Square vs PayPal (March 2020): Clash of the Payment Processing Titans

Whether you’re searching for an offline card reader, a way to take credit card payments online, or a POS app, you’ve probably come across both PayPal and Square in the past.

Both Square and PayPal are incredibly popular tools for merchants and business owners. They offer an easy way to start making money through your online or offline store, whether you’re taking digital payments, or credit cards. PayPal is pretty much a household name among consumers and businesses today. There’s a good chance that many of your favorite stores even offer customers the option to pay for their products using a PayPal account.

On the other hand, while Square doesn’t have exactly the same status that PayPal does, it does benefit from a large and growing consumer base. Square has a very extensive set of features, including some credit card processing systems and readers that are a lot more impressive than PayPal’s.

However, when it comes to making the choice between PayPal vs Square, things can get a little complicated. After all, the two systems are pretty similar.

If all you need is a mobile card reader, or a way to take debit and credit card payments online, then you can use either Square or PayPal for that purpose. So, how do you make the right choice between the two?

We’re here to help with that.

This Square vs PayPal review will guide you through all the ins and outs of both payment processing systems so that you can make the right investment in your business.

Square vs PayPal: Fees and Processing Rates

Probably one of the first things that you’ll want to consider when you’re comparing PayPal vs Square, is how much you’re going to need to pay in processing fees to manage your transactions. Both Square and PayPal offer very similar prices for their credit card processing technology, so at first glance, the two don’t have much to separate them. Additionally, neither service will charge you regular subscription fees beyond the ones that you incur for a transaction.

Square Fees

Here’s what you pay for Square:

  • 2.9% plus 30 cents for online payments
  • 2.5% for keyed entry
  • 1.75% for card transactions

You can see a more complete rundown of the fee types here:

square fees

Crucially, Square’s pricing also comes with access to a credit card reader when you first open your account. This means that you can immediately start taking payments both online and offline. Additionally, all of the Square pricing packages come with access to the state-of-the-art POS system from Square, which helps you to manage your business on the backend.

From a security and safety perspective, Square also comes with no chargeback fees whatsoever. Part of the reason for that is that Square has a unique chargeback protection system built into its technology. This covers you from potential chargeback disputes up to $250.

If you process a large number of transactions every month, then Square can also customize your payment processing experience to suit your unique needs. There’s a discount for bulk payments, but nothing for charities and non-profits.

PayPal Fees

So, how does PayPal add up?

The costs look something like this:

  • 2.75% for chip and pin/ contactless payments
  • 5% plus 5 cents for a micropayment
  • 2.9% plus a fixed fee to add PayPal buttons to your site
  • 2.9% plus 30 cents for online sales
  • 2.9% plus a fixed fee to add PayPal to your checkout
  • 3.4% plus 30c for payments from magstripe

If you’re worried about chargebacks and disputes with PayPal, then you’re pretty well-protected again. The chargeback protection offered by PayPal includes support for unauthorized transactions, and even help when items aren’t received by customers.

When a chargeback is initiated with PayPal, the amount requested will be refunded to the customer, while the merchant gets a fee with a cap of $20. Crucially, you can have your initial fee refunded if PayPal finds that the case should be decided in your favor.

Another point to keep in mind when you’re comparing PayPal vs Square in terms of pricing, is that each payment processing company also comes with additional “optional” costs to think about. For instance, though there are no monthly fees for PayPal, you may need to consider costs like:

  • Recurring billing: $10 per month
  • Micropayments: 5% plus $0.05
  • Hosted payment page/ Virtual terminal: $30 per month
  • Mass payouts: 2% fee

On the other hand, Square comes with extra fee options like Payroll for $34 per month, or

Both Square and PayPal are pretty decent overall when it comes to pricing. The core features for both payment processing tools are very similar. Since the pricing for the supplemental services will only apply to some people, you needn’t worry about it much if you’re only looking to build a basic ecommerce site.

Square vs PayPal: Compatible Devices

While extra software functionality will definitely ramp up the price of your Square or PayPal service a little -one other expense you may need to consider is the compatible hardware. This will only be relevant to you if you want to run an offline pop-up store as well as an online service.

Square POS and PayPal Here, the mobile systems for the two providers, run on Android and iOS phones and tablets. Alternatively, you can purchase a number of terminals and other devices to upgrade your offline experience too.

Square is clearly the more robust option for companies in search of hardware, with a huge selection of devices to choose from.

square hardware

One of the most basic Bluetooth enabled devices is Square’s contactless and chip reader, which you can access for $49. There’s no magstripe transaction with this, but you get your magstripe reader for free from Square anyway.

We’re not going to spend too long going through all the different tools available from Square in this review – as we have other articles available for that. However, we will note that the Square Stand and the Square Register are two of the most powerful POS tools on the market today. The Square Stand for $199 comes with the contactless and chip reader included, as well as a swivel stand so you can show an order to your customers.

The Square Register (read our Square Register review), on the other hand, is a lot more expensive, but it’s also intended for much bigger businesses. At around $1,000, the Register comes with a custom Android tablet included, as well as a customer-facing display and integrated card reader. There’s nothing on the market from PayPal that’s anywhere near this comprehensive.

Interestingly, Square offers a magstripe reader for free to its customers, while PayPal will ask you to pay $15 for the same tech. We’d probably recommend upgrading to the Bluetooth Chip and Swipe reader instead of you’re going to get some basic tech, however. This device retails at $24.99 and comes with a clip so you can mount it to your phone or tablet. If you want to accept contactless payment, you can also get the chip and tap reader for $59.99.

Alternatively, if you’re looking for a more comprehensive system overall, then you can try the re-branded Miura M010 that PayPal offers for $99. The device is pretty intuitive, and it works well with a POS system like Vend POS. However, there’s no built-in POS for the PayPal brand like you get with Square.

Clearly Square comes out ahead of PayPal in this area. You can even get financing for your devices to spread the cost out over a longer period of time. However, if you’re just looking for something simple to support your small business or pop up store, then you can probably get by with both Square and PayPal.

Additionally, PayPal Here and Square POS both come with a bunch of cash drawers, bar scanners, and receipt printers that you can attach to them for extra functionality.

Square vs PayPal: Receiving Payments

The price that it costs to manage payments is just one of the things you’ll need to consider when you’re looking for a tool to process your online transactions. You’ll also need to ensure that whichever system you choose can give you access to your money as quickly and painlessly as possible too. A big advantage of PayPal for instance is how fast you can unlock your cash.

Any of the mobile payments that you accept through PayPal will be available almost instantly in your PayPal account. If you have your own debit card or credit card with PayPal (through Mastercard), then you’ll be able to spend your money immediately. There aren’t any fees to use your PayPal card, and you can transfer funds to your bank account if you prefer too.

The transfers are free and can take anywhere up to 3-4 business days to get into your account. You can also initiate instant transfers if you’re willing to pay a 1% fee for the transfer amount.

Square is pretty speedy when it comes to bank transfers and payments too. Usually, you’ll be able to get a standard payment to your bank account within one or two business days, depending on when your payment was processed. Often, the payments taken by your credit card processor before 5 Pm PT will be available the next business day.

Like PayPal, Square offers an instant transfer option too, for 1% of the total transferred sum. As of 2019, Square has also implemented a digital wallet for merchants similar to PayPal. If you order a Square card, you can immediately swipe that card and use it to pay for services instantly, with no funds. The debit card is also backed by Mastercard.

Square vs PayPal: Payment Options

Aside from transaction fees and payment times, another major point you’ll need to consider when comparing Square and PayPal, is how many options they give you for accepting payments from customers around the world.

Square, for instance, stands out as one of the leading payment processing solutions, because it can accept all major credit and debit cards. Additionally, you can use Square terminals and online POS systems to accept Apple Pay, Android, eWallet payments and more. Additionally, Square comes with a free card reader, as well as access to a wide range of alternative hardware options for your offline business. This means that you can either run a local company, a pop-up-store, or a huge global venture without too much trouble.

Though Square is an incredibly flexible option for accepting payments both online and offline, PayPal has plenty to offer too. First of all, you’ve got the benefit that many consumers in today’s world already have a PayPal account that they’ll feel comfortable using to make a payment. Many consumers appreciate seeing the option to pay with PayPal alongside more common choices like credit or debit card transactions.

Additionally, PayPal is one of the most significant payment processors worldwide. You can take payments through PayPal in more than 200 countries around the world, which means that you’ll be able to take your business as far as you’d like. This is particularly useful for companies that are selling services rather than products.

What’s more, with PayPal, you can accept every major debit and credit card for your eCommerce store or your offline business. Another major bonus? If your clients want to spread the cost of whatever they’re buying out over a little while, they can use the PayPal credit system instead.

The PayPal credit feature is a particularly compelling part of what makes PayPal stand out as a processing tool. The more options you can give your customers on how to pay for their goods and services, the more likely they are to convert.

Square vs PayPal: Ease of Use

Choosing the right point of sale system, or an online service for taking card payments, means thinking about a number of different things. Do you want your POS system to be connected to a magstripe reader that you can use for offline payments? Do you need to make sure that your service works with the current checkout that you have set up for your website? Are you going to look into things like android and apple pay as well as debit card and credit cards?

paypal

However, before you can get carried away with all the features that modern systems have to offer, you’ll need to ensure that the service that you’re getting is easy enough to use. After all, when you start taking dozens, or even hundreds of payments every day, you don’t want to worry about whether your system is set up correctly.

The good news is that both PayPal and Square are designed for simplicity. Square built its entire business around the idea that simplicity should always be a crucial component of your POS. Everything that you need to run your store will be available for you, whether you’re using one of Square’s state-of-the-art terminals, or you’re sticking to a tablet or desktop.

square

Obviously, if you’re using the Square POS online, the ease of use that you experience will be affected somewhat by the other technology that you’re using, such as your hosting provider and the company that you’ve build your website with. However, Square is currently one of the best options for beginners in the offline and online world.

On the other hand, PayPal is another exceptionally easy-to-use system for payment processing. You can start taking card payments online with PayPal in seconds. All you need to do is copy/paste some code from the PayPal site onto your shopping cart system. You can also add PayPal buttons to your website that allow customers to add products to their cart or set up automatic billing.

PayPal is an excellent alternative to Square for beginners. The only downside is that it does generally move the customers that come to your website outside of your domain when they’re making a purchase. This means that the payment process is a little more complex for end-users with PayPal than it is with Square.

Square vs. PayPal: Mobile Payments

So, should you choose Square or PayPal when you want to accept mobile payments for a temporary store?

Both PayPal and Square are excellent at offering an efficient eCommerce sales experience. For instance, Square recently purchased Weebly to help businesses design a more immersive checkout process for digital customers. Additionally, there’s a Square API available if you want to build payment processing into your existing checkout.

On the other hand, PayPal is one of the most popular and convenient ecommerce payment options on the market, known by customers all around the world. However, when it comes to mobile payments, Square definitely has an edge on the market.

The Square POS is one of the most powerful mobile apps for merchants on the market, working perfectly with smartphones, iPads and other tablets alike. When you sign up for a Square account, you also get a free magstripe reader as standard.

Although PayPal does provide mobile payment options through PayPal Here, they’re not nearly as advanced or comprehensive as what you can get with Square. For instance, two of the major areas where Square gets out ahead of PayPal in this area is with an offline mode, and inventory management.

Inventory management from the Square POS app means that you can track the quantities of your products in your mobile tool, set low-stock alerts, and even bulk upload inventory information. There’s also the option to adjust stock to account for damage, returns, and theft. Although you do need to upgrade to Square for Retail if you want more advanced features like multi-location inventory management, you still get a lot more than anything available from PayPal.

The customer database provided by the Square app alone is enough to make a massive difference to your payment processing strategy, as you can link purchases to specific customers. You’ll also have the option to save card details and other information to a file, rather than asking your customers to present a card at every purchase.

Sadly, PayPal Here just doesn’t match up.

Although it’s an attractive feature from the PayPal team, and a great way for beginners to get started with offline payments, it’s very limited in functionality.

The biggest benefit of PayPal Here, by far, is the fact that you can create up to 1,000 sub-user accounts underneath your own master account. This means that any of the volunteers or employees that are helping out with your company can also have their own login. Alternatively, if you want to issue individual login details to your employees with Square, then you’ll need to enable employee management, which means paying an extra monthly fee.

Square vs. PayPal: Invoicing and Virtual Terminals

Square and PayPal are both companies that offer an excellent selection of tools for today’s business owners. As well as taking immediate online and offline payments through your credit card reader, chip card reader, or POS system, you can also use these services to invoice your customers.

Invoicing is an excellent tool to have in a world where customers are looking for multiple payment options. Rather than needing to take a card swipe or direct transaction for everything you sell, you can use PayPal or Square to set up long-term payments instead. These online transactions will work similarly to any of the other payments that you take online.

There are no extra fees to invoicing with Square vs. PayPal if you’re using this feature for your merchant services. You’ll just pay the processing costs that are typical for any card system. The feature sets from both PayPal and Square are pretty similar too.

 

square payment details

With Square’s invoicing feature, merchants can generate custom invoices without any add-ons or plugins for their digital transactions. You can implement a logo and business information, and even attach files to the invoice. Additionally, if you need to take monthly fees from a customer, you can schedule recurring invoices that include terms of services and other details too.

Square gives you the option to add discounts and sales tax through your POS app. Additionally, if you want to accept tips or donations along with your payments, then you can include that too. This makes Square one of the most diverse processing services for invoicing. Small business owners can even use their invoicing tools with customer details pulled from their existing customer database.

Some of the more recent additions to the Square experience include the ability to request down payments on invoices and download contract templates.

square payments new invoice

PayPal’s invoicing tool is also a handy option for today’s businesses. You can create custom designs for your invoices that include your business information and logo. Additionally, there’s the option to add terms and conditions, notes for clients, and photos. PayPal will even allow you to leave a private note for yourself if necessary. The most notable difference between Square and PayPal is the fact that there’s no integrated customer database or linked inventory. Additionally, you cant store card swipe details on file.

However, like Square, PayPal will give you the option to request down payments on invoices or enable partial payments so that your customers can pay what they owe over time.

From a virtual terminal perspective, Square and PayPal are once again quite similar – the main difference being that you’ll need to pay extra by $30 a month for PayPal’s virtual terminal. The Terminal comes as part of the Payments Pro plan, rather than being built into the standard POS. On the other hand, Square’s virtual terminal is completely free and syncs seamlessly with the rest of the Square environment.

Square vs. PayPal: Extra Features

Both Square and PayPal are exciting options for companies that want quick access to reliable merchant services and payment processing. Whether you’re taking online transactions or contactless payments, you’ll love the wide range of features that come from both providers.

However, both Square and PayPal have areas where they separate themselves from the crowd. For instance, the Developer tools from Square a lot more significant from Square than they are from PayPal. While PayPal gives you invoicing and subscription management, the marketplace tools for developers are pretty limited at this point. On the other hand, Square offers APIs that are ready-made for reporting, analytics, inventory tools, back-office management, and online or in-app payments.

Additionally, both Square and PayPal also offer merchant financing options for companies that need a little extra help finding the money for their new inventory, hardware, and payment processing services. Both Square and PayPal offer financing programs for eligible businesses. However, it’s worth noting that neither option is likely to be the best for your online store if you want to keep costs low when buying a tap reader or cash drawer.

Finally, Square and PayPal also offer access to sales reports and analytics to help you keep track of how your business is performing. Square definitely comes out ahead of PayPal again here, by offering more insight into your customers and your inventory.

Integrations and Addons

Notably, there is another way to extend the functionality that’s available from both Square and PayPal today, and that’s through integrations and add-ons.

Both PayPal and Square offer access to various add-ons and integrations. While PayPal has chosen to partner with a range of other best-in-breed companies, rather than developing software on its’ own, Square focuses on acting as your primary source of support for virtually every aspect of your business.

With PayPal, you can access integrations with things like Google, QuickBooks, eBay, and many others to help with things like sales and sales reports. On the other hand, Square has various of its own add-ons to offer for stuff like employee management, marketing, loyalty schemes, and even gift cards.

That’s not to say that Square doesn’t play well with other third-party integrations too. There are still ways to connect your account to eCommerce, POS, and accounting solutions, as well as tools for invoicing, inventory management, accounting, and much more. The main difference is that you can keep everything in your Square account if you want to.

While Square’s list of integrations isn’t as large as other options like Stripe, it’s a lot more varied overall than PayPal. You’ll definitely have a robust selection of tools available with PayPal, but Square is a lot more flexible and open, for those who need that.

Square vs. PayPal: Customer Service & Support

Ultimately, no matter what kind of payment processing solution you choose for your business, you’re always going to need customer service from time to time. Even if you select something as easy to use as PayPal or Square, there could be moments where you need extra assistance.

Unfortunately, not all companies are as reliable as they should be when it comes to technical support and customer service. Neither Square nor PayPal is likely to win any awards when it comes to customer support and service. Both companies are pretty basic in what they have to offer.

Square Customer Service Solutions include:

  • Help Center: The help center from Square is pretty detailed. It covers a lot of different topics, including how to start your Square account.
  • Social media: Square offers support through a Twitter feed and a YouTube channel. There’s also the option to post to the Facebook page.
  • Phone and email support: Phone support from Square is only available when you have a code. Unfortunately, you won’t be able to access that code if your account is “unfairly” terminated. You should still get a 24-hour turnaround on an email though.
  • Community forum: You can also get advice from Square staff and customers by visiting the Square forum. It’s a useful resource to have when you’re struggling with Square features.

PayPal Customer Service Solutions include:

  • The Home Hub: Here, you can get most of your questions answered through FAQ topics linking to articles.
  • Social media: Twitter and Facebook are available to answer your questions. However, they’re not always speedy at getting back to you.
  • Phone and Email: Phone support from PayPal isn’t a very consistent experience, but it is there. Fortunately, you should be able to access most of the answers you need elsewhere.
  • Community Forum: Like Square, PayPal allows you to get answers to your questions from other users through its community forum.

Square vs. PayPal: Which Should You Use?

So, which option should you pick when it comes to Square vs. PayPal?

Well, that all depends on what you need.

Generally, Square is the best option for individual sellers and businesses who want an affordable and simple way to sell their products anywhere, accept any kind of payment, and manage everything they need in a centralized environment. You can use Square if you’re a service provider, eCommerce store owner, or a seller using a mobile device at a local pop-up store.

Square is also definitely the best option for anyone with an offline presence. If you’re looking for a POS system that comes with access to some of the best hardware on the market, then Square is it. With your free Square profile, you’ll be able to access all the payment options you need to make a profit in your business, as well as a wide selection of sales, inventory, and employee management tools. There’s even access to a free credit card magstripe reader when you first start.

On the other hand…

PayPal is one of the most popular and appealing payment powerhouse solutions on the market. If you’re looking for something that’s going to help you get the most out of your online store, then you’ll definitely want to look at PayPal as your online payment provider. Online buyers love having the option to pay for things using PayPal. Additionally, the secure system available with PayPal will integrate well with most of the eCommerce platforms that you can use.

PayPal also gives you the option to go far beyond online selling if you need to as well. There’s PayPal Here for your mobile point of sale service. Although it’s not as comprehensive as the kind of experience that you get from Square, it’s definitely worth using for smaller businesses. Additionally, PayPal also comes with virtual terminals and recurring payment options – however, both of these incur monthly fees, unlike with Square.

If you’re selling online, and you’re using an eCommerce platform to manage things like customer details and inventory, the PayPal environment could be perfect for you. However, if you want to combine your brick-and-mortar store with your online sales, then Square will always beat PayPal overall.

What Are the Alternatives?

PayPal makes a lot of sense for some merchants. If you’re selling online through multiple channels like eBay and Esty, then you’ll love the comfort that PayPal gives to your global customer base. It’s great to have a comprehensive platform that allows you to take multiple payments from channels around the world on the same account. Alternatively, Square offers the biggest selection of benefits for merchants that want to deliver a combination of offline and online payment strategies.

Additionally, Square offers more advanced features for business owners than PayPal and doesn’t charge monthly fees for things like recurring invoices and virtual terminals. But, what do you do if you don’t want to use Square or PayPal?

Well, there are still options available.

Here are some of our favorites.

Payline Data

Payline is a simple payment processor that offers mobile, instore and online payment services. Ideal for in-store transactions, Payline is way cheaper and more flexible than PayPal for retail businesses of the traditional nature. Additionally, there’s an interchange plus pricing schedule, which means that the fees vary based on what kind of cards you process.

Pros 👍

  • Flexible interchange plus pricing structure
  • In-store credit card processing packages
  • Cheaper offline transaction fees
  • Mobile payment support

Cons 👎

  • Only available in the US
  • Difficult to forecast your monthly fees
  • Not as good at eCommerce as PayPal

👉 Check out our detailed Payline Data review.

Stripe

stripe

Stripe is another excellent alternative to both PayPal and Square. This unique solution has quickly become the preferred ecommerce platform of a lot of leading stores. Squarespace has been working with this company for several years now. Additionally, the Shopify Payments system is available through the Stripe payment processing technology too. Stripe offers a comprehensive all-in-one offering for merchants. If you’re looking for streamlined simplicity and a lot of great integrations with third-party tools, this is the option for you.

Pros 👍

  • Automatic payments to your bank account
  • Mobile and online payments available
  • Access to companies all over the world
  • Only pay for what you need
  • Support with real-time reporting
  • Transparent pricing
  • Excellent integrations

Cons 👎

  • Takes a while for money to be available
  • Merchant accounts only available in some countries
  • Extra fee for international cards
  • Not as simple as Square or PayPal when it comes to using the interface.

👉 Check out our detailed Stripe review.

Google Pay

Finally, Google Pay might not be as well-known of an alternative to Square or PayPal, but it’s an offering that’s quickly gaining traction. If you want to receive debit and credit cards online, then the Google Business solution with Google Wallet is an excellent choice. Google Pay is quick and easy to use for all customers, and it’s free to access too. Google Pay enables fast and simple checkout on a multitude of stores and online sites.

Pros 👍

  • Works with a range of payment options
  • SCA security built-in
  • Takes minutes to receive or send out payments
  • No fees required
  • Fantastic for smaller businesses

Cons 👎

  • Limited availability
  • None of the back-end extras associated with Square
  • No dedicated offline hardware available

Which payment processing system will you be using this year? Are you going to stick with PayPal or Square, or would you prefer to explore the benefits of one of our alternatives? Let us know in the comments below.