Square VS PayPal: Which Is Best For Small Business?

Both Square and PayPal offer mobile credit card readers for in-person selling. As far as PayPal’s card reader vs. Square’s, Square still offers a free plug-in magstripe reader, while both companies offer inexpensive Bluetooth-connected readers that can accept chip cards along with NFC payments, such as Apple Pay and Google Pay. However, only Square offers full POS systems and smart terminals.

While PayPal Zettle integrates with several popular POS systems, you’ll still be limited to using the Zettle Reader 2. It’s a stylish device that takes chip, NFC, and PIN payments, but it’s not a smart terminal. For that, you need the Zettle Terminal, which will run you $199 without accessories.

Looking at the POS app differences between Square vs. PayPal Zettle, Square’s back-end dashboard really shines, giving you access to your basics in payments and everything behind the scenes.

While PayPal Zettle’s inventory management system is an improvement over that of PayPal Here and is now nearly a match for Square’s inventory management, Square still stands alone in offering an offline mode. That’s a big deal when you’re selling on the go and can’t get a steady internet connection.

Additionally, Square’s customer database allows you to associate a purchase with a specific customer, then links up with Square Loyalty and Square Marketing. While some of the features of each are premium add-ons, Square Marketing comes with several free templates, so you can still email all of your contacts with updates and offers. Square’s customer database also doubles as the spot where you can make notes about customers, track their spending habits with you, and store cards on file.

PayPal Zettle doesn’t have these features, but it does offer free sub-user accounts so that you can give every employee, volunteer, or team member a unique login. Square also allows you to do something similar for basic logins, but you’ll need to pay the monthly fee for employee management if you want timekeeping and advanced features.

Both Square and PayPal 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 the same service costs $10/month with PayPal (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, which costs $30/month. It includes hosted checkout pages and the virtual terminal but will require a developer to implement. Alternatively, you can get PayPal Payments Advanced for $5/month, which gives you hosted checkout pages but no virtual terminal.

You can also implement PayPal in addition to 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 lift a finger 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. For more information about Square’s website and online selling options, check out our Square Online payments guide.

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 as Square does, but you will find an extensive list of compatible ready-made 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 recently rolled out Square Online Checkout, allowing Square users some of the same flexibility in payments and donation management. Square Checkout simplifies 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 through Weebly, which Square recently acquired. 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 as well.

Both PayPal and Square let you sell subscriptions and accept recurring payments. However, while Square offers this to all users for free, PayPal charges $10/month 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 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.

Regarding virtual terminals, PayPal has me scratching my head. While we do see some merchant accounts adding extra fees for a virtual terminal, Paypal’s added fee of $30/month for its Payments Pro plan to take card-not-present sales is pretty steep!

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 on the PayPal side.

Square and PayPal have multiple credit and debit cards for merchants to select from. In particular, 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 to your PayPal account instantly (or up to three days to 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 from $300-$250,000. 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 processing at least $15K-$20K annually. Your first two PayPal loans can be from $1,000-$125,000, while subsequent loans can go up to $200K. 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, with both offering banking and cryptocurrency investing. Only Cash App allows for stock market investing, though. You cannot use Venmo to send money internationally, while Cash App only allows international transactions between the US and 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/etc. 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 Checkout Links to create payment links that can be placed in your Facebook/Instagram/Twitter 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 (1.99% + $0.49) to nonprofits, making it the winner of this category.

For more information, see our Square for nonprofits and PayPal for nonprofits posts.