By When you’ve launched your online store, with products ready and a date set for the big reveal, there’s one final piece of the puzzle you may still be ignoring: how will you actually get paid?
If you’ve started researching payment options, you’re probably overwhelmed by the sea of familiar names—PayPal, Stripe, Square, Shopify Payments. But what many guides fail to tell you is that these platforms vary greatly, and selecting the wrong one can impact your revenue, cause delays, or even freeze your funds.
In this post, we’ll cut through the noise and give you a clear, no-nonsense guide to selecting the right payment processor for your small ecommerce business. We’ll offer honest comparisons, identify the pros and cons, and walk you through what to consider before making your final choice.
What to Keep in Mind When Choosing a Payment Solution
Before diving into specific platforms, it’s crucial to understand the factors that will shape your decision. The right payment processor is integral to your business’s success. It affects cash flow, customer trust, and the smooth operation of your backend processes. Here’s what to focus on:
1. Revenue & Growth Potential
How much are you processing each month, and how quickly do you expect to grow? Some payment processors are better suited for small-scale startups, while others can handle larger volumes as your business grows. Fees and payout structures can change depending on your sales volume, so it’s essential to know where you stand now and where you’re heading.
2. Platform Compatibility
Are you using Shopify, WooCommerce, or a custom-built site? Not all payment processors integrate seamlessly with every ecommerce platform. It’s important to check compatibility to avoid unnecessary headaches.
3. Customer Location
Are you selling locally or internationally? Some payment gateways offer better support for cross-border transactions, including currency conversion and international fees. You’ll want a processor that supports your target market and provides secure, trusted payment options for your customers.
4. Product Type
Selling physical goods, digital products, subscriptions, or services? Different platforms cater to different business models. For example, some payment processors handle recurring payments better, while others specialize in one-time product purchases.
5. Transaction Fees
Don’t just look at base transaction fees. Make sure to compare all costs, such as:
- Flat rates or percentage fees
- Extra charges for international payments
- Currency conversion fees
- Hidden fees like platform or statement fees
You want to find the most cost-effective solution that aligns with your average order size and customer base.
6. Support & Ease of Use
When something goes wrong—whether it’s a dispute, fraud alert, or payout delay—how easy is it to resolve the issue? Consider the level of support available, whether it’s live chat, phone support, or community forums.
7. Payout Speed
How quickly do you receive your funds? Cash flow is crucial for small businesses, and knowing when you’ll be paid is just as important as how much you pay in fees. Some platforms pay out quickly, while others can hold funds for days, even weeks, without explanation.
8. Trust Signals for Buyers
Trust is key for online transactions. Familiar payment options like PayPal, Apple Pay, and Google Pay reassure customers that their payment is secure, especially if they’re buying from a store for the first time.
Comparison of the Most Popular Payment Processors
Here’s a quick look at some of the top payment processors available for small businesses, helping you decide which is best suited for your needs.
| Processor | Best For | Pricing | Payout Speed | International Support | Ease of Setup | Support |
|---|---|---|---|---|---|---|
| Stripe | Tech-savvy sellers planning to scale | 2.9% + 30¢ (domestic) | 2 business days | Excellent | Moderate | Limited for small accounts |
| PayPal | Boosting trust with a secondary option | 3.49% + fixed fee (domestic) | 21+ days (new sellers) | Excellent | Very easy | Slow unless high volume |
| Square | Simple, US-based stores under $10k/month | 2.9% + 30¢ online | 1–2 business days | Limited (5 countries) | Very easy | Good for small biz |
| Shopify Payments | Shopify users for seamless setup | 2.9% + 30¢ (Basic) | 1–3 business days | Good (via Stripe) | Seamless for Shopify users | Integrated with Shopify |
| BNPL (Klarna, Afterpay, etc.) | Higher-ticket items and Gen Z shoppers | 4%–6% per transaction | Varies by provider | Varies by provider | Easy add-on | Minimal; depends on provider |
| Traditional Merchant Accounts | Stores doing $20k+/month seeking better rates | 1.5%–2.5% (negotiated) | Varies | Yes (depends on processor) | Complex (underwriting required) | Dedicated reps |
A Closer Look at Each Processor
Let’s take a deeper dive into the key players in the payment processing space.
1. Stripe
Stripe is a flexible and scalable solution trusted by both large companies and small startups. It’s great for businesses planning to scale and needing customization. However, it’s not the easiest to set up for beginners and often requires technical help.
- Pros: Works with various platforms, powerful tools for subscriptions, multi-currency support, fast payouts.
- Cons: Complex setup, may flag new accounts, limited support for small accounts.
Bottom Line: Stripe is best for sellers looking to scale and who have the technical expertise or resources to manage its setup.
2. PayPal
PayPal is one of the most trusted names in ecommerce, and it builds immediate customer confidence. However, it’s known for high fees and delays in payouts, especially for new sellers.
- Pros: Built-in fraud protection, easy to set up, boosts trust, global recognition.
- Cons: High fees, especially for international transactions, slow support, account freezes can happen unexpectedly.
Bottom Line: PayPal is a great secondary processor to build trust but shouldn’t be your only payment option due to its fees and inconsistent support.
3. Square
Square offers simplicity and fast setup, making it ideal for small businesses. It’s an all-in-one solution that handles both online and in-person payments, but it has limitations if you’re planning to scale or sell internationally.
- Pros: Easy to use, quick setup, predictable pricing, fast payouts, great for small US-based businesses.
- Cons: Limited international support, fewer integrations, and not built for high-volume businesses.
Bottom Line: Square is a solid choice for small businesses doing less than $10k a month, especially if you’re based in the US and want simplicity.
4. Shopify Payments
For Shopify store owners, Shopify Payments is the easiest and most integrated option. It’s powered by Stripe, so you get the benefits of Stripe without the complexity.
- Pros: Seamless Shopify integration, no extra transaction fees (unless using third-party processors), fast payouts.
- Cons: Limited to Shopify users, potential fund holds, not as flexible as Stripe.
Bottom Line: If you’re on Shopify, Shopify Payments is the way to go for simplicity and efficiency.
5. Buy Now, Pay Later (BNPL)
BNPL services like Klarna and Afterpay let your customers split payments, often boosting conversion rates and average order value (AOV). However, these services come with higher fees and should not be used as your main processor.
- Pros: Increases AOV, reduces cart abandonment, easy integration.
- Cons: High fees, may not appeal to all customers, doesn’t replace traditional payment processors.
Bottom Line: Use BNPL as a supplementary option to increase conversions but not as your primary payment processor.
6. Traditional Merchant Accounts
Traditional merchant accounts are ideal for high-volume businesses, offering lower transaction fees and more control. However, they come with a more complex setup process and usually require a contract.
- Pros: Lower fees at high volumes, more control, dedicated support.
- Cons: Complex setup, slow payouts initially, higher upfront costs.
Bottom Line: Merchant accounts are best for large businesses with significant sales volume that need specialized rates and support.
How to Choose the Right Payment Processor
By now, you should have a clearer understanding of what to look for in a payment processor. Ask yourself these key questions:
- What platform are you using? Shopify? WooCommerce? Custom site? The platform you’re on will determine your payment options.
- What’s your sales volume? Under $10k/month? Square or Shopify Payments might be perfect. Over $20k? Consider merchant accounts for better rates.
- What are you selling? Physical products? Stick with flexible platforms like Square or Shopify Payments. Digital products? Stripe or PayPal are great choices.
- Where are your customers located? Selling internationally? Ensure your payment processor supports global transactions and currency conversion.
Conclusion
Your payment processor is a critical part of your ecommerce business. It affects everything from cash flow to customer trust, so it’s important to pick the right one. Start with something simple and stable, then reassess as your business grows.
As you scale, your needs will change. Be ready to revisit your payment setup as your business expands, ensuring you’re always getting the best terms for your volume and needs.