Square VS PayPal For Small Business: Which Is Better?

PayPal and Square (sometimes called Squareup) are both huge names in the payment processing industry. They provide similar core features for small businesses — whether that is in-person (mobile POS) sales, eCommerce sales, or a combination of the two. Here, we inspect how each platform compares in the most important categories. After reading this post, you will have a clearer answer to the PayPal vs. Square debate as it pertains to your small business, and you’ll know whether Square or PayPal will deliver a better value for your processing needs.

Square VS PayPal: Quick Summary

Comparing Square vs. PayPal is complex and depends on which services you need. PayPal supports international growth and makes the most sense for eCommerce, while Square provides more in-person selling tools. Looking at PayPal vs. Square fees, they both charge 2.9% + $0.30 for online payments, but in-person fees differ.

Besides their differing in-person transaction fees — 2.6% + $0.10 for Square and 2.7% for PayPal — you’ll find key differences in the PayPal vs. Square feature sets and add-on pricing. Read on to learn more about these differences.

Square Overview

Square is a powerhouse when it comes to features, ease of use, and transparent, affordable pricing. While Square is certainly not for every business model — especially high-risk or global businesses — many small business owners will find it’s the perfect fit for their needs.

Square was built for a variety of businesses — the corner coffee shop, mobile contractors, niche creators; you name it. What began as a mobile-processing focus with that little white credit card reader has slowly and methodically become better and more accessible for businesses ready to scale. Square now offers complete POS software and hardware systems, with niche POS packages for different industries, as well as integrations with other POS systems, such as Vend, Lavu, and TouchBistro, for businesses that want to use Square processing with a different POS.

With the free developer tools, an easy website builder, and a growing number of social media integrations, you can sell just about everywhere with Square. Square’s platform is agile and ever-improving, with new tools to help businesses adapt to curbside pickup and online ordering through Square Online Checkout. Square also takes the guesswork out of payment security by providing a fully secure way to process payments in-person, online, with an invoice, or at your virtual terminal.

PayPal Overview

With its highly recognizable payment button popping up everywhere, PayPal has arguably owned the eCommerce payment space for quite some time. Today, shoppers recognize the little yellow PayPal button as the alternative to giving out a credit card to one more site. Sales observably improve if a shop adds the PayPal button to its checkout!

While consumers trust it, the ground is a little shakier on the merchant side, with the most common complaint being poor or inconsistent customer support. That said, PayPal provides incredible value with an all-in-one payment system that makes global selling accessible to more merchants than ever before. PayPal also offers in-person mobile processing with the PayPal POS app, PayPal Here. The PayPal Here app is light on features, but you can integrate with Hike, talech, Vend, Lavu, TouchBistro, and others if you want to use a full POS system with PayPal processing. You can also accept in-person PayPal and Venmo payments using PayPal Here.

Offering a fully secure payment solution, PayPal has a broad suite of developer tools and solutions built for growth. Whether that’s adding a button anywhere on your site, within an email, or a landing page, invoicing, and recurring billing options, you’ll find what you need. And if you don’t want to use PayPal exclusively, it is still a fantastic option to supplement your checkout flow as well. We’ll get more in-depth on all of PayPal’s features in the following sections.

Square VS PayPal Video

Comparing Square & PayPal Features

Let’s start by laying the groundwork. As far as your core features are concerned, you can expect very similar functionality when accepting payments from PayPal and Square. You’ll have the following with both:

• Free mobile point of sale app compatible with nearly all devices
• Acceptance of all types of credit cards
• Keyed transaction support
• Record cash transactions
• Issue full and partial refunds
• Apply discounts
• Item library with product descriptions, images, and variants
• Barcodes and SKUs
• Receipt printing
• Email/SMS receipts
• Cash drawer support
• Invoicing
• Recurring billing

Now, one could argue that things start to diverge when you take a closer look between Square vs. PayPal. You’ve got a good idea of the common features with the list above, but below, I’ll highlight some of the differences in usability and back-end tools that could affect your decision.

Mobile POS App

Square Dashboard Features

When you look at the POS app differences between Square vs. PayPal Here, it is really striking. One of the places Square shines is the back-end dashboard, which gives you access to your basics in payments and everything behind the scenes. Notably, Square beats PayPal Here on inventory management and offline mode. Square’s inventory management tools are ready as soon as you sign up, and they allow you to track quantities in the mobile app, set up low-stock alerts, and bulk load your inventory.

Additionally, the 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 their card on file.

PayPal POS (PayPal Here) doesn’t have these features. What we do like, however, is that it offers 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, but you’ll need to pay the monthly fee for employee management.

eCommerce

Screenshot of Square’s Free Online Store Webpage

PayPal began as an online payment processor, and that’s still the core of its business, yet you won’t find many out-of-the-box selling solutions that you can with Square. For instance, PayPal doesn’t offer a free website as Square does, but you will find an extensive list of ready-made third-party integrations that are compatible. PayPal also offers a robust set of tools to create custom and “smart” payment buttons for purchases.

You can also create donation buttons to add anywhere online and allow donors to choose whether to make a one-time or recurring donation. We were happy when Square rolled out Square Online Checkout, which allows 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, Square offers a very simple way to get started. You can set up your 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. If you don’t like Weebly or want to use your existing site, Square does support many integrations as well as offer developer tools.

Credit Card Readers & POS Systems

Both Square and PayPal offer basic credit card readers for in-person selling. These include both free plug-in readers to accept credit cards and inexpensive Bluetooth-connected readers that can accept NFC payments, such as Apple Pay and Google Pay. However, only Square offers full POS systems and smart terminals.

Some of the POS options you have with Square include Square Stand for iPad, which has a built-in credit card reader, and also Square’s proprietary hardware options, Square Terminal ($299) and Square Register ($799). With Square Register, you can accept payments in the included customer-facing screen, and Square Register is a smart terminal with built-in payments acceptance.

You can use PayPal Here’s credit card reader with peripheral POS equipment, and PayPal Here integrates with several popular POS systems. However, even if you use PayPal with a POS system, you’ll still be limited to using the basic Bluetooth chip and tap reader. There is no option to use PayPal Here processing with a smart terminal or all-in-one POS system (such as Square Register).

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 a month. It includes hosted checkout pages as well as the virtual terminal but will require a developer to implement.

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.

Virtual Terminals

Square’s Free Virtual Terminal Feature

While I consider this part of the mPOS app, it’s worth taking a look at this one on its own. Here is another aspect where 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. So if you ever accept payments over the phone, you’ll want to consider the extra fees on the PayPal side. For more on PayPal’s fees, check out our article on PayPal’s processing fees.

PayPal VS Square: Reporting

PayPal may be inching closer to Square in regards to reporting. PayPal Here now has enhanced reporting features that can summarize your sales by a specified timeframe, salesperson, payment type, or items purchased. You can also get your reports from any PayPal Here-compatible device.

Square has similar reporting features to show sales per employee, tips, and average sale size. However, with Square, you can also view more specific trends, such as the most-used modifiers to orders. And if you use Square gift cards, you can track everything related to this activity as well from your Square Dashboard.

International Sales

Especially 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 choice if you’re comparing them head-to-head. However, if you have plans 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.

Developer Tools

Square and PayPal both offer a full suite of developer tools to create custom online payment integrations for businesses. However, you can do a lot more than just that. Both platforms have opened their mobile POS apps up with SDKs (software development kits) so that you can power your branded mobile apps with a trusted, reliable, ready-made solution. That includes mobile card readers, too. Square also offers APIs (application programming interface) for its inventory tools, reporting and analytics, back-office management, and online and in-app payments.

PayPal’s additional developer tools include invoicing and subscription management and an easy mass-payout tool. All of this is pretty powerful, but it’s still not quite at the same level as the most developer-friendly platforms out there (such as Stripe or even the PayPal subsidiary Braintree).

Mobile Payments

Square and PayPal are both capable of accepting NFC payments and digital wallets. Both systems let you accept tap cards, Apple Pay, and Google Pay. Both systems also allow contactless QR code payments, whereby your customer uses their phone to scan a printed QR code or a QR code on your POS screen and then pays on their own device. However, PayPal gives you a couple more options for mobile payment acceptance; specifically, PayPal Here can process in-person PayPal and Venmo payments.

While Square cannot accept in-person PayPal payments (or Venmo payments), customers can pay via PayPal on your Square Online Store.

Financing & Credit Products

In recent years, Square and PayPal have expanded their offerings to include financing and credit products, such as credit cards, business loans, and lines of credit. Both providers also offer payment plans for your customers that allow them to pay for transactions in installments.

Business Loans

Square and PayPal both offer merchant cash advance-style short-term business loans to their customers in the form of Square Capital and PayPal Working Capital loans. These loans are similar in terms of rates and fees, charging a one-time factor rate rather than interest like a traditional loan. Both have a maximum repayment term of 18 months, and the balance is automatically deducted from your bank account as a percentage of your daily credit card sales. Square Capital loans max out at $100K and PayPal’s at $125K for your first two loans or $200K for subsequent loans.

PayPal also offers more traditional short-term business loans through its subsidiary LoanBuilder.

Credit Cards

Square and PayPal have multiple credit and debit cards for merchants to select from. I’m not going to go over all the differences here, but both have an equally varied selection. In particular, Square’s debit card, Square Card, is useful for Square merchants that 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).

Consumer Financing

Finally, both Square and PayPal have consumer financing products merchants can offer their customers. These include Square Installments, 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 to themselves.

Square VS PayPal: Fees & Pricing

When comparing PayPal vs. Square fees, you’ll find that both processors offer similar prices for credit card processing when using their free apps. Neither service charges any regular fees beyond those incurred per transaction, though with both, you can opt for add-on services.

The lack of a flat per-transaction fee for PayPal makes it favorable to low-volume businesses and small-ticket merchants. The $0.10 per-transaction fee charged by Square can add up when you’re dealing with smaller transactions. PayPal ends up being a bit better for low-ticket merchants due to the lack of a per-transaction fee, and Square is slightly better for higher-volume merchants due to the slightly lower percentage rate.

However, PayPal charges $30/month for its virtual terminal and another $10/month for recurring billing, a hefty price tag considering Square offers a free virtual terminal and no monthly fee to use its recurring invoice function. One other compelling feature to note: Square charges no fee for chargebacks and even offers merchants up to $250/month in chargeback protection for qualifying purchases.

Square also has industry-specific POS systems with their own subscription costs and different processing rates in some cases:

• Square For Retail: Free plan available; Plus plan $60/month per location + 0.1% processing discount
• Square For Restaurants: Free plan available; Plus plan $60/month per location +$40/month per added POS device
• Square Appointments: Free plan for individuals; two to five employees $50/month + 0.1% processing discount; six to ten employees $90/month + 0.1% processing discount

If you want a more in-depth discussion of each company’s pricing, check out our complete guide to Square’s costs and our complete guide to PayPal’s fees.

Ease Of Use

All in all, Square and PayPal are both simple for someone to start using. Their core platforms rest on being easy to use for the average small business owner. Most find their features adequate, and integrations can supplement any gaps you might find in either based on your business needs.

The Square POS software comes with more powerful features out of the box, including better inventory tracking, customer insights, free basic email marketing, a free virtual terminal, and employee management tools. Square’s all-inclusive payment processing system makes it easier to do more from the get-go. With Square, you can navigate to all of your existing features and easily set up additional integrations and add-on premium features, all from a very organized and UI-friendly dashboard, including setting up your eCommerce shop or syncing with and selling on social media.

To pull in some of the features you may need from PayPal’s payment button, specifically inventory tracking features, you’ll need to play around a bit with the developer tools in the back end. And while this shouldn’t necessarily be a deal-breaker, Square is leagues ahead as far as user experience, dashboard accessibility, and finding additional tools when you’re ready for them.

Customer Service & Support

Of all the categories we are comparing for PayPal vs. Square, customer service and support are equally the weakest for both. Neither of them is known for having top-notch customer support and can be described as spotty at best to reach a person quickly. They both check all the boxes when it comes to providing standard customer support channels, but you won’t get the personalized support you’d receive from a traditional merchant account or POS provider.

Square’s Support Options

• Help Center: Square has an online knowledgebase that’s comprehensive and covers just about any detail you’ll need.
• Social Media: Square’s support Twitter feed is active, and its YouTube channel is full of instructional videos.
• Phone & Email Support: Available by code, you can reach Square’s customer support team by phone and email. You have to go through a few extra steps to get your customer code. Unfortunately, some users who have had terminated accounts report issues with reaching customer service.
• Live Chat: Square does have live chat support, but you will initially be routed through the Square Support Assistant chatbot. If you require more personalized assistance that the chatbot can’t solve, you should eventually be able to get in touch with a live person.
• Seller Community Forum: Here, you can pull advice or instruction from other Square users, and Square’s staff is very active as well.

PayPal Here’s Support Options

• PayPal Hub Home: PayPal’s help center is organized by topic, so you can search the FAQs for answers to your most pressing questions.
• Social Media: PayPal is responsive to both Facebook and Twitter.
• Phone & Email Support: The consensus is that phone support is inconsistent, but you don’t need a code to access it as you do with Square. Usually, though, we recommend searching the online FAQ or email help desk support first.
• Live Chat: PayPal has a chatbot similar to what Square has. You can eventually get a response from a live person if you go through the chatbot first.
• PayPal Community Forums: Similar to Square, you can search for or ask your question in the PayPal Community Forum. We did take note that PayPal’s forum isn’t quite as comprehensive or helpful, however.

Overall, the answers to most technical issues are pretty easy to come by for both without ever having to talk to someone. And since live support is a bit spotty for both, that’s a good thing!

Square VS PayPal: Reviews & Complaints

When you compare Square and PayPal reviews, you’ll quickly realize that Square and PayPal have different strengths and weaknesses but are very much the same type of platform. As such, they both have the same types of complaints. What a majority of complaints boil down to is the processing model of both companies — that is, they are third-party processors. That means you, the merchant, will always have some inherent risk in terms of account stability compared to a traditional merchant account. For the majority of users, you’ll have no issues. But those who do are understandably very frustrated at having funds frozen for a time or their account terminated without warning.

If you have a business that doesn’t process enough to warrant a traditional merchant account, you don’t have many options. Square, PayPal, Shopify, and Stripe are all third-party processors that have democratized the payments industry so that more people can start accepting payments. We recommend learning how to prevent any account holds and freezes in the first place, as that will go a long way.

Always read the fine print in your contract, and understand that when you sign up for an account, you’ve agreed to the inherent risks as well. Keep in mind that most users are happy with PayPal and Square — but be educated on how to prevent common issues and stay alert.

Integrations

Both PayPal and Square offer a wide array of add-ons and integrations. PayPal seems to have opted to partner with many other companies rather than develop software solutions of its own, which means apart from the virtual terminal and recurring billing, you can’t get add-on products directly from PayPal.

PayPal’s list of supported integrations includes a variety of eCommerce providers, from shopping cart software to self-hosted solutions as well as POS and accounting integrations. You’ll also find form builders and other business-focused integrations, event management, email marketing, and invoicing/billing.

In contrast, Square offers several premium add-on options for merchants who want a seamless experience, starting with employee management, payroll, marketing, and loyalty. Gift cards are available for the cost of purchasing the card stock (starting around $2/card for small orders) and any processing fees at the time of purchase.

Square also has a vast library of integrations from POS, eCommerce, marketing, shipping, and accounting as well as solutions for invoicing, time-keeping, inventory management, and industry-specific solutions for healthcare, event management, and restaurants.

In all, while Square’s list of supported integrations isn’t as extensive as some other options out there (here’s looking at you, Stripe), it is more varied than PayPal’s. I don’t think that PayPal is limited. I would call it “carefully curated,” if anything. You have a robust suite of tools at your disposal with PayPal, although not quite as powerful as Stripe’s tools. Square is more open and flexible in its partnerships and allows centralized control for different aspects of your business beyond payment processing.

The Key Differences Between Square & PayPal For Small Business

1) Rates & Fees: Square charges 2.6% + $0.10 for all swiped, dipped, and tapped transactions; PayPal charges a flat 2.7%. The two programs also have different transaction fees for keyed-entry, card-on-file, and QR code transactions. PayPal also has added fees for virtual terminal use and chargebacks, while Square does not.

2) POS Software: Square has more robust POS software features than PayPal for in-person selling, including better inventory and back-office management. Square also has industry-specific POS software packages, whereas PayPal does not.

3) POS Hardware: Square has proprietary POS system hardware, including smart terminals and all-in-one systems with built-in payment acceptance. PayPal can be used with POS hardware, such as an iPad terminal set up with a cash drawer; however, you’ll have to use PayPal’s basic mobile credit card reader.

4) International Selling: PayPal supports international sales, while Square does not.

5) eCommerce Features: Square accounts come with a free eCommerce website. PayPal only allows you to integrate PayPal into your existing website but does not set you up with your own website.

6) Integrations & Add-Ons: Compared to PayPal, Square has more third-party software integrations and more in-house add ons, including both paid and free add-ons.

7) PayPal Acceptance: PayPal allows businesses to accept in-person PayPal Payments. Square merchants can accept PayPal payments online, but not in person.

Which Is Best For My Business Needs: PayPal Or Square?

We’ve explored each category in the Square vs. PayPal debate, but how can you answer the question: Is Square or PayPal better? 

Choose Square If…

• You sell mostly in-person
• You need a full POS system (rather than just a mobile POS app)
• You want multichannel features and tools in one platform (e.g., loyalty, email marketing support, inventory reporting)
• You don’t have a site and want to get one up quickly
• You want the potential to scale premium add-ons and integrations easily

Choose PayPal If…

• You sell mostly online
• You want to sell globally
• You want the brand recognition of the PayPal name
• You deal in low-ticket sales
• You want to accept in-person PayPal payments

Square VS PayPal Comparison: The Final Verdict

While we are a little hesitant in proclaiming Square as the unequivocal winner, its robust and ever-improving feature set just can’t be denied. Over the last few years, we’ve observed that Square’s features and services have noticeably expanded and improved, which speaks volumes to the overall quality of the platform. You just can’t find the same set of features, freebies, and business-scaling tools with PayPal, particularly if you sell in-person and need robust POS features. However, if you need support for international selling and want the brand recognition of one of the most popular names in online payments, PayPal probably has a pretty strong draw to satisfy your business needs.

Both platforms offer flexibility not only in services and features but also the freedom to change processors without being bogged down by a binding contract — and that can be an invaluable asset on the hunt for the right processor. If you’re still weighing your options between the two, check out our full Square review and PayPal review. We also have many reviews and resources to help you get on board with a traditional merchant account, if that is applicable, so be sure to check out our merchant account reviews page. And if you have an opinion or piece of advice regarding PayPal or Square, we’d like to hear from you in the comments!