Paypal vs Google Checkout vs Square

Credit card feesThere are now more options than ever before when it comes to processing credit cards for your business. In the early days if you wanted to sell online you had either Paypal or an expensive Gateway provider to choose from. Today you have many options. The question is, which one works best for your needs?

Most of my clients are smaller businesses just starting. Signing up for a gateway or a terminal is often a scary option because of the contracts they want to get you into. If you are not yet sure what sales will look like then an option like Paypal is often the suggested route.

Having come off of a fresh horrible experience with Paypal I am now referring my clients to other options such as Google Checkout or Square. I thought it would be interesting to compare the three as they are the most widely used processors out there right now.

Paypal has been around the longest, however I have found that you really have no control over your money. I suggest to anyone with a Paypal account that they keep little or no balance in their account. I currently have a personal Paypal account and a business Paypal account with a combined balance of $1500 that Paypal will not give me access to. I have recently switched to Google Checkout for online transactions and Square for transactions where the card is present. A you can see in the chart below, Paypal and Google Checkout have the same fee structure. Square is a cheaper solution if you have the customers card in hand.

Square is a card reader and app for mobile devices. If you have a smart phone and your customers cards are present at the time of sale, this is the best option for you.

When should you switch to a Merchant account? Well I came across this nifty tool which helps you determine if you are making enough monthly transactions to save money with a merchant service such as Merchant accounts often have monthly fees for Gateway access but have lower transaction fees. If your sales average less than $6000 per month then you would not benefit much at all from having a merchant account over one of the accounts shown below. However it is a scary decision to go from a service that would not cost you anything if you had no sales at all to a service that has a fee regardless of sales.

It is my opinion that if you have the ability to use Google Checkout as an option then you should. They are not acting as a bank like Paypal is. They simply process the payments and batch out to the bank account of your choice. Plus if there is a problem with the customers transaction, Google Checkout give then the option to update their payment where as Paypal just rejects it. This results in fewer lost sales for you.

Google Checkout

Monthly Sales Fees Per Transaction Fee on $100
Less than $3,000 2.9% + $0.30 $3.20
$3,000 – $9,999.99 2.5% + $0.30 $2.80
$10,000 – $99,999.99 2.2% + $0.30 $2.50
$100,000 or more 1.9% + $0.30 $2.20
Monthly Sales Fees Per Transaction Fee on $100
$0 to $3,000 2.9% + $0.30 $3.20
$3,000+ to $10,000 2.5% + $0.30 $2.80
$10,000+ 2.2% + $0.30 $2.50
Monthly Sales Fees Per Transaction Fee on $100
Card Swipe 2.75% $2.75
Manually Enter Number 3.5% + $0.15 $3.65

I would love to hear about your experiences with any of the above services in respect to fees and the handling of your money. As I mentioned above, I have had issues with Paypal but that is not the case for everybody.

As I mentioned above, before making a decision to choose a Merchant Service Provider you Gould check this website out. It’s a nice resource to help you decide.
FeeFighters Paypal Calculator

1 Comment

  • Visiongraphix / Jim Steward
    August 9, 2011 at 11:17 pm

    I have been using Square now for over 6 months and am very happy with the service. There is a lag of about 3-5 days until the money actually appears in your bank account, but I can live with that. The only thing that I would like to add to Square is a more detailed activity statement. Square often combines multiple customer payments into a single payment to your bank account and it’s sometimes a challenge to match up deposit to customer orders. If square had a web portal for accepting phone payments, it would be very handy.

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