Stripe VS Square

Stripe VS Square
✓ Products and Services ✓
✓ Compatible Hardware ✓
✓ Fees and Rates ✓
✓ Sales and Advertising Transparency ✓
Customer Service and Technical Support ✓
✓ Negative Reviews and Complaints ✓
✓ Positive Reviews and Testimonials ✓
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Overview

Spend a little bit of time reading up on Stripe (read our review) and Square (read our review) and you’ll start to see the similarities. They’re both giants in the payment industry, media darlings that have transformed the way people pay for things and the way merchants accept payments. They’re both on the leading edge of technology and rely heavily on machine learning to drive their payment processing systems.

Most importantly, both Square and Stripe offer huge assortments of commerce tools that make it easy for merchants to run their businesses. With the various APIs and integrations available, there are almost limitless possibilities for creating a custom system with everything from invoicing to email marketing and more.

But that’s where I stop pointing out the similarities. Once you get past that point, it becomes harder to draw apples-to-apples comparisons because Square’s offerings are much more varied. Square really is an all-in-one processor that can handle in-person and eCommerce payments, as well as inventory management, customer databases, and more. Stripe is more limited to eCommerce, both for websites and for mobile apps, but it has powerful tools for global enterprises, subscription-based businesses, and other online companies.

To keep things fair and within a manageable scope, we’re going to limit the scope of this comparison to each companies’ online and mobile commerce tools. That means, for the most part, we’re not going to look at mPOS apps, POS integrations, appointment booking, or email marketing…except to say if you need them, Square is the better choice.That also means we’ll be ignoring Stripe Atlas, the company’s service for helping international merchants establish themselves in the US.

If you want to sell online and Square and Stripe have made your shortlist, you should start by asking yourself some questions:

  • What features do you absolutely need? Which features aren’t essential, but would be very nice to have?
  • What percentage of your transactions are from outside the US?
  • Do you have a developer or advanced coding knowledge yourself?
  • Do you have limited tech knowledge and need an easy solution?
  • Are you looking for specific integrations?
  • What industry is your business part of?
  • How advanced are your subscription tool needs?

Once you have the answers to these questions, you can sit down and look at each company in more detail. Read on for our comparison of Stripe vs. Square!

Products & Services

Winner: Tie

It’s so important to have a list of must-have features before you set about choosing any sort of payments or eCommerce software because you don’t want to make the decision and then find out that you’re missing a very important function. But it’s also important to think about where you want your business to go and what tools you want to invest in as your business scales up. If you pick the right service, it could mean you never need to switch. But if you don’t think about growth, you may wind up having to make a complicated switchover later in the future once you’ve outgrown a solution.

The good news is that for the most part, Stripe and Square are both very good solutions that scale up as a business grows. It just comes down to in which direction a business wants to grow.

Square Tools and Services for Online Merchants

Square initially stood out among mobile competitors by offering a free webstore to its merchants. Since then, the company has branched out considerably to include eCommerce integrations as well as developer tools. For a more in-depth review of all of Square’s offerings, check out our full review.

  • Online Store: Square’s free online store is very basic. There are only four templates to choose from, and you can only customize portions of the site (such as filling in your business name and address in the footer) in addition to loading your products. This is not a good solution for anyone with a large and diverse inventory, especially if your shipping costs vary significantly or if you’re looking for a particular visual aesthetic.
  • eCommerce Integrations: When you first take a look at Square’s eCommerce offerings, you’ll see that Square very conveniently groups everything by a merchant’s level of technical expertise. I think this is a really helpful approach.

    The easiest integrations are listed on the site and Square lets you know that you can choose from an assortment of templates.

    The intermediate level includes eCommerce integrations that require a bit more work and technical knowledge to get set up.
    Square’s list of integrations includes some of the best shopping cart options, and the list keeps growing. That makes me happy, but if your preferred integration isn’t on the list yet and you do have the technical knowledge (or an eager developer on your payroll), there are more tools at your disposal. You can check out the list of Square integrations in the app marketplace.
  • Developer Tools: Square’s dev tools make it possible for you to create almost any custom integration you could need. For eCommerce, there are two APIs, Checkout and Transactions.  Square Checkout is a premade form that can be dropped into a site with minimal fuss. Using Checkout means merchants are eligible for some perks, like next-day deposits and chargeback protection. The Transaction API, combined with Square’s payment form, is more customizable. Square has other APIs to handle other aspects of commerce, but you’ll find that Square doesn’t readily support in-app payments.
  • Dashboard Reporting: Square’s reporting tools are fairly advanced, especially for a company that started as an mPOS. They’re very popular with merchants who want to know what’s selling and how much they’re processing and need standard business data. The dashboard is actually quite intuitive, as well. However, Square doesn’t allow for a huge amount of customization in reports unless you get into the Reporting API, which allows you to create real-time notifications using webhooks.

Additionally, Square offers the following tools:

  • Advanced Inventory: Square will reconcile online and in-person sales and give you an up-to-date count on your inventory, including low-stock alerts when you hit a specified threshold. Plus, you can bulk upload products and generate SKUs, create variants, and more.
  • Fraud Protection Tools: Square uses machine learning to analyze transactions and identify and flag possible fraudulent transactions.
  • Customer Database: Save customers’ contact information and build a database with records of their purchases so that you can market to them later.
  • Invoicing: Create invoices from within the Square dashboard or from within the mPOS app. Square also allows customers to store their cards to automatically pay invoices (using this Card on File will cost you a bit more). You can also create recurring invoices. However, if you want extensive subscription management tools, you’ll need an integration with a service like Chargify, which will add to your costs.
  • Free Virtual Terminal: If you want to process payments over the phone or you don’t have access to the mPOS, you can use Square’s virtual terminal. Transactions will be processed at the manual entry rate (3.5% + $0.15) rather than the eCommerce rate, but the solution is PCI compliant and is designed for regular use.

All in all, while it’s worth noting that Square really is an omnichannel solution for merchants who want to sell anywhere without needing to build a complicated system of integrations. But it has some shortcomings, especially for digital merchants. Subscription tools are nearly nonexistent, and fraud protection doesn’t compare to the tools Stripe offers. If you want advanced, custom reports, you’ll be better served by Stripe. However, Square’s tools and overall design are incredibly easy to use, especially for business owners who don’t have a lot of technical expertise or a large budget to hire someone. And it has very strong tools for merchants who sell physical products in particular.

Stripe Tools and Services for Online Merchants

Stripe has earned its name as a developer-friendly option, but you can also integrate with a host of third-party apps to accept payments with ease. The company focuses on internet and mobile commerce, but developers have extended Square’s power to include mobile payments and more. Just take note, there’s no free storefront option here. For a more detailed look at different features, check out our complete Stripe review.

  • eCommerce Integrations & Plug-Ins: Stripe outclasses Square in terms of shopping cart integrations by virtue of sheer numbers. In addition to integrations with major eCommerce software providers, developers have created an assortment of plug-ins for businesses operating on WordPress, Magento, and other websites. If you’re not really sure where you start, you might end up doing a lot of research to decide the best course of action, but you can at least take heart in knowing that there’ll be something that will meet your needs. You can check out the full list of eCommerce integrations on Stripe’s “Works With” page.
  • Developer Tools: Stripe is much loved by developers for its flexibility, its extensive documentation and its support for multiple programming languages. Its APIs allow you to create invoices and subscriptions along with many other features.

    Stripe Elements will let you create an entirely custom form with pre-built components; Stripe Checkout generates a pre-built form you can just drop into the site with a few lines of JavaScript. With Stripe, it’s very easy to accept payments on a desktop computer, a mobile site, or within a mobile app. Stripe now even supports 1-touch payments on mobile
  • Stripe Sigma: Stripe offers your standard user dashboard with some general sales reports at no charge. But if your business is heavily data-driven, Sigma’s customizable reporting is the perfect solution for you: you can generate reports based on SQL queries. This is pretty cool, and it’s a great way to make sure that anyone on your team can get the reports they need without creating an information bottleneck. Pricing is based on a sliding scale rather than a set additional monthly see.

Stripe’s additional tools include:

  • Stripe Billing: Stripe’s subscription tools are industry-leading, with the ability to charge clients based on a recurring quantity or metered usage, to set free trial periods, and much more. You can also create invoices or set up recurring billing tools. However, new businesses will pay a small additional charge per transaction to use these tools.
  • Stripe Radar: Stripe makes a big deal of its fraud monitoring tools, bundled under the very-apt name Radar. The system uses machine learning and a host of criteria to analyze every transaction and decide whether it is legitimate or possibly fraudulent. Radar also lets merchants set custom criteria for rejecting transactions and review flagged transactions to decide whether to accept or reject them.
  • Marketplace Tools: Merchants who want to operate a marketplace can use Stripe to build the platform. Stripe’s marketplace tools are grouped under the moniker “Stripe Connect.”
  • Multiple Currency Displays & Dynamic Currency Conversion: These tools are a major reason why Stripe is such a powerful tool for global businesses. Whereas Stripe will automatically convert transactions to USD (usually at the cost of a fee to the cardholder), Stripe will allow you to display prices in local currencies based on where the customer is located. Stripe then automatically converts them for the merchant, charging a small markup over the exchange rate. This makes a business more appealing to international customers.

There’s no doubt that Stripe is very powerful. It can handle all sorts of payments, from digital subscriptions to retail goods. It’s one of the best solutions for global businesses with its currency tools. But it does have some limitations. If you plan to sell across multiple channels, there’s no option for in-person payments unless you have an integration like Flint Mobile (read our review), but it’s still more costly than other mPOS options. There’s no virtual terminal, either. While Stripe does allow you to manually enter a transaction if all else fails, it’s a last resort rather than a tool to be used on the regular because of PCI compliance issues.

Stripe’s inventory tools aren’t on the level of Square. They’re powerful, but if you want advanced inventory management, you’ll need to tack on an integration. I also don’t think that Stripe’s inventory tools are even half as intuitive as Square’s. But I think part of that is Stripe’s focus on online payments and tools for digital merchants, compared to Square’s omnichannel approach.

All in all, it’s really hard to say one of these companies is inherently better than the other. Both have a good assortment of integrations for shopping carts and other tools, though Stripe has a greater number of supported integrations. If you want ease of use, especially if you sell physical goods,  Square is the standout option. But if you need flexibility, robust tools, and advanced data, Stripe is the better choice. So it ultimately comes down to your business’ needs.

Fees & Rates

Winner: Tie

I am happy to say that pricing for both Square and Stripe is mostly straightforward:

  • 2.9% + $0.30 per online card transaction

There are no monthly fees, no monthly minimums, no statement fees. That’s very nice to see.

I do want to point out that Square charges different rates for its card-present and keyed transactions (2.7% and 3.5% + $0.15, respectively). However, invoices process at the same rate as eCommerce transactions unless you’re using Card on File, which process at the keyed transaction rate.

Square also has no chargeback fees, which is very unusual. Not only that, but the company has rolled out Chargeback Protection, which will cover the actual chargeback costs on qualifying disputes up to $250 per month. This doesn’t apply to merchants who use the Transactions API, but it is available for those who use Stripe Checkout.

You can get volume discounts if you process above $250k per year AND have an average ticket size exceeding $15. That’s a mark in Square’s favor for large businesses. However, nonprofits don’t get any sort of special discount, which you can often find with other processors.

Stripe’s pricing has become a tiny bit more complicated. In addition to card transactions processed at 2.9% + $0.30, you can also accept ACH transactions for 0.8%, capped at $5 maximum.

The base fee per transaction is simple. And for each chargeback, Stripe will assess a $15 fee, unless the chargeback is decided in your favor. In that case, you’ll pay absolutely nothing.

Stripe’s subscription tools, lumped under the name “Stripe Billing” along with invoicing, will cost you a small percentage fee (between 0.04% and 0.07%) on top of your transaction.

Existing Stripe merchants are grandfathered out of this new pricing. Large businesses will actually pay the higher 0.7% markup, but it seems Stripe has compromised by offering lower transaction fees.

You’ll also pay a monthly fee for access to Stripe Sigma. The cost is a sliding scale based on the number of transactions you process each month, which is a great way for very small businesses to still get crucial data. But for a company that built its reputation on not charging any fees beyond transaction processing, it’s a little bit disappointing to see that model disappearing. You can estimate your cost with Stripe’s tool.

Stripe does offer enterprise pricing for very large businesses, and some nonprofits may be eligible for a special rate. Stripe doesn’t make any promises about nonprofit pricing apart from “let us know and we’ll see what we can do.” So you shouldn’t assume it’s guaranteed.

With Stripe, you may also be able to negotiate for micro-transaction rates. Whereas per-transaction fees like the $0.30 Stripe and Square charge can eat up fees from small transactions (less than $10 in particular), micro-transaction rates typically include a higher percentage and a lower per-transaction fee that can save merchants money. This is ideal for anyone who sells digital goods and other low-cost items.

Because it’s something offered as part of a custom package, Stripe may not offer this deal to everyone. If you’re unable to get a micro-transaction plan from Stripe, it might be worth looking at a third option — PayPal (read our review) — instead. The 5% + $0.05 fee could save you quite a bit of money in the long run.

All in all, Stripe and Square are fairly evenly matched in pricing. Some merchants might enjoy the lack of chargeback fees and included chargeback protection that Square offers. But Stripe might be a bigger draw for other companies, despite the additional charges for using its subscription tools or Sigma reporting.

Contract Length & Cancellation

Winner: Tie 

Both Stripe and Square offer pay-as-you-go processing with no locked-in contracts or early termination fees. It really is that simple. Stripe will even help you transfer your customer data to another processor in a PCI compliant way.

If you’re using any of Square’s monthly services in addition to eCommerce processing, you can get a free 30-day trial, and then if you choose to continue with the service, you can cancel at any time. Square doesn’t bill annually for those services the way many SaaS providers do. (Conversely, you also don’t get any discounts for paying annually, either.)

Sales & Advertising Transparency

Winner: Tie 

One of the reasons I like pay-as-you-go processors is that they are, on the whole, very upfront and transparent. They tend to not have extensive sales teams, and if they do have a sales team, they’re all in-house. They’re very clear about their pricing and terms, and they’re applied fairly to all merchants.

Square and Stripe both fit this pattern to a T. You won’t see reports of misleading sales pitches or rates not as promised here, which is always nice to see. You can find Stripe’s terms of service on the site, both the general user agreement and the Stripe Payments agreement. Like Stripe, Square has separate agreements applying to general use, payments, and other services. I do recommend you be cautious and check that your business doesn’t fall on either list of “prohibited businesses,” because that’s an easy path to account termination.

Overall, I’m really happy with both companies in this category, and you shouldn’t have any worries about whether you’re being told the truth or whether you’ll pay what you were quoted.

Customer Service & Technical Support

Winner: Square

I think it’s fairly clear that Square outshines Stripe in terms of its customer support — both in quality and in the number of channels available.

Square offers merchants phone and email support, as well as an extensive knowledgebase. That’s pretty typical of any processor, but on top of that, Square operates the Seller Community, a community forum about all-things Square.

 

You can get answers from other Square merchants as well as from Square support reps. It’s a pretty powerful tool. But on top of that, Square’s team monitors Stack Overflow for questions about Square products and responds to them.

And that’s not even talking about Square’s dedicated Twitter support handle (@SqSupport), or the developer portal and documentation.

I can’t say that Square customer support is all sunshine and rainbows, because I do see customer complaints about the quality. However, without a doubt the biggest complaint about the quality of customer support comes from merchants whose accounts have been terminated. In that case, Square cuts off access to phone support and will only communicate via email. This is unfortunate and I don’t know if it’s actually a good solution. But I am sure part of the reason to reduce the odds of a customer support rep saying something they shouldn’t, and to prevent support resources from being tied up dealing with complaints from terminated merchants whose accounts won’t be reinstated.

Stripe is more limited in its support options. Its primary support channel is email. However, Stripe also operates an IRC Freenode chat (#Stripe) that developers may find useful. There’s no dedicated social media support with Stripe, but you can follow the general @Stripe twitter feed.

Stripe also maintains a self-service knowledgebase, though I don’t think it’s as extensive or detailed as Square’s. But I will say that Stripe’s documentation is pretty legendary, and so it’s going to be one of the best resources you can get.  You can also find questions about Stripe on Stack Overflow, but I am not able to ascertain whether Stripe’s team is active on the forum at all the way that Square is.

I do see comments from merchants that the support is pretty good. But I also see a lot of complaints from frustrated merchants about the lack of phone support. That complaint has actually become one of the biggest marks against Stripe. I’ve seen one mention that Stripe might be rolling out phone support to “select merchants” (presumably high-value clients). However, take this with a grain of salt. I wasn’t able to verify it through any sort of authoritative source.

Negative Reviews & Complaints

Winner: Tie

As far as complaints go, the single biggest issue for both Square and Stripe is a common one:

  • Account Holds And Terminations: This is unsurprising (understatement of the year, right there) because it’s a common issue with any third-party processor. Because these payment systems are usually open to almost anyone right away and they are all lumped into one large merchant account, there’s a greater risk that some of those accounts will be terminated for risky behavior. There’s very little scrutiny done before a sub-account with one of these processors is approved, which stands in contrast to merchant accounts, where the processing company will do a lot of underwriting and investigation before approving your application. Both Square and Stripe use a lot of machine learning to analyze transactions and flag suspicious behaviors. This potential for account holds or terminations is universal — you will encounter it with any third-party processor. If you want to avoid it, your only alternative is to seek out a traditional merchant account.

The other big complaint that I see with both is also a pretty common one:

  • Poor Customer Support: If I’m honest, reports about the quality of customer service conflict. But because of how common the complaints are, I’m listing it here. With Stripe, the most common issues are the lack of phone support and slow response times for email. With Square, a lot of the complaints about poor customer service come from terminated merchants, but I’ve seen a few complaints about slow or unhelpful email responses.

Additional frequent complaints about Stripe include:

  • Lack Of Fraud Protection: I want to be clear: Stripe does have fraud management tools and a system to help merchants fight chargebacks. But I have seen complaints from merchants who don’t think these are adequate. Chargebacks are not settled by Stripe, so there’s not much the company can do beyond pass the requested documents on. But for fraud prevention, merchants need to make sure they have the appropriate tools enabled.
  • Not User-Friendly: There’s a lot of testimonials from users (especially developers) who really like Stripe and find it simple to set up. There are plenty of others who disagree with that idea. I’m inclined to think most people with a decent technical backing will get along fine with Stripe, but for some people, especially those with less technical knowledge, it’s not going to be a good choice.

For Square, there is one other common complaint:

  • Lack of advanced features: It’s not that Square doesn’t have enough features, or that it’s missing anything important. The complaints about Square often focus on the lack of very particular advanced features that you typically find in full-scale POS systems. In this case, I think Square’s lack of extensive subscription tools would fit the bill. Some merchants have been upset for quite a while over the lack of Cost of Goods Sold (COGS) reporting. Square added this feature with its Square for Retail app, but not for online sales or its free POS. Square has some very powerful reporting tools, but in the end, they won’t hold a candle to Stripe’s Sigma offering.

I think, yet again, that the two companies are pretty evenly matched in this category. The largest complaints are identical, and that’s because they’re the same complaints we see with third-party processors. To be entirely honest, poor customer service is a common complaint across the entire payments industry. It’s frustrating, for sure. But you can take steps to better inform yourself — read our article on how to prevent holds, freezes, and account terminations. And please take reports of poor customer service with a grain of salt, because I see conflicting accounts there.

Positive Reviews & Testimonials

Winner: Tie

As media darlings, both Stripe and Square have gotten lots of press. They’re both lauded for the way they’ve transformed payments.

I usually feel a little bit silly comparing two businesses in this category because it almost feels like a bit of a popularity contest. But in this case, we’re dealing with two companies who have both gotten a LOT of positive press over the years, not to mention high-profile clients. And the bits of each service that merchants love most are pretty similar, too.

Square merchants love how easy the service is to use. And I tend to agree — Square is one of the most intuitive options out there as far as payments and using the dashboard. Merchants also really like the predictable pricing and lack of fees. Other than that, the integrated invoicing feature and the seamless omnichannel commerce experience are big draws.

Stripe also wins merchants over with its pricing, and its tools are very much loved by developers. While if you don’t have a lot of technical knowledge, Stripe may feel foreign to you, developers say it’s incredibly easy to use. Also on the dev side of things, it seems like the quality of customer service is great, even if business owners don’t always like the lack of phone support. And unsurprisingly, merchants really seem to love Stripe’s robust subscription tools. The predictable pricing and lack of monthly fees are also appealing.

Final Verdict

Winner: Tie

Stripe and Square have some very important core similarities: they’re both third-party processors with an assortment of tools that allow merchants to sell online. Neither one is suited to high-risk industries, and there’s a lengthy list of businesses neither company can work with. But despite that, both Stripe and Square offer tools that cater to a huge assortment of industries. They’ll both grow with your business, making it easy to scale up.

But despite their similarities in terms of business model, it’s also pretty clear that what each company does best is completely different.

Square is a spectacular all-in-one processor. You can sell in a store, on the go, and online and get all of your information and payments and orders collected in one simply, intuitive dashboard. There’s a huge array of add-on products that allow you consolidate a host of business functions under one name, and they’re guaranteed to work together perfect. eCommerce support is really the newest branch of Square’s offerings, and it’s a work in progress as the company establishes more partnerships and integrations with other major players.

If you have limited technical knowledge, Square is going to be much easier to get started with and to navigate through the different features. It’s free advanced inventory tools are also very well suited to retailers and other businesses that sell primarily physical goods.

Stripe focuses only on Internet payments (both on the web and in-app), but its tools make it possible for businesses to cater to customers all over the globe. The international appeal — from the local currency displays to the sheer breadth of payment methods accepted — make it clear that Stripe is already a global player.Not only that, but with Stripe’s APIs and documentation, a savvy developer could create all kinds of payments platforms for a business. Business owners who don’t have a developer on staff, and who don’t have a lot of technical knowledge themselves, might struggle with understanding how to use Stripe, especially if you want to do anything more than integrate it with some sort of shopping cart software.

You also get a far more limited scope of features. There’s no native support for omnichannel commerce. No mPOS app, no POS integration to support card-present pricing, no invoicing. If you need more than online payments on a regular basis, Stripe isn’t a suitable choice. But if that’s all you need, Stripe isn’t just a good option — it’s one of the best out there, period. If your business has a global reach, again you’ll find that Stripe once again tops the lists of best solutions.

I’m not comfortable saying that one of these solutions is better than the other because it really comes down to what your priorities are. Do you need something easy to use? Do you want to embrace multiple sales channels? Or are you limited to online sales and want best-in-class tools to reach a global audience, manage subscriptions, and even drive mobile commerce? Square can get the job done, and it’ll be the easier solution, but Stripe offers far more tools.

Sit down, think about what features are absolutely mandatory for you to have — and then look at which ones you’d like to have, but aren’t necessarily required. From there, it should be fairly clear which solution is right for you! Don’t forget to check out our complete reviews of Stripe and Square for more insights into how they function.

Have questions? Leave us a comment and we’ll help! Have experience using either of these tools? We’d love to hear from you.

As always, thanks for reading!

The post Stripe VS Square appeared first on Merchant Maverick.

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How To Use GoFundMe To Fund A Business In 8 Steps

go fund me for business start up

With over $5 billion raised on the platform since its inception in 2010, GoFundMe has a reputation for helping to cover the costs of personal emergencies in a world where most of us are just one missed paycheck away from ruin. But while the company has become synonymous with charitable crowdfunding, you might not realize that GoFundMe can be used to fund a business as well. Want proof? Here are the categories you can choose from when creating your GoFundMe campaign:

 

go fund me for business

Now, don’t get me wrong: If your entrepreneurial venture is a high-tech startup with exponential growth potential, or if you’re creating the next tabletop gaming sensation, you’re going to be better off going with a more commercially-oriented crowdfunding platform like Kickstarter (see our review) or Indiegogo (see our review), or perhaps one of the new equity crowdfunding sites that have popped up in recent years.

However, for the right kind of startup business — preferably one with a local/community focus and with a compelling story to tell about overcoming adversity — GoFundMe is an attractive fundraising option. One big reason? GoFundMe charges no platform fee to individual campaigns launched from the US, UK, and Canada. The typical crowdfunding site takes 5% of what you raise.

I’ll give three real-world examples of people using GoFundMe to fund a business and finding success.

  • Two Detroit students raised $3,000 to fund their socially-conscious waffle cookie company
  • Owners of a San Francisco restaurant raised $50K to get out of debt
  • A veteran raised $2,000 to start his own motorcycle repair shop

Read on for the eight steps you should follow to get money from GoFundMe to start your own business.

1) Make Sure Your Business Is Right For GoFundMe

Before you go about using GoFundMe to start a business, consider whether your startup is a good fit for GoFundMe. Many of the startups currently using crowdfunding to great effect are in industries that thrive on platforms like the aforementioned Kickstarter: makers of apps, gadgets, and games who typically don’t have an offline presence in the form of a restaurant or shop. Likewise, Patreon (see our review) has become a leading crowdfunder for podcasters, musicians, graphic artists, and other creatives whose work is easily disseminated online.

Crowdfunding with GoFundMe is a different matter, however. Donors tend to contribute to GoFundMe campaigns not to get in on the latest tech trend or trendy tabletop game, but to make a positive difference in the life of people in need or to benefit their community as a whole. Look at the sort of businesses that have had successful GoFundMe campaigns and you’ll note that they typically feature some combination of a) a business that has a positive impact on public life in a community and b) an entrepreneur/business owner with either a sympathetic and compelling personal story to tell or a mission related to charity or social justice.

If neither a) nor b) applies to you and your business, you’d be better off seeking funding from one of the other crowdfunding outfits I’ve mentioned. If at least one of the two does apply to your efforts, you stand a decent shot at making GoFundMe work for your business.

go fund me for business

2) Develop A Business Plan & A Realistic Funding Goal

Have a business plan ready before you start publicly campaigning for money. In particular, make sure you set a funding goal that you expect to actually be able to meet. Define exactly what it is that you plan to do with the money you expect to raise so that in the event you reach your funding goal, you know what to do next.

Of course, all the best-laid plans on Earth won’t help you if you don’t actually raise any money. One way to increase your chances of crowdfunding success is to offer cool rewards to people who donate to your campaign.

3) Offer Multiple Reward Tiers

Remember when I said that GoFundMe donors are motivated mainly by the desire to do good? This may be the case, but you’re still competing for the limited attention of donors with all the other campaigns listed on the site. This is when rewards come into play.

With GoFundMe, as with Kickstarter and many other crowdfunders, you can offer multiple levels of rewards to those who contribute to your campaign. This means that you can offer increasingly higher-value rewards to people who donate larger amounts of money. My advice would be to take advantage of this crowdfunding feature and offer multiple reward tiers to your would-be donors. Give people a reason to feel invested in your success!

While branded trinkets and t-shirts might draw some people in, rewards that give people a taste of your product or service are even better. Offer discounts, coupons and/or gift cards for whatever you have to offer. Get people in the habit of frequenting your business and they’ll be more likely to give you their business on an ongoing basis.

4) Refine Your Campaign Pitch

When creating your GoFundMe campaign page, you’ll obviously want to make it as appealing as possible.

  • Post A Fun Campaign Video: Keep it to around two minutes so you don’t lose viewers’ fickle attention, but don’t be afraid to show a personal touch, as people prefer authenticity and humor to slick sales pitches. You should at least allude to the personal challenges you’ve faced in growing your business. After all, this is GoFundMe, where tugging at the ol’ heartstrings is expected.
  • Make Your GoFundMe Campaign Page As Attractive As Possible: Use high-resolution images to promote your campaign. Preferably images that feature both you and your place of business. Remember: the personal touch is key.
  • Write A Descriptive Title: Try to summarize what your campaign is all about with one phrase. Don’t just write “Business Needs Help” — that doesn’t tell anyone anything or capture their interest. A good, catchy title can help distinguish your campaign from the thousands of others like it!

5) Seek Support From Friends & Family Before Launch

Not to diminish the importance of marketing your campaign to the public at large, but your most important source of support is likely to be your personal network: friends, family, co-workers, acquaintances, etc. Not only are they likely to contribute a significant proportion of what you raise, but it’s essential to secure their support before your campaign goes public. That way, when you launch your campaign, strangers who come across it won’t see “$0” as the amount raised. Success breeds success, and it’s easier to attract public support when you’ve already secured a decent chunk of funding.

You can have family members donate anonymously if you don’t want people knowing how much of your support comes from relatives!

6) Market Your Campaign Via Social Media & Email

To build buzz around your GoFundMe campaign, you’ll need to market it on your social media channels. Use Facebook, Twitter, Instagram and the like to spread the word about your story and your campaign. If you can, try to collect the email addresses of those interested in your campaign in order to build a mailing list in which you can give updates on your business’s progress and whatever other behind-the-scenes material you like. You can use services like MailChimp (see our review) to keep your followers updated with attractive template-based emails in which you can detail your progress.

Try to develop some press contacts as well. This way, when you’re ready to launch, you can alert them ahead of time.

7) Keep Everybody Updated After Your Campaign Launches

There’s a reason it’s called a campaign — you have to work hard to keep the contributions flowing! The uncomfortable truth is that most crowdfunding campaigns, whether they be for business or personal causes, don’t reach their funding goals. If you want to beat the odds, a compelling story and a nifty video won’t be enough. You’ll need to work on your campaign continuously as if it were your job.

Once your campaign is in full swing, keep everyone informed with frequent updates. Don’t just post updates to your GoFundMe page — make sure to send out updates through all your social media channels as well. Go ahead and get personal with your updates. Don’t just rattle off a list of statistics. Document your continuing personal involvement in your campaign for business funding. Be sure to respond to anyone with questions about what you’re doing, both on your GoFundMe page and on social media.

8) Stay Engaged With Your Backers Post-Campaign

Let’s say you overcome your challenges and meet your funding goal. Fantastic! Now, what are you going to do with the contacts you’ve made, the followers you’ve attracted, and the mailing list you’ve started? If you want your business to thrive, you won’t just let them drift away.

Consider an email drip campaign to keep your contacts appraised of your latest doings and to offer special promotions. Stay active on the social media channels you used to such great effect during your campaign. Maintain the relationships you developed with your first customers, as these people will be your most important evangelists, spreading the good word about your business and the friendly, personable owner who treated them so nicely.

In this lonely, atomized world we unconscionably created, people long to experience community. Provide them with one, and they will reward you.

Final Thoughts

Crowdfunding is hard. As I mentioned at the start of this article, most crowdfunding campaigns fail. There’s a reason why crowdfunding hasn’t solved the problems of startup undercapitalization or bankruptcy-inducing medical expenses. However, if you prepare beforehand, build a community of supporters, and approach the task like a job, you’ll greatly increase your chances of success when using GoFundMe to start a business.

Check out the links below to learn more about GoFundMe.

Read our full GoFundMe review

Visit the GoFundMe website

The post How To Use GoFundMe To Fund A Business In 8 Steps appeared first on Merchant Maverick.

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Payment Processing Companies And Services For Small Businesses

Payment Processing Services And Companies For Small Businesses

Navigating the world of payment processing services can be confusing for a small business owner, and it’s easy to make a mistake that can have a negative impact on your bottom line. With fast-talking sales agents lurking around every corner, waiting to sign you up for a lengthy, expensive contract, you need a good understanding of the basics of processing services, as well as specific things to watch out for.

While most merchant services providers offer a full range of products and services for every business, most of them are geared toward the needs of larger, established companies rather than small businesses and startups. Which services you need to run your business will depend primarily on the where and how you sell your products. For example, retailers and eCommerce businesses have very different requirements, although there are also some services (such as basic credit card processing) that are universally required.

In this article, we’ll provide you with a quick overview of the primary merchant services that you’ll need to accept credit card, debit card, and electronic check payments. We’ll also briefly review several of the best all-around merchant services providers for small businesses. All of them offer easy-to-use solutions at a fairly low cost compared to what the major credit card processors usually charge.

Payment Processing Services

It’s important to give your customers as many possible ways of paying for their purchases as you can, as this naturally leads to increased sales. At the same time, you don’t want to invest extra money into supporting payment methods that few, if any, of your customers actually use. Here’s a brief overview of the primary payment methods available and the services you’ll need to support them:

Credit Card Payment Processing

Providing credit card processing services is one of the most basic merchant services, and all providers will offer this feature. To accept credit cards, you’ll need either a full-service merchant account or an account with a payment service provider (PSP) such as Square (see our review). While every provider will allow you to accept major credit cards such as Visa and MasterCard, you’ll want to check carefully if you need support for less popular cards such as Discover, JCB, or Diner’s Club. American Express is also treated differently, as they function as both the issuing bank and the credit card association. Fortunately, Amex offers their OptBlue program, which simplifies the process of accepting their cards.

Debit Card Payment Processing

Virtually all merchant services providers support debit card transactions. In setting up your account, however, be aware that the interchange rates for debit transactions are usually much lower than it typically is for credit card transactions. The reason for this is simple: banks don’t have to issue a credit when the card is used like they do with credit cards. If the customer has sufficient funds in their bank account to cover the cost of the purchase, the transaction is usually approved, and funds are withdrawn immediately. Unfortunately, some merchant services providers set their processing rates without taking this distinction into account, which means you’ll end up paying much more for debit card transactions than you should. Tiered pricing plans and flat-rate plans are the usual culprits here, so look carefully at your proposed rate quote before signing up. You won’t have this problem with interchange-plus pricing, as the actual interchange rate is passed on to you, and the processor’s markup is the same for every transaction.

ACH Payment Processing

eCheck (ACH) payment processing operates on a different network from those used to process credit and debit cards. For this reason, most providers will require you to sign up for a separate ACH processing service as an optional feature when setting up your account. Adding eCheck processing to your account will allow you to accept bank transfers (i.e., eChecks) and paper checks with optional check scanning hardware. Processing rates for eChecks are very low because the money is coming directly out of the customer’s bank account. However, most providers will charge you a separate fee (usually around $20.00 – $30.00 per month) to add an eCheck processing service to your account. For small businesses, this might not be economical unless you have a significant number of customers who prefer to pay by check.

NFC Mobile Wallet Payment Acceptance

NFC-based payment methods such as Apple Pay and Google Pay have only been on the market for several years, and consumers have been slow to adopt them. However, they are becoming more popular over time, and it’s a good idea to offer them to your customers if you can. Most, but not all, modern credit card terminals and point-of-sale (POS) systems can accept these payment methods, but you’ll want to check the specific requirements for each particular NFC-based method you want to be able to accept. While NFC-based payment methods are ultimately tied to the user’s credit or debit card, they offer superior security and protection from fraud over traditional magstripe and even EMV card reading methods.

Mobile Payment Processing

Traditionally, mobile payment acceptance required a bulky wireless terminal. Not only were the terminals expensive by themselves, but they also needed a separate data plan (usually around $20.00 per month) to transmit the payment processing data. Then smartphones came along, and it wasn’t long before companies figured out that you could create an app that would effectively turn your phone into a credit card terminal. Coupled with an inexpensive card reader that plugged into the phone’s headphone jack, you had a simple mobile payment system that was far lighter and less expensive than the old wireless terminals.

While Square was the first company to pioneer this system, almost all other processors have followed suit, and today it’s hard to find a provider that doesn’t offer a similar mobile processing solution. Unfortunately, most of those competing systems fall far short of what Square has to offer. The apps themselves are very basic, and we’ve seen plenty of complaints about poor reliability, poor handling of tips, and a general lack of features. Magstripe-only card readers, while still offered for free or very low cost, are essentially obsolete liability traps with the switch to EMV-based chip cards. The gradual disappearance of the headphone jack from late-model smartphones further complicates matters. While this situation is bound to improve, today only Square and a small number of other merchant services providers offer both a fully-featured app and an EMV-compliant, Bluetooth-connected card reader.

eCommerce Payment Processing

To accept payments over the internet, you’ll need a software service called a payment gateway. Gateways can send transaction data to your provider for processing, and they also offer a number of other features you’ll need to run an online business. While features vary from one provider to another, most gateways offer support for recurring billing, online invoicing, and a secure customer information database to store your customer’s payment method data. Security features are also very important, with most providers offering some form of encryption or tokenization of data to keep it from falling into the wrong hands. Most merchant services providers offer either their own proprietary gateway or a third-party product such as Authorize.Net (see our review).

Online Reporting

Online dashboards are very popular these days, and almost all merchant services providers offer them. With these web-based dashboards, you can monitor the state of your business and track your transactions in real-time. They’re particularly valuable for eCommerce businesses and retailers who have more than one location.

Canadian Payment Processing

Unfortunately, most US-based providers do not offer accounts to businesses located in Canada. However, there are a few choices available north of the border that provide excellent service and fair prices. Helcim (see our review), one of our favorite providers, is based in Calgary and operates throughout both Canada and the United States.

Nonprofit Payment Processing

If you’re in the nonprofit sector, you’ll want to reduce your costs wherever possible. While you can sign up with any merchant services provider, it’s usually a better idea to go with one that offers reduced processing rates for nonprofits. Dharma Merchant Services (see our review), one of our highest-rated providers, specializes in helping nonprofits get set up with merchant services.

High-Risk Payment Processing

If your business falls into the high-risk category, your options for finding a provider will be more limited than they are for other merchants. The majority of merchant services providers, including most of those profiled below, do not accept high-risk merchants and will terminate your account if they later determine that you’re in the high-risk category. While there are many providers on the market that specialize in serving high-risk merchants, beware that many of them will charge you very inflated processing rates and account fees while providing poor customer service. For a look at the more reputable high-risk providers, check out our guide to the best high-risk merchant account providers.

Low-Volume Payment Processing

If your business only processes a few thousand dollars per month in credit/debit card transactions, or you’ve just launched, you’ll want to find a low-cost provider that won’t eat up your profits through high processing rates and hidden fees. Businesses at this end of the spectrum often don’t need a full-service merchant account and are better off going with a payment services provider (PSP). While you’ll pay somewhat higher processing rates, you’ll save money overall because most of these providers don’t charge any monthly fees. They also don’t require long-term contracts or charge early termination fees (ETFs), so you’ll be free to switch to a full-service merchant account with a different provider when your business is large enough to need one. For low-volume retailers, Square (see our review) is an excellent choice. The quickest and easiest option for eCommerce merchants is PayPal (see our review).

Payment Processing Companies

Below are short overviews of some of the best merchant services providers we’ve found for small businesses. Be sure to check out our full reviews for companies that you think might be a good fit for your business.

Square

Square Logo

Possibly the most popular provider for small businesses, Square offers simple flat-rate processing with month-to-month billing and no early termination fee. With Square, you can accept all major credit and debit cards. However, their processing rates don’t offer any discounts for debit card processing. Rates are fixed at 2.75% for swiped (or dipped) transactions, 2.9% + $0.30 per transaction for online payments, and 3.5% + $0.15 per transaction for keyed-in transactions.

Square offers a mobile-only processing solution with their Square Reader, which is now available in an EMV-compliant, Bluetooth-enabled product. While it’s not free like the old magstripe-only reader, it’s a great investment and much less expensive than competing products from other providers. The new reader also accepts NFC-based payment methods, future-proofing your system (at least for the time being).

Square also offers eCommerce payment processing, as well as a host of other features for both retail and eCommerce merchants. While it’s also available in Canada, high-risk merchants are not supported. There’s also no discount for nonprofit businesses. Square specializes in meeting the needs of low-volume merchants, and we recommend them for businesses processing less than $5,000 per month. For more details, see our complete review.

CDGcommerce

Another excellent choice for low-volume businesses, CDGcommerce offers a full-service merchant account for a low monthly fee of just $10.00 per month. That’s about as low as it gets for an actual merchant account, although you’ll want to seriously consider adding the optional cdg360 security package for an additional $15.00 per month. The company also offers true month-to-month billing with no early termination fee, which is a great feature for small businesses that don’t want to get trapped in a long-term contract.

In addition to basic credit/debit card processing, eCheck (ACH) processing is available for an additional fee. For eCommerce merchants, CDGcommerce offers a choice between their proprietary Quantum gateway and Authorize.Net (see our review). Either option is completely free, with no monthly gateway fees or additional per-transaction charges. For retailers, your account includes a “free” Verifone Vx520 EMV-compliant terminal. While there’s no charge for the terminal, you’ll have to pay a $79 per year maintenance fee, which is fully disclosed. You can also include a free mobile card reader with your account, but it’s magstripe-only at this time.

For businesses processing less than $10,000 per month, the company offers a simplified interchange-plus pricing plan. Rates are interchange + 0.25% + $0.10 per transaction for card-present transactions and interchange + 0.30% + $0.15 per transaction for online transactions. Discounted rates are also available for qualified nonprofit businesses.

CDGcommerce is not available in Canada and does not support high-risk merchants. For all others, it’s a great choice for a small business that wants a true merchant account with a minimum of expense or commitment. If the company sounds like a good fit for your business, check out our complete review.

Helcim

Helcim logo

With offices in both Canada and the United States, Helcim is another excellent provider that’s geared toward the needs of small business owners. Their Retail pricing plan costs only $15.00 per month and features interchange-plus rates starting at interchange + 0.25% + $0.08 per transaction. You’ll have to supply your own terminal, but the company offers them for sale at very competitive prices and doesn’t use overpriced terminal leases.

For eCommerce merchants, Helcim’s eCommerce pricing plan costs $35.00 per month and comes with the fully-featured Helcim Payment Gateway. Processing rates are all interchange-plus, and start at interchange + 0.45% + $0.25 per transaction. As with the Retail Plan, these are the highest rates available, with lower rates available if you meet their monthly processing volume requirements. Merchants who sell both online and from a storefront can get a combined Retail + eCommerce plan for $50.00 per month. Discounted rates are available for nonprofit businesses.

Helcim offers eCheck (ACH) processing as an optional add-on for $25.00 per month and $0.25 per check. Their mobile processing solution is free and included with all retail accounts. However, they currently only offer a magstripe-only card reader. To keep costs low, the company does not accept high-risk merchants. One caveat: Helcim freely discloses that their pricing structure will not be cost-effective for low-volume businesses processing less than $1500 per month. Read our full review for more details.

Dharma Merchant Services

Dharma Merchant Services review

You’d be hard-pressed to find a merchant services provider that’s more ethical and transparent than Dharma Merchant Services. They offer true month-to-month billing with no early termination fees, interchange-plus pricing, and low account fees – all of which are fully disclosed on their website. Account fees are only $10.00 per month for basic credit and debit card processing. eCheck (ACH) processing is available through one of several optional programs.

Dharma has special pricing plans for storefront, restaurant, and virtual (eCommerce) businesses. Processing rates range from interchange + 0.20% + $0.07 per transaction to interchange + 0.35% + $0.10 per transaction depending on your business type. Recurring and incidental fees are all disclosed on their website, including a $7.95 per month PCI compliance fee. The company also offers special discounted rates for nonprofits.

Mobile processing is supported through First Data’s Clover Go card reader and app. This service costs an additional $10.00 per month, plus $99 for the Clover Go Basic Reader (or $139 for the Clover Go Contactless reader). Dharma is only available to US-based merchants and can only support certain limited categories of high-risk businesses. The company’s fee structure is only suitable for businesses processing at least $10,000 per month, something which they also fully disclose on their website. For a more in-depth look at Dharma Merchant Services, please see our complete review.

Payline Data

Payline Data high risk merchant accounts

Another great option for small or new businesses is Payline Data. They offer a number of simplified pricing plans, all featuring interchange-plus pricing. Their Payline Start plan, designed specifically for new businesses, has no monthly fee and features a single processing rate of interchange + 0.50% + $0.10 per transaction. There’s also a $99.00 per year PCI compliance fee and a $25.00 monthly minimum, but that’s about it for recurring fees. Lower rates are available under the Payline Shop plan, which costs $9.95 per month. For eCommerce merchants, Payline Connect charges somewhat higher rates, but includes a payment gateway and virtual terminal for $10.00 per month.

While all accounts include basic credit/debit card processing, eCheck (ACH) processing is a separate service. Payline doesn’t disclose the cost of this option. They also offer Payline Mobile, their proprietary mobile processing solution. It costs $7.50 per month for merchants on the Payline Start plan, and features the Ingenico RP457c card reader, which can accept magstripe, EMV, and NFC-based payment methods and connects to your smartphone (or tablet) via either the headphone jack or Bluetooth.

Payline Data offers discounted rates to nonprofit businesses and can also support some high-risk merchants. It doesn’t advertise this capability, however, so you’ll have to ask your sales representative about it. The company’s services are only available to businesses in the United States. For a more detailed look at Payline Data, check out our complete review.

Fattmerchant

For a unique take on merchant account pricing, take a look at Fattmerchant and their subscription-based pricing. Their standard account pricing plan for both retail and eCommerce merchants includes a $99.00 per month subscription fee, but offers processing rates of interchange + $0.08 per transaction (for retail sales) or interchange + $0.15 per transaction (for online sales). These low rates eliminate the standard percentage markup that most other providers charge, as those charges are included as part of your monthly subscription fee. Almost all other account fees are also included in your subscription price, although you’ll have to pay an extra $7.95 per month if you need a payment gateway.

Fattmerchant can also process eCheck (ACH) payments, although they don’t disclose pricing for this option. Mobile processing is supported via the Fattmerchant Payments Mobile app, which is currently only available for iOS. The Fattmerchant Mobile Card Reader can accept either magstripe or EMV transactions and is included with your account.

Fattmerchant doesn’t advertise any discounted rates for nonprofits, and they don’t accept high-risk businesses. They’re also only available to US-based merchants. While their subscription-based pricing can result in significant savings for businesses with a sufficiently high processing volume, they’re not ideal for very low-volume merchants or businesses that are just starting out. If you’re regularly processing over several thousand dollars per month, however, we encourage you to compare their pricing with what you’re currently paying. You might be able to save a lot of money overall despite the relatively high subscription fee. For a more in-depth look at Fattmerchant, please see our complete review.

Final Thoughts

Selecting a merchant services provider should be approached with great caution. You need to really do your homework in evaluating the numerous plans and options each provider has to offer, as well as coming up with the most accurate estimate of total costs that you can. While a basic account for credit or debit card processing can be had for relatively little money, additional services will add to your costs quickly. Credit card terminals, a payment gateway, or an eCheck processing service will usually cost you more, although they will obviously be worth the price if your business needs them.

The six merchant services providers we’ve profiled here represent the best choices for a small business or one that’s just starting out. If you’re just opening your business and don’t have an established processing history or any idea of how much your processing volume will be, Square is probably your best bet. The up-front cost to start processing is exceptionally low, and the pay-as-you-go nature of their service will help you avoid monthly fees if you don’t need to process transactions every month.

When your business is large enough that you need the stability and additional features of a true merchant account, CDGcommerce, Helcim, and Payline Data are great choices. You’ll get a full-service merchant account for a very low price and will have the flexibility to switch providers without incurring a penalty. Once your business gets a little larger and more stable, Dharma Merchant Services and Fattmerchant can really save you money on your overall processing costs. To compare our top-rated providers side-by-side, check out our Merchant Account Comparison Chart.

The post Payment Processing Companies And Services For Small Businesses appeared first on Merchant Maverick.

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The Best Credit Card Reader For Your Small Business

So you want to use your cell phone or tablet to start accepting payments for your business. Whether this is your first time around or you’re just wondering if it’s time to update that old credit card reader you’ve had for four years, there’s certainly a lot to consider. What kind of technology is out there? How much does a cell phone credit card reader cost? Should I get a credit card machine and POS instead? Which are the best credit card readers?

I’ve seen a lot of mobile card readers in my time. And the first thing to understand is that the card reader is tied to the mobile processing app (mobile point of sale, or mPOS for short). Sadly, we can’t just mix and match one card reader with another app. So before anything, you need to look at the software and make sure it’s a good fit for your needs. You should also check the processing rates and the cost of the hardware.

Apart from aesthetics, the reality is there aren’t a lot of differences between one card reader and the next. They all have the same core features, and they all use the same sort of security. Reliability is as much a product of the app design as it is the hardware design, sometimes moreso. So while you do want a good, affordably priced credit card reader, you should first narrow down the list of potentials using the software as your main criteria. Once that’s done, you can take a closer look at all the hardware.

If you are curious about what your hardware options are, read on! I’ve compiled a list of the most popular credit card readers and their specs. Make sure you read our reviews for each mobile app so that you understand the drawbacks and shortcomings of each as well as all the advantages.

But first, let’s set the record straight.

Credit Card Reader vs. Credit Card Machine: Know Your Terms

So what’s the difference between a credit card reader and a credit card machine? While it’s certainly possible that you might encounter some people who use the terms interchangeably, “credit card reader” is generally the term for small mobile devices that connect to smartphones and tablets and process transactions through a mobile app. This connection can be physical or wireless. However, the smartphone or tablet typically has to also have either cellular signal or a Wi-Fi connection.

A credit card machine (also called a credit card terminal) is larger, not mobile, and generally connects to a full-fledged POS. They may or may not have an integrated receipt printer or a PIN pad device for customers. Credit card machines require a connection to either a phone line or the Internet to function. Some machines are capable of wireless Internet connections, but they do add to the cost.

The biggest difference between a credit card reader and a credit card machine is price, though. A mobile card reader can cost anything from $10 to about $80, whereas the typical entry-level price for a machine is about $120. However, depending on what features are included, a credit card terminal can cost $600 or more.

Types of Credit Card Readers for Phone & Tablet

When categorizing credit card readers, you need to consider two criteria: how the device connects to your phone or tablet, and which payment methods the device accepts (we’re not talking about manual entry options just yet).

Phone Connection Options:

  • 3.5mm/Headphone Jack: Most of your entry-level credit card readers will connect to a phone or tablet via the 3.5mm headphone jack. However, it’s worth noting that this design is slowly fading out. Part of the driving force is Apple’s removal of the headphone jack from its iPhones, but I think it’s also a result of our overall shift toward wireless. It’s worth pointing out that both Square and PayPal have Lighting to 3.5mm headphone jack adapters that will allow you to continue to use their magstripe readers.
  • Bluetooth: Bluetooth readers are becoming increasingly common. They’re compatible with both iOS systems, they’re secure, and they allow for some sophisticated card reader designs. The one downside to Bluetooth readers is that they can run low on power quickly if they’re always connected without a “sleep” mode.

Generally speaking, credit card readers for smartphones and tablets support one of these connection methods, but not both. There’s always an exception to the rule, however. With Apple moving toward Lightning ports for everything, it’s worth getting a Bluetooth device, which will ensure that no matter what smartphone or tablet you get in the future, the card reader will be able to connect.

Supported Payment Methods

  • Magstripe: Until 2015, magstripe transactions were the only form of credit card payment commonly accepted in the US. Magstripe transactions (also referred to as swipe transactions because they are made by swiping the card through a terminal or card reader) are still supported, but becoming superfluous as other, more secure payment methods become available.
  • EMV: In October 2015, a major liability shift occurred, shifting responsibility for fraudulent swipe transactions onto merchants, if that card had an EMV chip and the merchant did not have an EMV-enabled credit card reader. As a result, you probably saw a surge of chip cards appear, and payment processors rushed to introduced new hardware capable of processing chip card transactions. Chip cards are more secure and can help reduce in-person fraudulent transactions.
  • NFC/Contactless: Apple Pay, Android Pay, Samsung Pay, and all of the other “Pay” apps you’ve seen rely on NFC (near-field communication) technology. Transactions are often called contactless or “tap” transactions.

All mobile card readers on the market accept some combination of these three payment methods. As a merchant, it’s important that you are able to process EMV transactions to protect yourself against liability for fraudulent transactions.

Card Readers for iOS vs. Card Readers for Android: Is There a Difference?

Generally speaking, mPOS apps tend to offer more features to tablet users, especially iPads. But apart from enhanced features for tablets, there usually isn’t much difference between apps for iOS vs. apps for Android.

The same goes for mobile card readers. Unless the app itself is built to function only on one operating system, a card reader for iPhone or iPad works with an Android phone or tablet. So if your business has a mix of Android and iOS devices, you can use your hardware on both. You’ll just have to worry about pairing and re-pairing any Bluetooth devices as needed.

Now that we’ve identified the defining traits of credit card readers, let’s look at the mobile card readers from the most popular mPOS systems: Square and PayPal.

Square Credit Card Readers

Square (read our review) is definitely a leader in the mPOS industry, both for its software and hardware. It was one of the first mobile systems to embrace chip cards and it seems to put a high priority on keeping its hardware affordable.

The one piece of Square hardware that we haven’t included here is the Square Register, which is more of a full-fledged POS than a mobile system. Check out our full review of Square Register for a closer look at the system.

Square Magstripe Reader

If I wanted to be extremely hyperbolic, I would say that Square’s magstripe reader is synonymous with mobile processing. Instead, I’ll just say that the white and boxy device certainly is iconic. The overall design hasn’t changed in years. Available for free if you order directly from Square or $9.99 at retail stores such as Staples (Square will reimburse you later), this entry-level device connects via the headphone jack, and as the name says, handles magstripe transactions only.

  • Cost: Free ($9.99 reimbursed if bought at a retail location)
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe

Square Chip Card Reader

If you just glance at the Square Chip Card Reader (read our unboxing review), you might not notice any immediate differences between the magstripe reader and the chip card reader. That’s because Square didn’t exactly reinvent the wheel. The Chip Card Reader is slightly thicker than the original, with an extra slot for inserting the chip end of a credit or debit card. Unlike the magstripe reader, you need to periodically charge this model. Square sells the Chip Card reader for $29, which is, all considered, a pretty good price for a device that can handle magstripe and EMV transactions.

  • Cost: $29
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV

Square Contactless & Chip Card Reader

The Contactless and Chip Card Reader from Square doesn’t exactly break the mold as far as design: White, boxy, with Square’s logo set into it. What’s that expression? If it isn’t broke, don’t fix it?

Unlike the previous two card readers, the contactless and chip card reader relies on a Bluetooth connection to process transactions. And it doesn’t support magstripe cards at all. To get around this, Square includes a magstripe reader in the package as well.

The contactless and chip reader sells for a very reasonable $49, but if the upfront investment makes you cringe a bit, Square also offers an installment plan that will allow you to pay off a portion of the cost each week. Expect to pay a little bit more in the long term as a trade-off for the convenience of the installment plan, but it’s nowhere near as bad a hardware lease program from a traditional merchant account.

The contactless and chip reader is a slim, slick little device and you can certainly use it in a handheld mobile situation. But Square also sells a clever little dock to charge the device and still allow you to use it. The dock goes for $29 on its own, but it is optional.

  • Cost: $49 (dock available for additional $29)
  • Connection: Bluetooth
  • Payment Types Supported: EMV, NFC/Contactless (separate magstripe reader included)

Square Stand

The Square Stand isn’t really a card reader — it’s an iPad stand with an integrated magstripe reader. But it was one of the devices that helped make Square so popular with merchants. These days Square sells the stand with a contactless and chip card reader plus the dock. But it merits a mention here because it shows that mobile card readers can also be used in countertop/retail setups. Square even sells bundles and kits with everything you need to get set up.

The Square Stand plus the card readers will run you $169, which is less than you’d pay for all the individual components — the stand ($99 originally). The contactless and chip card reader ($49), and the dock ($29). Bundles that include a cash drawer and receipt printer start upwards of $500, not including the iPad.

  • Cost: $169
  • Connection: Bluetooth
  • Payment Types Supported: EMV, NFC, Magstripe (integrated into tablet stand)

PayPal Credit Card Readers

The other major name in the mPOS space (and commerce in general) is PayPal. The company’s mobile processing app, PayPal Here (read our review), isn’t quite as full-featured as Square, but you’ll find a lot of similarities between the two, especially as far as business model.

PayPal Mobile Card Reader

PayPal’s mobile card reader is a standard magstripe reader with a headphone jack connector. While the color has changed from PayPal blues to black, the overall shape hasn’t: it’s still a simple and quite stable triangle that connects via a headphone jack. There’s no frills or fuss here.

PayPal used to offer the mobile card reader for free through its website, but that’s no longer the case. It’ll cost you $14.99 to get started, though it’s worth the extra money to upgrade to at least an EMV reader.

  • Cost: $14.99
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe

PayPal Chip & Swipe Reader

PayPal’s Chip and Swipe reader is a step up from its Mobile Card Reader, with a sleek rectangular design. It’s about the size of a credit card and slim at just half an inch thick. Plus, $24.99 for a Bluetooth device that accepts both EMV and magstripe, makes it one of the more affordable options for card readers, especially if all you need is mobile support.

  • Cost: $24.99
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

PayPal Chip & Tap Reader

If you want more than just magstripe and EMV support, PayPal also sells a Chip and Tap reader that allows you to accept Apple Pay, Android Pay, and other contactless methods. The Chip and Tap reader looks quite a bit different from the Chip and Swipe reader. Though it’s still black, it’s boxy and measures 0.75 inches in depth.

I actually hate to say this, but the PayPal reader reminds me a bit of Clover Go’s all-in-one reader, just more refined. And unlike the Chip and Swipe reader, this design is meant for both mobile and countertop use — and PayPal offers a charging dock for those who are interested in a countertop setup.

Alone, the reader sells for $59.99, but a bundled kit with the reader and dock sells for $80 (PayPal indicates that’s a markdown from $89.99 on its website). I don’t see the dock listed for sale separately, but I would assume it would sell for $30 on its own.

  • Cost: $59.99 (bundle available for $79.99)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

PayPal Chip Card Reader

PayPal’s Chip Card Reader was actually the first EMV-enabled reader the company offered, and it wasn’t PayPal’s own design. The reader is actually a branded Miura M010, which has also previously been offered by Square, and is still available from Shopify as well.

The Chip Card Reader is a handy little mobile reader, but you can get a dock for it and mount it in a countertop setup (at least, until PayPal possibly phases this device out of its lineup). Despite its rather bland name, this reader accepts magstripe, EMV, and NFC/contactless payments. However, it comes at a steep price $79, which is still less than the original $150 it sold for. It’s worth noting that despite the PIN pad, it doesn’t support PIN entry because PayPal Here doesn’t support debit transactions.

  • Cost: $79
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Alternatives to Square & PayPal Readers

While Square and PayPal are certainly two of the biggest names, they’re not the only options if you need a mobile credit card reader. Let’s take a look at some of the other processors and what hardware they offer.

Shopify

Shopify is mostly associated with eCommerce, but it’s moved toward an all-in-one approach that includes a POS (read our review). The full-fledged POS package is designed for a countertop setup and syncs with your Shopify store. However, for a very reasonable $9/month, you can get the Shopify Lite plan, which supports sales through social media and a buy button on your own website, as well as access to the mobile POS. Keep in mind that this is designed almost exclusively for retail environments. For mobile users, though, Shopify offers two readers.

Shopify Tap, Chip & Swipe Reader 

I mentioned before that PayPal’s Chip Card Reader is actually made by another company and is called the Miura M010. Shopify licenses the same device and calls it the Tap, Chip and Swipe reader.

Again, you have a Bluetooth connection with support for magstripe, EMV, and contactless transactions. Shopify sells the reader for $89, which is on the higher end of things. The dock sells for $39. However, the reader is well designed and very functional, and if you want to accept Apple Pay and other “Pay” apps with Shopify, it’s the only option.

  • Cost: $89 (dock available for $39)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Shopify Chip and Swipe Reader 

Shopify’s Chip and Swipe Reader is a sleek white device. As the name implies, the reader can handle both magstripe and EMV transactions, but not contactless/NFC. I like that it comes with a dock charging dock by default, instead of as a pricey add-on.

The retail price for the reader is listed as $29, but as I am writing this, Shopify is offering it for free. The Chip and Swipe Reader is easily one of the more beautiful card readers I’ve seen, as well as innovative and well priced.

  • Cost: $29
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

Payline Mobile

Payline Data is a traditional merchant account processor, but its Payline Mobile app (read our review) is actually a viable standalone processing option even for low-volume and seasonal merchants. The company offers a standard magstripe reader (the Ingenico G5X) that isn’t particularly interesting. Its other mobile reader, though, is the Ingenico RP457c, and it is definitely one of the more innovative card reader designs I’ve ever seen.

For starters, the RP457c can connect to cell phones and tablets through the headphone jack or Bluetooth, which is very uncommon. It also supports magstripe, EMV, and NFC transactions all in one. The device is designed to clamp onto phones or rest in a dock for use as a wireless reader.

Payline doesn’t disclose its current pricing for the RP457c, in part because some merchants may be eligible for a free device. However, I was able to confirm that the reader retails for $150, which is quite expensive.

  • Cost: $150
  • Connection: 3.5mm, Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

SumUp

SumUp (read our review) is a European company that opened up processing for US merchants in 2017. While it’s not as comprehensive as other mPOS options, it does everything most merchants will need to do. It’s also worth pointing out that the SumUp mobile card reader, called the SumUp Air, actually won an award for its innovative design.

The SumUp Air shows its European sophistication with its sleek white minimalist design. It relies on a Bluetooth connection to process magstripe, EMV, and contactless transactions. If you want more information, check out our unboxing review of the SumUp card reader.

  • Cost: $69
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Clover Go

Clover Go (read our review) is the mobile extension to the Clover family of POS products developed by First Data. It functions best as an extension of Clover, but it can be a standalone POS option. However, pricing for the hardware as well as payment processing can vary significantly depending on which reseller you go through, and you should be wary of sales gimmicks and possible contracts with early termination fees.  However, don’t forget that anyone selling Clover products is just reselling First Data’s processing services.

Clover Go Reader 

Clover’s basic “entry level” reader is a headphone jack reader that supports magstripe and EMV transactions. The design is overall larger than most comparable devices, but Clover does include a clamp to help stabilize the card reader while attached to a phone or tablet.

Pricing for the Clover Go reader will depend on resellers. Some may even offer it for free. Unlike its all-in-one sibling, you can’t get this reader through the Apple Store and if you sign up with First Data directly you’ll probably be offered the All-In-One Reader first and foremost.

  • Cost: Varies according to reseller
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV

Clover All-In-One Reader

I said earlier that the PayPal Chip and Tap Reader reminded me of Clover Go. That’s because Clover Go is also a square, boxy device with very similar dimensions. However, whereas PayPal’s is black, Clover Go’s is white.

You’ll also find the All-In-One Reader comes with a dock. It’s not the most elegant design, but it will allow you to charge the device or keep it on a countertop while still processing card transactions.

Unfortunately, pricing for this card reader varies depending on which company a merchant chooses to sign up with. You can get it direct from First Data (or the Apple Store) for $39.95, not counting the dock, which sells for $34.  

  • Cost: $39.95 (through First Data or Apple Store; other prices vary according to reseller)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Intuit/QuickBooks GoPayment

Intuit’s mobile payment solution, QuickBooks GoPayment (read our review) appeals mostly to a small but viable niche — QuickBooks Online customers who need an easy way to take payments in person. While the app isn’t loaded with advanced features, it will work pretty well for merchants with simple needs. Intuit offers two readers to address merchant needs.

Chip and Magstripe Reader

Intuit’s Chip and Magstripe reader is a small, gray, unassuming device. It doesn’t have quite the sophistication of some other readers (I might even call it bland), but the design is overall good. The curves have a sort of friendliness about them rather and prevent it from looking boxy like other devices. As the name implies, this card reader supports magstripe and EMV transactions. It connects to a phone or tablet via Bluetooth.

The Chip and Magstripe Reader goes for $19 normally, but Intuit is offering the reader free for new merchants. That puts it at the lower price end, especially for a Bluetooth enabled device with EMV. You can also connect the device to computers running QuickBooks Desktop Pro 2018 and future versions of the software.

  • Cost: $19 (free with signup for new merchants)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

All-In-One Card Reader

Intuit’s newer card reader is an all-in-one device that connects via Bluetooth. But unlike its sibling, this device supports magstripe, chip card, and contactless transactions. By default, it’s meant to nest in a charging dock.

Intuit sells the all-in-one reader for $49, which is not a bad price at all considering that the dock/cradle is included at no extra charge. It has the same sort of nondescript gray finish, but Intuit has embraced a curvy aesthetic that is easy on the eyes.

  • Cost: $49 (including dock)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

PayAnywhere

Last on the list is PayAnywhere (read our review). While the name isn’t as recognizable as some of the alternatives, PayAnywhere’s mPOS does have some good features and interesting hardware. Its biggest shortcoming is simply the quality of customer service and some practices involving its Storefront plan.

PayAnywhere offers merchants a choice of two readers for merchants, though they still leave me a bit perplexed in terms of design.

PayAnywhere 2-In-1 Reader

PayAnywhere’s entry-level reader is a 2-in-1 device with magstripe and EMV support and Bluetooth connectivity. It looks pretty simple, and it actually reminds me of PayPal’s Chip and Tap reader with its shape and coloring.

There’s not much more to say about this little device except that PayAnywhere offers it free for new merchants. Additional 2-in-1 readers run for $30.

  • Cost: $29.95 (free for new merchants)
  • Connection: Bluetooth
  • Payment Types Supported: Magstripe, EMV

PayAnywhere 3-In-1 Reader

I think the most interesting thing about PayAnywhere’s 3-In-1 Reader is that it’s the only mobile card reader I’ve seen that supports NFC and connects via a headphone jack. (The Ingenico RP457c can connect via headphone jack OR Bluetooth, so I don’t count it in the same category.) It looks shiny and futuristic with its black finish and lights, which is ironic for a device that uses a dying connection method.

PayAnywhere offers its 3-in-1 device for $40, but on the website you’ll also see an offer for free processing on your first $5,000 in Apple Pay transactions (valued at $135). However, an offer like that should not be the deciding factor in choosing a processor.

  • Cost: $39.95
  • Connection: 3.5mm
  • Payment Types Supported: Magstripe, EMV, NFC/Contactless

Is a Mobile Credit Card Reader Absolutely Necessary?

You don’t actually have to have a mobile credit card reader to process payments with a mobile POS system.

Flint Mobile, a mobile processor that works through Stripe, has no credit card readers at all. Instead, the app relies on a device’s camera to scan cards. The camera doesn’t actually snap a photo of the card, which would be a huge security issue. But the app is able to open the camera and scan a card the same way QR code readers are able to access the camera to open QR code links. Flint has a couple of filters it applies to the camera for added security.

That said, Flint isn’t the only mobile option with this ability. PayPal Here and Intuit GoPayment also include the camera scanning feature.

Not only that, but most mPOS apps also include a feature that allows you to manually key in transactions. These process at a higher rate that swiped/dipped/tapped transactions because they’re processed as card-not-present, like ecommerce transactions. But it’s a useful alternative when the card reader is being glitchy or the card is very worn. The notable exception to all this is SumUp, a company that started in Europe and doesn’t support manual entry for cards except through its virtual terminal.

Of course, if you don’t want to pay extra for manually entering transactions, it might be best to spend a little extra money and buy a backup card reader or two in case one starts to misbehave.

Are Free Credit Card Readers Worth It?

Several mobile POS options (including Square) provide an incentive for potential customers in the form of a free credit card reader. This can certainly make it more tempting to try out a payment processing service, but it shouldn’t be the deciding factor.

For one, free card readers tend to be pretty basic. Some have EMV support, but none of the free card readers on this list support contactless payments. Contactless support may not be mandatory for everyone, but EMV support should be a mandatory feature for every merchant. A reader with a Bluetooth connection will also ensure it’s future-proof no matter what phone or tablet you upgrade to later on.

Two, a free mobile card reader will absolutely not offset a processor’s shortcomings, such as poor customer service or missing features. It’s smarter for merchants to make a decision based on the quality of the mobile app, its features, and the processor’s customer support.

So while the ability to try some mPOS options without any upfront investment is nice, please don’t let a free credit card reader be the reason you pick one processor over another. Make sure you explore all of your options.

Don’t let a free reader be the determining factor in choosing an mPOS.

Final Thoughts

I’m not going to try and convince you that mobile credit card readers are the world’s most fascinating subject (even if I could probably talk your ear off for a couple of hours about all the different designs and features and how they embody the philosophies of the companies that sell them).

But if nothing else, you should take away a few key ideas that will prepare you to choose a mobile point of sale app and a credit card reader:

  • Software is more important than the hardware. Make sure the app has what features you need before you set your heart on a device.
  • Make sure the card reader you choose has EMV support. In 2018, there’s no reason why you shouldn’t be taking such a basic step to protect yourself and your business.
  • Prices for credit card readers range from totally free to upwards of $75. How much you want to spend is entirely up to you, but you will generally pay more for Bluetooth connectivity and for NFC support. Don’t be suckered in by the offer of a free reader, because there are lots of other criteria you should consider first.
  • You don’t technically need a mobile reader to take payments on a phone or tablet. However, you will pay more to process manually entered transactions in your mPOS app, so it’s a good idea to get one anyway.

Thanks for reading! If you’re ready to choose an mPOS app, a great place to start is our mobile processing comparison chart! Otherwise, if you have questions, feel free to leave us a comment!

The post The Best Credit Card Reader For Your Small Business appeared first on Merchant Maverick.

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