Ecosystem Distribution vs Low Fees

This is the core tradeoff between low cost acquiring and ecosystem distribution. A merchant paying more to Zettle or Stripe is not just buying card acceptance, they are buying access to more ways for a customer to pay, and in some cases more ways to sell. PayPal can route in wallet and Pay Later demand into the same merchant flow, while Stripe lets merchants run online checkout, in person payments, and financing from one system.

• With PayPal POS, a shop can take contactless cards and digital wallets on an iPhone with no extra hardware, and PayPal also offers Pay Later and PayPal payment options. That makes the higher MDR easier to swallow because the merchant gets more checkout choices and access to PayPal linked buyers.
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• Stripe wins the same argument from the software side. Terminal plugs into the same Stripe stack used for online checkout, subscriptions, marketplaces, and merchant cash advances, so a merchant can see online and offline payments in one back end instead of stitching together separate vendors.
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• FlatPay is attacking from the opposite direction. It starts with a cheaper all in one setup for a single store, then adds ecommerce plugins and merchant cash advances later. That is attractive for straightforward SMBs, but it does not yet match the built in consumer demand and product breadth of PayPal or Stripe.
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Competition in SMB payments is moving away from the card reader alone and toward who controls the broadest commerce workflow. As Tap to Pay and SoftPOS make hardware less special, the winners will be the providers that combine acceptance, software, financing, and customer reach tightly enough that merchants care less about a few basis points of fee difference.