Square VS PayPal: Which Is Best For Small Business?

Both Square and PayPal offer mobile credit card readers and standalone all-in-one touchscreen terminals for in-person sales. While Square still offers a free plug-in magstripe reader, it’s only suitable for occasional/very low-volume sales due to the antiquated and less-than-fully-secure nature of magstripe technology.

Both companies offer inexpensive Bluetooth-connected readers that can accept chip cards along with NFC payments, such as Apple Pay and Google Pay. While the PayPal reader sports a PIN pad, Square’s contactless reader does not — you’ll need at least a Square Terminal for that.

Both Square and PayPal offer all-in-one touchscreen terminals that come with the POS app pre-installed and can be used on a standalone basis — no need to pair with your phone. If you’re looking for a full POS setup, Square has many more industry-specific register kits available with various combinations of hardware, including cash drawers, receipt printers, barcode scanners, and iPad stands/mounts. These accessories can also be purchased on a stand-alone basis, and some Square register kits give you the option of including an iPad in the package.

PayPal now offers register kits in four different combinations — fewer than the number of register kits Square offers. Plus, only Square offers restaurant-specific POS equipment.

Looking at the POS app differences between Square vs. PayPal Point of Sale, Square’s back-end dashboard really shines, giving you access to your basics in payments and everything behind the scenes. While both Square and PayPal offer an inventory system, Square’s premium POS packages offer more advanced inventory features than PayPal.

Both PayPal and Square offer comprehensive invoicing systems that offer recurring invoicing, automatic payment reminders, partial payments, invoice customization, and more.

However, Square comes out on top here because it does not charge a monthly fee for recurring billing, whereas PayPal does (unless you are using PayPal Checkout, confusingly enough). Plus, when paying an invoice via ACH, Square takes a 1% fee, while PayPal takes a 3.49% + $0.49 fee from invoices paid via check.

Online Payments

Like Square, PayPal doesn’t offer customization in the checkout process — unless you opt for the PayPal Payments Pro plan. It includes hosted checkout pages and the virtual terminal, but it will require a developer to implement. Alternatively, you can get PayPal Payments Advanced, which gives you hosted checkout pages but no virtual terminal.

You can also implement PayPal as a secondary payment method alongside your existing payment processor using PayPal Checkout. Again, you’ll need a developer to implement this option, but Checkout uses contextual information to display to customers the opportunity to checkout with PayPal, Venmo, or even PayPal Credit, without you having to do a thing after setting it up.

Square offers a plethora of developer tools at no charge, enabling lots of versatility as long as you have a developer’s expertise at hand. However, you still can’t use Square as a supplementary payment method, unlike PayPal.

Online Sales Tools

PayPal began as an online payment processor, and that’s still the core of its business, yet you won’t find as many out-of-the-box selling solutions as you can with Square. For instance, PayPal doesn’t offer a free website like Square does, but you will find an extensive list of compatible third-party integrations.

PayPal also offers robust tools to create custom and “smart” payment buttons for purchases. You can also create donation buttons to add anywhere online, allowing donors to choose whether to make a one-time or recurring donation.

Thankfully, Square now offers payment links, allowing Square users some of the same flexibility in payments and donation management. These links simplify your customer’s eCommerce experience down to a simple link or button, making it much easier for anyone to start selling online or taking donations, even if you don’t have a site.

If you need a full site but don’t have the time, money, or expertise to create one from scratch, Square offers a free online Square Store. The free version is pretty basic, but you can upgrade to one of the competitively priced paid plans for more features. Square also supports numerous online store integrations and offers developer tools as well.

International Sales

If you have an eCommerce business, being unable to process international sales may be a deal-breaker. At this time, Square does not support international sellers, so PayPal is the obvious winner here.

However, if you plan to scale with a global eCommerce focus, we recommend Shopify as another fantastic option for its ease of use and overall functionality. You can immediately activate your PayPal button at the back end of your Shopify dashboard to facilitate PayPal digital payments as well.

Our list of the best PayPal alternatives showcases some additional payment processors with particularly strong international eCommerce capabilities.

Both PayPal and Square let you sell subscriptions and accept recurring payments. However, while Square offers this to all users for free, PayPal charges a monthly fee for this service if you are using PayPal Payments Advanced or Payments Pro. If you’re just using PayPal Checkout, however, there is no monthly fee.

Additionally, both Square and PayPal have consumer financing products that merchants can offer their customers. These include Afterpay, PayPal Pay In 4, and PayPal Credit. These products allow businesses that sell high-ticket items to offer “buy now, pay later” options without taking on any financial risk.

While we do see some merchant accounts adding extra fees for a virtual terminal, PayPal’s monthly fee for its Payments Pro plan to take card-not-present sales is pretty steep. You can also get the virtual terminal on its own without getting Payments Pro, but it comes with a monthly fee, as well.

Square and Shopify both include a free virtual terminal. If you ever accept payments over the phone, you’ll want to consider the extra fees PayPal charges for this.

Square and PayPal have multiple credit and debit cards for merchants to select from. Square’s debit card, Square Card, is useful for Square merchants who want instant access to their funds without waiting for the standard one to two business days for an ACH transfer. In terms of quick access to funds, Square Card makes Square competitive with PayPal since PayPal deposits show up in your PayPal account instantly (or up to three days in your bank account). Meanwhile, PayPal’s business debit card lets you make purchases directly from your PayPal business account while earning 1% cash back.

Square also offers Square Banking, a suite of services that includes business checking and savings accounts, along with access to small business loans. Loan offers are based on your card sales. PayPal doesn’t have an equivalent banking service, but it does offer PayPal Working Capital loans to PayPal sellers. PayPal also offers more traditional short-term business loans through its subsidiary, LoanBuilder.

As for digital wallets, PayPal has Venmo in its corner, while Square has Cash App. Both are more consumer-oriented than business-oriented, offering banking and cryptocurrency investing. Only Cash App allows stock market investing, though. You cannot use Venmo to send money internationally, while Cash App only allows international transactions between the US and the UK.

PayPal merchants who prefer to sell on their social media accounts (or who may want to supplement their online store sales) can create an embedded payment link and post it on their Facebook, Twitter, or other profiles. Another feature, Shops on Facebook and Instagram, lets you sell products from your Instagram page while giving you access to the full ecosystem of Instagram Shopping tools.

Square offers similar social selling features — you can use Square to create payment links that can be placed in your social media posts. And when you build an online store with Square Online, you can connect it to your Instagram feed. When you tag items in your posts, your followers can make purchases from the Instagram app.

Regarding Square vs PayPal for nonprofits, both companies offer fundraising and donation tools for nonprofit organizations, including donor information collection and customizable donation buttons. However, only PayPal offers a special discounted processing rate to nonprofits, making it the winner of this category.

For more information, see our Square for Nonprofits and PayPal for Nonprofits guides.