I am a licensed CPA in both New York and Massachusetts, and a member of the American Institute of Certified Public Accountants.
Battle of the Credit Card Readers: Square vs PayPal vs QuickBooks
Swiping credit cards has never been easier. Each service listed below offers a free card reader that can be hooked up to your desktop computer, iPhone, iPad, and other mobile devices. All you need to do is link your bank account and you are ready to start accepting credit card payments from customers. What was once a frustratingly complex task for small businesses is now a piece of cake.
There is a major battle ensuing between these platforms to win the hearts and minds of small business owners. We’re going to take a look at three of the leading card swiping services and find out which one is ideal for your business.
Square – The Innovator
Processing Fees: 2.75% or $275 flat per month (up to $21,000).
Square was the first true innovator of the all-in-one swiping system and completely disrupted the credit card processing landscape. The company exploded in popularity with the launch of their elegant solution for mobile credit card processing in 2010.
When it comes to pricing, you can choose a flat rate of 2.75% per transaction or $275 per month. With the flat rate plan, every charge you process over 10K is completely free of processing charges. However, this benefit is capped at $21,000 each month. Each charge that goes over the monthly cap will revert back to standard 2.75% fee.
Square is the most cost effective solution for businesses that swipe between $10,000 to $40,000 in monthly credit card payments (see table below). They do not offer live phone support, so keep that in mind if you value customer service.
PayPal Here – The Challenger
Processing Fees: 2.70%
After dominating the online payments realm for the last 20 years, PayPal is making an entrance into the card-swiping arena. Their approach is nearly an exact replica of the Square model, but deposits funds to your existing PayPal accounts. They send you a free card reader and swiped payments will land in your account instantaneously.
PayPal Here does not offer any significant cost savings over the competition. Its primary benefit is nearly instant access to your cash through seamless integration with existing PayPal accounts.
QuickBooks Merchant Services – The Workhorse
Processing Fees: 1.69% +29¢ per swipe + $19.95 per month.
QuickBooks Merchant Services just recently made the jump into the free card reader business model. Although the pricing structure is a bit more complex, it offers a great value at many different card-processing volumes. In particular, it is considerably less expensive for businesses charging $50,000+ monthly.
Existing QuickBooks customers will find several key advantages to this platform. First, every transaction you process will be automatically reconciled with your existing accounts. You won’t need to worry about downloading transaction records from a 3rd party. Second, it gives you the ability send invoices with a payment link for your customers. And finally, the free card reader is widely considered to be more durable and dependable than the alternatives.
QuickBooks offers the best overall value in terms of cost. It is also a great time saver for businesses already using QuickBooks software for bookkeeping. However, if you process numerous small transactions ($10 or less), keep an eye on the 29¢ per transaction fee.
A Handy Comparison Chart of Monthly Costs
Don’t have time to estimate your expected card swiping costs? The table below gives you an estimated monthly cost based on your average credit card swipes and revenue.