How to Choose Payment Processing and POS Software
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Payment processing is the rare business expense you can never eliminate — every sale carries a fee. The goal is not zero fees, which do not exist, but a structure that fits how you actually sell, with no surprises.
Square and Stripe represent the two natural starting points. Square's point-of-sale software is free — the business model is the processing fee on each sale — which suits retailers, cafés, and service businesses. Stripe is the developer-friendly payments platform for online and in-person sales. This guide covers how to choose between those shapes.
Start with where the money changes hands
In-person, online, or both — this single question eliminates half the options. A café needs a fast POS with a card reader; an online store needs a checkout that converts; a business doing both needs one system that reconciles them. Square grew up in-person and expanded online; Stripe grew up online and expanded in-person through Terminal and card readers.
Beware the bolt-on: a POS with online added later (or vice versa) often means two dashboards, two payout schedules, and reconciliation headaches. If you sell in both places, trial both sides before you commit.
Learn the two pricing religions
Processors price in two broad ways: flat-rate, one predictable rate per sale, and interchange-plus, the card network's cost plus a fixed markup. Flat rate is simple and predictable — Square's model — and usually suits smaller or spikier volume. Interchange-plus is transparent and usually suits higher, steadier volume.
The crossover point is real but unknowable in advance. Start with the simple structure, track your effective rate — total fees divided by total volume — for a quarter, and only switch when the math, not a sales rep, says to.
Price the hardware and the humans
POS hardware looks affordable until you outfit three registers, a kitchen display, and a backup reader. List every device, then check what happens when one dies on a Saturday — overnight replacement, or a trip to the store? Downtime during rush hour dwarfs any rate difference.
Then price the humans: who trains the staff, who answers the phone when a payout is late, and what does support actually cost? A processor with real human support is worth a slightly higher effective rate for most small businesses.
Check the exit and the extras
Some processors hold your customer data hostage; the good ones export cleanly. Confirm you can take your customer list, transaction history, and recurring billing tokens with you. Recurring billing is the painful one — ask specifically how stored payment methods transfer.
Extras like appointments, online stores, invoices, and loyalty programs are genuinely useful when they replace a second subscription — and genuinely distracting when they do not. Only count the extras you would otherwise pay for separately.
Quick checklist
- Classify your sales: in-person, online, or both — and trial both sides if both.
- Start with flat-rate pricing; compute your effective rate quarterly before considering interchange-plus.
- List all hardware, then ask about failure replacement on a Saturday.
- Confirm you can export customers, history, and recurring billing tokens.
- Check what support is included and how to reach a human when payouts stall.
- Only value extras — appointments, loyalty, online store — you would pay for separately.
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