Best Payment Gateways for Small Businesses with Low Transaction Fees

Every small business owner knows the feeling: you look at your monthly processing statement and wonder where all the money went. Payment gateway fees nibble away at margins, and choosing the wrong provider can cost thousands a year. The good news? You don't have to accept the default. Whether you're running a coffee shop, a freelance design studio, or a growing ecommerce brand, the things actually worth buying are the gateways that balance low fees with the features you need.

We dug into the numbers — comparing flat-rate models against interchange-plus pricing, monthly fees, and real-world use cases — to find the four payment gateways that give small businesses the best deal in 2025.1

Flat-Rate vs. Interchange-Plus: What's the Difference?

Before we get to the picks, it's worth understanding the two main pricing models because that's where the savings live.

Flat-rate pricing charges a single percentage plus a fixed fee on every transaction, no matter the card type. It's simple, predictable, and great for low-volume businesses. Square and Stripe both use this model.1

Interchange-plus pricing passes along the actual interchange fee set by the card networks (Visa, Mastercard, etc.) and adds a small markup. It's cheaper for high-volume merchants because you're not overpaying on premium-card transactions. PayPal and Shopify Payments offer variations of this model.2

The rule of thumb: if you process under $5,000/month, flat-rate is fine. Above that, interchange-plus almost always wins.

The Best Payment Gateways for Low Fees

1. Square — Best for In-Person & Low-Barrier Entry

Square is the easiest way to start accepting payments with zero upfront cost. There are no monthly fees, no long-term contracts, and the hardware is free for basic setups.1

For in-person transactions, Square charges 2.6% + 10¢ per swipe/dip/tap. Online payments (keyed-in or via Square Online) run at 2.9% + 30¢.2 Those are flat rates — simple to understand, simple to budget.

Where Square really shines is the ecosystem: free POS software, inventory management, and even a free online store. If you're a retailer, restaurant, or service business that takes payments face-to-face, Square is the obvious starting point.1

Best for: In-person businesses, pop-ups, and anyone who wants to start accepting cards today with zero monthly commitment.

2. Stripe — Best for Online Businesses & Developers

Stripe is the gold standard for online payment processing. It's the engine behind countless ecommerce stores, subscription services, and marketplaces — and for good reason.1

Like Square, Stripe charges 2.9% + 30¢ per successful card charge with no monthly fees.2 But the real value is in what you can build: Stripe's API lets you customize checkout flows, set up recurring billing, accept 135+ currencies, and integrate with hundreds of platforms.2

Stripe also offers competitive rates for international cards and digital wallets like Apple Pay and Google Pay. If your business lives online and you want control over the checkout experience, Stripe is the pick.1

Best for: Ecommerce stores, SaaS businesses, and anyone who needs a developer-friendly payment platform.

3. PayPal — Best for Trust & Versatility

PayPal is the payment gateway customers already trust. With over 400 million active accounts worldwide, offering PayPal at checkout can increase conversion rates significantly.1

PayPal's standard rate is 2.99% + 49¢ per transaction (slightly higher than Square and Stripe), but there are no monthly account fees.2 The trade-off is worth it for many small businesses because PayPal's brand recognition reduces cart abandonment.

PayPal also offers PayPal Payments Pro ($30/month) for a hosted checkout experience, and PayPal Zettle for in-person payments. The versatility — online, in-person, invoicing, buy-now-pay-later — makes it a solid all-in-one option.1

Best for: Businesses that want maximum customer trust, international selling, and a familiar checkout button.

4. Shopify Payments — Best for Shopify Users

If you run a Shopify store, Shopify Payments is the no-brainer choice. It's built directly into the platform, which means zero transaction fees on top of your Shopify subscription — compared to 2.0% + 30¢ if you use a third-party gateway.1

Shopify Payments rates are 2.9% + 30¢ for online transactions (on the Basic plan) and 2.6% + 10¢ for in-person via Shopify POS.2 Higher-tier plans (Shopify, Advanced) get lower rates, down to 2.4% + 30¢ online.

The real savings come from avoiding the third-party surcharge. If you're already paying for Shopify, using Shopify Payments eliminates that extra 2% hit — which can add up fast.1

Best for: Anyone running a Shopify store who wants the lowest total cost and tightest integration.

Side-by-Side Comparison

Which One Should You Choose?

There's no single "cheapest" gateway — it depends on how and where you sell.

• Sell face-to-face? Go with Square. No monthly fees, competitive in-person rates, and a free POS system.1
• Sell online and need flexibility? Stripe gives you the best rates and the most powerful API.1
• Want maximum customer trust? PayPal is worth the slight premium for the conversion lift.2
• Already on Shopify? Use Shopify Payments to avoid third-party surcharges and keep everything in one place.1

Recomate earns affiliate commissions when you sign up through the links above. We only recommend payment gateways we've vetted for pricing, reliability, and small-business fit.

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