Thursday, February 18, 2016

Square vs Shopify - Comparing Two E-Commerce Sites & Their Features

3/17/16 Update: Square transactions made using the online store are increasing from 2.75% to 2.9% + $.30 per transaction, the same price as Shopify for this category.  See updated table below.

When you have something to sell, an e-commerce site can be one of the biggest tools you use to not only collect payment for an item, but also to get exposure for items.  Two of the biggest names in e-commerce are Square and Shopify, and while they can accomplish many of the same things, they do them in different ways and offer different features.  This post covers the similarities and differences between these two e-commerce solutions.

The Similarities
  • Zero setup fees
  • Zero transactions fees for the buyer of the item(s)
  • Has available card readers for direct in person sales
  • Provides an online shop/website to advertise and sell item(s)
  • Allows invoices to be emailed directly to customers, rather than having a customer add items to their cart for online sales
  • Fees collected are automatically deposited into connected bank accounts
  • Credit card rates apply equally to Visa, MasterCard, Discover and American Express cards
The Differences



Account Fees
While Square does not charge any monthly fees, all Shopify plans have a monthly fee.  Shopify's Lite plan is $9 per month and the Basic plan is $29 per month.  The Lite plan does not include a website/online presence, so if this is something you require, you will want to choose the Basic plan should Shopify be the e-commerce solution you select.

Credit Card Rates for Swiped Cards
Square charges a flat rate of 2.75% for all swiped credit cards.  Credit card rates for Shopify's Lite and Basic plans are 2.70%.  While Shopify does have larger plans with reduced rates, they have a higher monthly fee.  However, if you have a high amount of e-commerce traffic, these plans may be more appropriate.  

Credit Card Rates - Manual & Online
Square charges a higher percentage for manual transactions or those made without the physical card.  The credit card rate for these transactions is 3.5% plus $.15 per transaction.  Shopify charges a higher percentage for online transactions, charging a credit card rate of 2.9% plus $.30 per transaction, for both Lite and Basic plans.  The credit card rate for online purchases using Square is the same as those for swiped cards which is 2.75%. Update 3/17/16: Square purchases using the online store will increase to 2.9% + $.30 per transaction.

Deposits
Fees collected using Square are deposited into connected bank accounts within 1 - 2 days, while Shopify makes deposits within 3 days.  This is a small difference and likely not the decision maker for most people, but still worthy of noting.

External Payment Gateways
While Square processes payments using the card reader in person, making payments online or by verbally entering a card, Shopify does this and more.  Shopify is also partnered with third party payment gateways like Amazon Payments, Paypal, Braintree, Dwolla, Quickbooks Payments, Verifi, and many more. Using these payment gateways accrues a 2% transaction fee in addition to the applicable credit card rates. 

Point of Sale Card Readers
Card readers cost $49 from Square and $129 from Shopify, though there are times when special sign up offers will provide these for free.  Both companies provide readers with the latest and greatest in security utilizing EMV and NFC.  EMV technology reads the chips embedded in cards while NFC uses a contactless communication like Apple, Google, and Samsung Pay.  Both EMV and NFC provide a higher level of security and are harder to counterfeit.


For people getting started or those who do not have a high amount of e-commerce traffic, Square may be the better choice as it provides an online presence without any monthly fees and the credit card rates are comparable.  Anyone with a more established e-commerce business or those expecting large amounts of growth should consider Shopify.  Shopify has multiple plans to choose from which ensures a balance of the lowest possible monthly fees with the best credit card rates for everyone's unique level of transactions.  

In summary, both Square and Shopify are excellent e-commerce solutions for businesses and individuals with transactions both small and large.  When considering which solution is best, consider the average monthly e-commerce transactions, the monthly account fees, the most common transaction types (in person, online, etc.) and the corresponding rates for these by solution, and lastly what payment types to accept.  Considering what e-commerce solutions a business needs will allow one solution to stand above the other.

As always, knowing what options are available is only half the equation, knowing what you need is the rest!

10 comments:

  1. Replies
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