If you’re a small business owner who wants to accept credit cards in person and online, you’ve probably considered using PayPal. PayPal is a payment facilitator, which is a company that simplifies the credit card acceptance process. PayPal places its business customers under its master merchant account, so businesses don’t have to apply for and deal with separate merchant accounts.
Many businesses accept card payments with PayPal, but it’s not for everyone. Here’s a look at the best PayPal alternatives that might work well for your business, along with an overview of precisely what PayPal offers.
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Different payment processing vendors are better suited for particular functions and transactions. Through careful analysis, we’ve rounded up some of the best options for businesses depending on their needs. Here are some worthy options to consider.
While PayPal got its start enabling cashless payments online, Square was a mobile payment pioneer, introducing the first widely used card reader that plugged into a mobile phone. Square’s strongest presence is in the in-person retail transaction space; more recently, it has branched out into e-commerce payments with its payments service.
Here’s a rundown of what Square has to offer:
Square’s e-commerce functions
Square’s marketing functions
Square currently lacks marketing tools or programs that are comparable to PayPal’s Store Cash, which offers customers incentives to buy from a retailer they’ve visited. However, Square does offer integrated email marketing software that tracks sales made through its emails, texts and social links. This software is similar to Constant Contact or Mailchimp, but it pulls contacts from the merchant’s customer list and lacks the ability to add noncustomers.
Here’s the pricing for Square’s integrated email marketing software:
Square’s subscription features
Like PayPal, Square supports subscriptions and free trials. However, Square’s process is a bit clunky and confusing.
There are three possible ways to set up subscriptions and free trials with Square:
Square mobile payment functionality
You can accept mobile payments with the Square Point of Sale app on a compatible iOS or Android device. With a Square reader, the cost is 2.6 percent plus 10 cents per transaction. For transactions where the card number is keyed in, it’s 3.5 percent plus 15 cents.
Square offers the following mobile payment equipment options:
Square’s virtual terminal options
Like PayPal, Square offers a virtual terminal, or payment gateway, for remote billing or accepting credit cards over the phone. This virtual terminal can issue receipts by email, text or print and collect customer feedback on digital receipts. It can also schedule recurring payments.
For professional-service businesses, the virtual terminal can integrate with the Square Terminal credit card machine (see below for more information). There is no monthly fee; the transaction fees are 2.6 percent plus 10 cents for in-person processing and 3.5 percent plus 15 cents for remote processing.
There’s some confusion about the difference between a payment gateway and a payment processor. A payment processor facilitates transactions between your merchant account and a customer’s bank account, while a payment gateway authorizes your customers’ payments.
Square’s point-of-sale options
Point of sale (POS) is where Square really shines. Square offers specialized software and hardware solutions for different business types: retail, food and beverage, and professional services.
Square’s retail POS software gives you these abilities:
Square used to have three retail-solution tiers but now offers one free POS plan. Square’s free POS plan has no monthly fee; you’ll pay 2.6 percent plus 10 cents for in-person transactions and 2.9 percent plus 30 cents for online transactions. It includes the POS app, online store and basic inventory tools. If you process over $250,000 in credit card sales, you may be able to get lower card processing fees.
Square provides solutions to accommodate different restaurant types: quick service, full service, fast-casual, bars and breweries, and ghost kitchens. Its POS software includes the following features:
Square offers three restaurant POS pricing tiers:
Square offers the following equipment options:
Restaurant payment processing has some unique considerations. You should consider your average sales ticket size, monthly sales volume and processing needs before signing a contract with a credit card processor.
Square’s money-moving abilities
Square has its own bank, Square Financial Services, which can integrate seamlessly with the Square Payments online payment-processing solution, giving merchants instant access to their money with no fees, minimum-balance requirement or credit checks.
If you have a bank account, Square allows you to send up to $10,000 per transfer instantly, with unlimited instant transfers per day. Instant transfers cost 1.5 percent of the transfer amount. Standard transfers are usually sent within 36 hours (one to two business days) and are free.
Square is an excellent choice for in-person retail and restaurant businesses because of its specialized software. Square is easy to integrate, and its free website tool is a nice addition. Read our in-depth Square review for more information.
Like PayPal and Square, Stripe offers a suite of payment solutions. Stripe’s primary strength is e-commerce payments, although it also offers a virtual terminal and card readers. Its main customers are large-scale businesses such as Zoom, DoorDash, Shopify and Lyft.
Stripe’s e-commerce functions
Even if your e-commerce transactions are considered riskier, there are ways to protect your business when you take payments online, including using two-factor authentication, instituting a personal verification system, and ensuring your hosting provider has safeguards in place.
Stripe’s mobile and point-of-sale functionality
Stripe’s recurring billing and subscription features
Stripe can generate invoices, support subscriptions, schedule email reminders for missed or overdue payments, and handle billing proration. It can also trigger actions based on upgrades, payments and cancellations.
Stripe’s recurring billing can handle flat-rate pricing, multiple-pricing selling, per-seat billing, usage-based billing, and flat-rate-plus-overage billing models.
Stripe’s marketplace operations
If your business is a marketplace where you provide a platform for service providers to sell, Stripe may be a good solution for you. The software helps marketplaces instantly onboard and manage service providers, split revenue from transactions among multiple recipients, and control expenses. It also allows you to retain your sellers with instant payouts and balance cards.
Stripe’s money-moving abilities
When you first get set up with Stripe, it takes seven to 14 days to transfer your money to your bank account. Once you’re established, payouts to your bank account arrive on a two-day rolling basis. If you’re in a high-risk industry, however, your money will take 14 days to arrive. Companies based in countries other than the U.S. and Australia will also have slower transfer times.
Stripe is best suited for e-commerce and marketplace businesses, especially those planning to scale quickly. It has excellent security features, and its transaction-retry protocol can increase sales that otherwise would have been declined. Read our in-depth Stripe review for more information.
Like the other providers mentioned here, Authorize.Net lets businesses accept payments online at retail locations and via mobile devices. Authorize.Net also supports phone sales and online billing. It accepts Visa (its owner), Mastercard, American Express, Discover, JCB, PayPal, Apple Pay and e-checks, but not Google Pay or Venmo.
Other than PayPal, Authorize.Net is the only payment provider that takes PayPal accounts, and it’s the only one that accepts e-checks.
Authorize.Net’s e-commerce features
Authorize.Net’s mobile payment features
Authorize.Net’s virtual terminal
Authorize.Net’s virtual terminal is called VPOS. It lets merchants email or print receipts and connect to a card reader via USB or Bluetooth. Data is stored in the Authorize.Net data center for security. Recurring billing can be conducted using the virtual terminal.
Authorize.Net’s money-moving abilities
Authorize.Net automatically transfers your revenue to your bank account at intervals that depend on your country’s location and risk level.
Authorize.Net is best suited for e-commerce businesses, especially those with web developers on staff. It has excellent security features, but it’s not tailored to retail or restaurant businesses. Transaction costs will be high for businesses that process many smaller purchases.
Keep an eye out for these up-and-coming players in the payment facilitation space:
When you’re looking for the best PayPal alternative, consider how your business operates and what it needs (and doesn’t need). Avoid paying for features you won’t use, and find a payment gateway that offers the functionality you need.
Consider the following factors when you’re evaluating PayPal alternatives:
In case you’re deciding between PayPal and a PayPal alternative, here’s a quick primer on PayPal’s pricing, setup, equipment, technology and more. PayPal lets merchants accept payments from e-commerce sites over the phone with a virtual terminal, by subscription and on-demand with invoicing.
Here’s a look at PayPal’s payment processing services.
PayPal Checkout is PayPal’s e-commerce and app payment solution. It offers contextual checkout button options so you can display payment buttons that are relevant to the individual customer. For example, Venmo users will see a Venmo checkout option. Paying with major debit and credit cards is also an option, as is the ability to choose Pay Later, which automatically splits the total cost into four payments. Offering these relevant payment options increases conversion because it makes paying easier.
Customers authorize payment in a PayPal pop-up window on the merchant site, and then PayPal automatically fills in the customer’s name and shipping address on the merchant checkout page. PayPal Checkout includes PCI compliance.
There are three levels of PayPal Checkout, and your business’s complexity and needs will determine which one is the best fit. (The fee for receiving domestic transactions via PayPal Checkout is 3.49 percent of the purchase price plus 49 cents per transaction.)
Store Cash is an optional feature for PayPal e-commerce merchants to help increase sales from abandoned shopping carts. PayPal can track about 40 percent of people who leave your site without purchasing. It can also identify customers who have purchased from you within the past 12 months but not within the past three months.
PayPal then sends these people an email notifying them that Store Cash is in their PayPal wallet to spend on your site within seven days. You pay a fee to PayPal of 8 percent of the purchase amount only when a customer returns to your site and makes a purchase using Store Cash.
With PayPal, you can enable recurring and subscription payments. The option has customizable trial periods to encourage customers to subscribe; it can handle fixed or quantity-based pricing. The fee for this type of transaction is 3.49 percent of the purchase price plus 49 cents, in addition to the $10 monthly fee.
Zettle is PayPal’s fixed retail POS solution. Signing up for Zettle is a bit more involved than signing up for PayPal Checkout or Virtual Terminal; merchants must meet eligibility requirements, apply and be approved.
Zettle includes an app to help you take payments, track sales and manage your inventory. It can integrate with your online sales, as well as with some of the best accounting software solutions, like QuickBooks Online. Download the Zettle app on a smartphone or tablet, or use it with a Zettle POS cash register. Zettle hardware includes a cash register, card reader, receipt printer and handheld scanner.
There are no monthly fees to use Zettle. The transaction fees are as follows:
The costs for Zettle equipment are as follows:
The PayPal Virtual Terminal is a secure payment gateway site that you can access via a web browser on a phone, tablet or computer. It’s suitable for companies that do most of their transactions over the phone; it requires no hardware, coding or software.
After the PayPal Virtual Terminal is set up, you’ll enter customer contact information, the purchase amount, and credit or debit card information on the screen. Because the risk of fraud is higher for transactions where the payment card is not physically present, the fee is higher for virtual terminal transactions: 3.09 percent of the purchase price plus 49 cents.
The PayPal invoicing option is most often used by freelancers and independent contractors. It allows business owners to create, manage and send invoices, and there’s no charge for these functions. The only time you’ll be charged is when a customer pays an invoice online using a credit card, debit card, PayPal account or PayPal Credit. PayPal’s fee for these online payments is 2.99 percent plus 49 cents per transaction.
If you’re considering PayPal payment services, here are some upsides:
PayPal also has some downsides to consider: