Payment Processing Fees Explained: Stripe, PayPal and Square
Every time a customer pays you by card, PayPal or a digital wallet, the payment company keeps a slice. It is easy to ignore on a single sale and surprisingly large across a year. Knowing exactly what you pay, and what to charge so that the fees are covered, is one of the simplest ways to protect your margin.
This guide explains how payment processing fees are calculated, compares the standard rates of Stripe, PayPal and Square, and shows how to work out the price you need to charge to receive a set amount.
How payment processing fees work
Almost every processor uses the same structure: a percentage of the payment plus a fixed fee per transaction.
- The percentage covers the card networks and banks, and grows with the size of the sale.
- The fixed fee is charged on every payment, whatever its size.
On top of that, most processors add:
- An international card fee when the customer's card was issued in another country.
- A currency conversion fee when the customer pays in a different currency from the one you are paid in.
- In some countries, tax on the fee, such as GST on payment gateway fees in India.
Platforms that sit on top of a processor, such as store builders, marketplaces and app stores, may also take their own percentage, and your software plan is a monthly cost of its own.
Stripe, PayPal and Square compared
These are the standard published rates for a card payment in the United States, checked in September 2026:
- Stripe: 2.9% + $0.30, plus 1.5% for international cards and 1% for currency conversion.
- PayPal checkout: 3.49% + $0.49, plus 1.5% for international payments and a 4% currency conversion spread.
- Square online: 2.9% + $0.30.
- Square in person: 2.6% + $0.15.
On a $100 payment that means:
- Stripe: $3.20 in fees, you receive $96.80.
- PayPal: $3.98 in fees, you receive $96.02.
- Square online: $3.20 in fees, you receive $96.80.
- Square in person: $2.75 in fees, you receive $97.25.
Rates differ a lot by country. Stripe's standard rate is 1.5% + 20p in the UK, 1.5% + €0.25 in the Eurozone, 1.7% + A$0.30 in Australia and 3.4% + S$0.50 in Singapore. A £100 UK card payment through Stripe costs just £1.70.
International cards and currency conversion add up
The extras are where fees climb quickly. The same $100 payment from a foreign card that also needs currency conversion:
- Through Stripe: 2.9% + 1.5% + 1% = 5.4% + $0.30, so $5.70 in fees and $94.30 received.
- Through PayPal: 3.49% + 1.5% + 4% = 8.99% + $0.49, so $9.48 in fees and $90.52 received.
If you sell abroad, pricing in your customer's currency and checking these surcharges can matter more than the headline rate.
Why small payments are expensive
The fixed fee hits small payments hardest. On Stripe's US rate, a $1 payment costs $0.33 in fees, which is 33% of the sale. A $0.25 payment would cost $0.31 and actually lose money. That is why tips, donations and micro-payments are often bundled, or given a minimum amount.
How much to charge to cover the fees
If you want to receive a set amount, you cannot simply add the percentage on top, because the fee is charged on the higher price too. The correct formula is:
Price = (amount you want + fixed fee) ÷ (1 − percentage rate)
To receive $100 through Stripe US:
- (100 + 0.30) ÷ (1 − 0.029) = 103.2956...
- Rounded up to the cent: $103.30.
- The fee on $103.30 is $3.30, which leaves exactly $100.00.
The same target needs $104.12 through PayPal checkout and $102.82 through Square in person. Adding 2.9% to $100 would give only $102.90, which leaves you short.
Our Universal Payment & SaaS Fee Calculator does this for you. Because every fee is rounded to the cent, it checks the price cent by cent to find the lowest one that really covers the fees.
Platform, marketplace and SaaS fees
If you sell through a store builder, a marketplace or an app store, there is often a second percentage on top of payment processing. A $50 sale through Stripe with a 5% platform fee costs $1.75 in processing and $2.50 to the platform: $4.25 in total, or 8.5% of the sale.
Add your monthly plan as well. At $10,000 a month in sales across 100 payments, Stripe's standard US rate costs $320. With a 5% platform fee and a $39 plan, your total monthly cost is $859, or 8.59% of sales. Seeing the whole picture is the only way to compare platforms fairly.
Tax on processing fees
In some countries tax is added to the processor's fee. In India, GST (usually 18%) is charged on payment gateway fees, so a ₹1,000 card payment on Stripe's 2% rate costs ₹20 plus ₹3.60 in GST, and you receive ₹976.40. Australian Stripe prices already include GST.
Can you pass the fees on to customers?
Building fees into your price is always allowed. Adding a separate card surcharge is different: it is banned for consumer cards in the UK and the EU, and restricted in some US states. Check the rules where you sell before adding one. When you do change your prices, you can use our Invoice Generator to bill the new amount.
Ways to pay less in fees
- Ask for custom pricing once your volume grows. Most processors negotiate with larger businesses.
- Encourage bank transfers or direct debit for large invoices, where fees are usually lower.
- Avoid unnecessary currency conversion by settling in the currencies you sell in.
- Set a minimum order value so the fixed fee does not eat small sales.
- Compare processors for your real mix of sales, not just the headline rate.
Work out your own fees
Choose your country and processor, enter an amount, and the free Universal Payment & SaaS Fee Calculator shows the fees, what you keep, what to charge to receive a set amount, your monthly cost, and how Stripe, PayPal and Square compare. Every preset can be edited to match your own account.
Want to know what a payment actually costs you?