Stripe, PayPal, Square, and the merchant-of-record options for digital products, compared on fees, setup, and which fits your business model.
Your payment processor determines your fees on every single sale, which platforms you can integrate with, and in some cases whether customers trust your checkout enough to complete a purchase. It's worth 20 minutes of comparison before you build your whole store around one.
Stripe charges 2.9% + $0.30 per online transaction and is the developer-first choice — the strongest option if you're running a subscription business or need custom checkout logic. Stripe Billing handles recurring pricing, free trials, and failed-payment recovery better than any competitor. The tradeoff is setup: it's built for businesses comfortable with some technical configuration, or using a platform (Shopify, WooCommerce) that integrates it for you.
PayPal's standard rate runs slightly higher (around 2.99% + $0.49), but it wins on brand trust and one-click checkout — customers who already have a PayPal balance or don't want to enter card details convert faster when it's offered. Easiest processor to add to almost any site with no developer needed.
Square charges 2.6% + $0.10 for in-person transactions and 2.9% + $0.30 online, and is the clear pick if you sell both online and in person — one dashboard, one inventory system, integrated POS hardware. Overkill if you're purely online.
If you're already on Shopify, using its built-in Shopify Payments avoids the extra transaction fee Shopify charges when you use a third-party processor instead. Covered in full in our Shopify review — for most Shopify stores, this is the simplest and cheapest default.
If you're selling an e-book, course, or other digital product directly, Gumroad, Payhip, and Lemon Squeezy act as a "merchant of record" — they handle international sales tax and VAT automatically, which Stripe alone does not. Fees run 3-10% depending on the platform, higher than raw Stripe rates, but the tax handling alone is often worth it for a solo creator who doesn't want to manage VAT compliance across dozens of countries.
Physical products, purely online: Stripe or PayPal. Physical products, online and in-person: Square. Subscription or recurring billing: Stripe. Digital products sold directly (e-books, courses): Gumroad or Payhip for simplicity, Lemon Squeezy if you want more customization.
Yes, and many stores do — offering both a card processor and PayPal at checkout typically increases conversion, since it removes friction for customers with a preference.
Not directly, but checkout speed and reliability affect conversion rate, which is what ultimately makes the traffic you've earned worth something.
On a $50 sale, the difference between Stripe (2.9% + $0.30 = $1.75) and PayPal standard (2.99% + $0.49 = $1.99) is about 24 cents. At low volume this barely matters — the deciding factor should be trust, integration, and features, not the fee difference alone.