices
• Trial preceding a subscription
• Marketplace solutions

None of these are ready to use, so you need a developer or integration tool (if connecting to another platform). If you’re just using Stripe for an online store, certain ecommerce platforms can connect to your Stripe account without a developer.

Square, on the other hand, offers several out-of-the-box options for merchants accepting remote payments:

• Email invoices (with free invoice app)
• Virtual terminal for phone and mail order payments
• Keyed-in payments in the POS app
• Integrated online store

No coding is required for these, and all are by default free, though paid ecommerce plans are available.

Service and account stability

Square and Stripe are not immune to frequent account holds, as you’ll see in customer reviews – because they are both aggregators. That is, you don’t get a unique merchant account like the ones provided by acquiring banks such as First Data. Instead, you receive payments through a pooled account.

This allows you to open a Stripe and Square account quickly, but it means the platforms are stricter at monitoring account activity over time, which can result in funds on hold and sudden account closure if it appears you are accepting high-risk transactions.

Customer service, on the other hand, is better with Stripe as they offer 24/7 support. Square only offers weekday support.

Our verdict

If you’re already processing payments through Stripe and need to accept cards in person, Stripe Terminal is a natural choice so you can keep payments consolidated and manage terminals from the same account.

If you just want a card machine for face-to-face payments, or you don’t care about customized POS software, Square is simply the best deal. Payouts are fastest, costs lower and app features excellent considering they are free and out-of-the-box-ready.

Compared to Square, Stripe Terminal is not the best choice in any way unless you’re using Stripe’s online payment system, which is geared towards internet-first companies.

Square offers a complimentary virtual terminal, invoicing, ecommerce and integrations with a wealth of extra tools. These things can be done in Stripe with greater flexibility, but not without technical know-how.