Online Payments for Australian Small Businesses: Stripe vs Square vs PayPal

Online payments in Australia have never been more accessible — but choosing the wrong platform costs real money. Whether you're a tradie sending invoices from the job site, a retailer taking in-person and online payments, or a professional services firm billing monthly retainers, the platform you choose affects your cash flow, your fees bill, and your customer experience.

This guide covers every major online payment option available to Australian small businesses in 2025, with real fee comparisons, use-case matching, and the GST implications most business owners overlook. The short answer: Stripe wins for online-first businesses, Square wins for businesses that need hardware, and PayPal is rarely the best choice for new setups — but the details matter enormously.

Why Online Payments Matter for Australian Small Businesses

Australia has one of the highest rates of card and digital payment adoption in the world. According to the Reserve Bank of Australia's 2023 Consumer Payments Survey, cash now accounts for less than 13% of consumer payments by number — down from over 60% in 2010. Your customers expect to pay digitally, and businesses that remain cash-only or invoice-only are increasingly leaving money on the table.

The ABS's 2022-23 Business Characteristics Survey found that approximately 35% of Australian small businesses still had no website or online presence. Of those that did have a website, a large proportion had no payment functionality at all. This is a significant competitive disadvantage: businesses that can accept payment at the moment a customer decides to buy — online, on mobile, or at the door — convert at dramatically higher rates than those who send a bank transfer request later.

For tradies specifically, the move to tap-to-pay via phone has transformed on-site payment collection. A plumber or electrician who can tap and receive payment the moment a job is done gets paid faster and faces far fewer "I'll transfer it later" situations.

Platform-by-Platform Breakdown

Stripe

Stripe is the developer's choice that has become accessible to everyone. It launched in Australia in 2013 and has become the dominant payment infrastructure for online businesses, SaaS companies, and increasingly, professional service firms. Stripe's key strength is its flexibility: you can embed a payment form on your website, send a payment link via SMS or email, create recurring billing, issue invoices, and build sophisticated payment flows — all from one account.

For Australian small businesses, Stripe's standout features are:

• Stripe Invoicing: Send professional invoices with a "Pay Now" button directly built in. Customers can pay by card, BPAY, or direct debit. Free for up to 25 invoices per month.
• Payment Links: Create a shareable payment URL in under a minute — no website required. Useful for tradies who want to text a payment link after completing a job.
• Stripe Terminal: Physical card readers that connect to Stripe, allowing in-person payments through the same dashboard as online payments. Hardware costs from ~$399 AUD.
• Payouts: Funds settle to your Australian bank account in 2 business days by default (faster with Instant Payouts for a 1% fee).

Stripe does not natively support Afterpay or Zip as checkout options (unlike some competitors), though third-party integrations exist. It also doesn't offer a walk-up hardware solution as seamlessly as Square.

Square

Square launched in Australia in 2016 and has built a strong presence particularly among retail, hospitality, and mobile service businesses. Square's defining advantage is its unified hardware-and-software ecosystem: the free Square Reader (a small Bluetooth card reader) lets any iPhone or Android become a payment terminal within minutes of signing up.

Square's key features for Australian businesses:

• Free card reader on sign-up: Square sends a free magstripe/contactless reader to new Australian accounts. A more capable Bluetooth reader is available for ~$59 AUD, and a full POS stand for retail is available from ~$599.
• Square Point of Sale (POS): A full inventory management, staff management, and reporting system built into the free Square app. Particularly well-suited to cafes, retail shops, and markets.
• Square Invoices: Similar to Stripe's invoicing product — send invoices with card payment links built in. Free tier available.
• Afterpay integration: Square now supports Afterpay at checkout (both in-person and online), which Stripe does not offer natively.
• Payouts: Standard next-business-day payouts to Australian bank accounts.

Square's weakness is its fee structure for high-volume businesses — the flat 1.9% rate is competitive at low volumes but doesn't offer volume discounts the way Stripe can (via custom pricing at scale).

PayPal

PayPal was the original online payment platform for Australian small businesses and still has strong brand recognition, particularly among older consumers. However, for new business setups in 2025, PayPal is rarely the optimal choice. Its fees are higher than Stripe and Square, its checkout experience is dated, and its dispute resolution process heavily favours buyers over sellers.

PayPal remains relevant in specific contexts:

• Businesses selling on eBay or Facebook Marketplace (PayPal is deeply integrated)
• Businesses whose customers are over 55 and trust the PayPal brand
• International transactions where PayPal's currency conversion can be convenient

PayPal's domestic transaction fee in Australia is 2.6% + $0.30 for card payments — higher than both Stripe (1.7% + $0.30) and Square (1.9% flat). For a business processing $50,000 per year, that's approximately $450 more in fees annually compared to Stripe.

Tyro

Tyro is an Australian fintech company founded in 2003 and is the most significant Australia-only payment provider on this list. Tyro's core product is its EFTPOS terminal hardware, which is popular with medical practices, hospitality venues, and retail businesses that do high transaction volumes. Tyro integrates directly with many Australian-specific POS systems including Kounta, Deputy, and medical practice management software.

Key Tyro characteristics:

• Integrated EFTPOS: Tyro terminals can integrate with your POS system so transactions are automatically matched, reducing reconciliation time significantly.
• Surcharging: Tyro makes it easy to pass card surcharges on to customers, which is common practice in Australian hospitality and medical settings.
• Medicare and HICAPS integration: Tyro's terminals support Medicare and health fund claiming, making it essential for medical, dental, and allied health businesses.
• Pricing: Tyro quotes custom rates based on monthly turnover. Entry-level rates typically start around 1.4% for domestic Visa/Mastercard, making it competitive at higher volumes.

Tyro requires a minimum monthly volume to be cost-effective and is not suitable for very small businesses or those who primarily transact online.

Till Payments

Till Payments (formerly Paydock) is an Australian payment orchestration platform that is particularly popular with businesses needing to route transactions across multiple payment providers. It's more relevant for mid-sized businesses with complex needs than for typical small businesses. Pricing is custom and typically involves a monthly platform fee plus per-transaction costs. For most small businesses, Stripe or Square will be a simpler and more cost-effective choice.

Fee Comparison Table

All fees in AUD. Correct as of early 2025 — always verify current pricing directly with each provider before making a decision.

Platform	Setup Cost	Monthly Fee	Domestic Card	Intl Card	AMEX	Payout Timing
Stripe	$0	$0	1.7% + $0.30	3.5% + $0.30	2.2% + $0.30	2 business days
Square	$0 (free reader)	$0	1.9% flat	1.9% flat	1.9% flat	Next business day
PayPal	$0	$0	2.6% + $0.30	3.6% + $0.30	3.6% + $0.30	Instant to PayPal, 1-3 days to bank
Tyro	Terminal rental/purchase	From ~$29	From ~1.4%	Varies	Varies	Next business day
Till Payments	Custom	Custom	Custom	Custom	Custom	Custom

Note: Square charges the same 1.9% for domestic and international cards, which makes it particularly advantageous for businesses with international customers. Stripe's international card surcharge is significant if you regularly charge overseas clients.

Use Case Matching: Which Platform for Which Business?

Tradies (Plumbers, Electricians, Builders, Painters)

For tradies, the best payment setup in 2025 is typically Square as the primary in-person solution combined with either Square Invoices or Stripe Invoices for sending invoices to commercial clients.

The Square Reader is ideal for tradies because:

• It's free to get started — no hardware cost barrier
• The Square app works seamlessly on any iPhone or Android
• Customers can tap their card or phone on the reader the moment the job is done
• Square's invoice feature lets you send a professional invoice with a card payment link for clients who prefer to pay from their computer

If you're a plumber doing a mix of emergency residential work (tap payment on-site) and ongoing commercial work (invoiced billing), Square handles both from a single platform.

Retail Businesses

Square is the clear winner for retail. The Square for Retail app is a full point-of-sale system with inventory management, barcode scanning, staff clock-in, and end-of-day reporting — all free for basic use. The Square hardware ecosystem (readers, stands, receipt printers, cash drawers) integrates seamlessly. For a small retail shop spending $30,000-$150,000 per year, the 1.9% flat rate is cost-competitive and the POS functionality saves hours of manual reconciliation.

Professional Services (Accountants, Consultants, Lawyers)

Stripe is typically the best fit for professional services businesses because its invoicing and recurring billing functionality is more sophisticated. Stripe's integration with accounting platforms like Xero and MYOB is also excellent — transactions automatically reconcile, reducing bookkeeping overhead. For an accounting or consulting firm sending regular invoices, Stripe's invoice-with-payment-link workflow is clean and professional.

Online-First Businesses

Stripe is the dominant choice for any business primarily transacting online. Its documentation and developer APIs are industry-leading, its checkout conversion rates are high, and its integration with major e-commerce platforms (Shopify, WooCommerce, Squarespace) is seamless. For businesses building a custom website, Stripe's embeddable payment elements can be added to any page with minimal technical knowledge.

GST and Tax Implications

This is an area where many Australian small businesses make expensive mistakes. Here's what you need to know:

Are payment processing fees GST-inclusive?

Yes — Stripe, Square, and PayPal all charge GST on their processing fees for Australian businesses. This means the fees you pay are GST-inclusive (i.e., 10% GST is included in the stated fee). The good news: this GST is a business expense and you can claim the GST component back as an input tax credit on your BAS, provided you're registered for GST.

For example: if Stripe charges you $170 in processing fees in a quarter, approximately $15.45 of that is GST, which you can claim back. Keep your Stripe/Square monthly statements as the tax invoices that support your ITC claims.

GST on sales

The payment platform you use does not affect your GST obligations on sales. If you're registered for GST, you must collect 10% GST on taxable sales regardless of how you collect payment. Most businesses should configure their payment platform to ensure pricing is displayed correctly — if you charge $110 for a service ($100 + $10 GST), ensure your invoice clearly shows the $10 GST component.

PAYG Withholding from payments

If your business makes payments to contractors or employees through any platform, standard PAYG withholding rules apply. Using a payment platform doesn't change your obligations. Always check ATO guidance if you're unsure about withholding requirements for specific payment types.

Reporting to the ATO

The ATO receives third-party data from payment providers as part of the Taxable Payments Annual Report (TPAR) regime. If your business is in a TPAR industry (building, cleaning, courier, IT, road freight, security), you need to report payments made to contractors regardless of how they were collected. Additionally, from 2024, payment platforms are required to report merchant settlement data to the ATO — the ATO will use this to cross-check your business income declarations.

Getting Started: Step-by-Step for Each Platform

Getting started with Stripe

1. Go to stripe.com and create a free account with your email address
2. Complete identity verification (passport or driver's licence, plus business details including ABN)
3. Add your Australian bank account for payouts
4. Choose your first product: Payment Links (for quick payment collection), Invoicing (for client billing), or speak with a developer if embedding on your website
5. Test with a $1 transaction to confirm payouts are working before going live

Getting started with Square

1. Go to squareup.com/au and sign up with your email address
2. Verify your identity and add your ABN and business details
3. Order your free card reader — it will arrive by post within 3-5 business days
4. Download the Square Point of Sale app on your phone
5. Add your bank account and confirm a small verification deposit
6. You're ready to take your first payment — just tap "Charge" in the app and have the customer tap their card

Getting started with PayPal

1. Go to paypal.com/au and create a Business account
2. Verify your identity and add your bank account
3. Generate a payment link or add the PayPal checkout button to your website
4. Note that PayPal holds funds for 21 days for new accounts — this eases over time as your transaction history grows

The Bottom Line: Which Should You Choose?

For most Australian small businesses in 2025:

• Online-first businesses: Stripe
• Tradies and mobile service businesses: Square (with Stripe for invoicing if needed)
• Retail with in-person POS needs: Square
• Professional services (accountants, consultants): Stripe
• High-volume retail or hospitality: Tyro (get a custom quote)
• eBay/marketplace sellers: PayPal (you often have no choice)

The key is to match the platform to how your customers actually pay you, not to choose the most popular option. If you're building a new website and want payment capability built in from day one, our free invoice generator can help you get started with professional invoicing while you set up your payment account.