Square VS PayPal: Which Small Business Software & Payments Platform Is Best For You?
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| Square | VS | PayPal |
|---|---|---|
| ✓ | Products & Services | |
| ✓ | Integrations & Add-Ons | |
| Tie | Fees & Rates | Tie |
| Tie | Contract Length & Cancellation | Tie |
| Tie | Sales & Advertising Transparency | Tie |
| Tie | Customer Service & Technical Support | Tie |
| Tie | User Reviews | Tie |
| ✓ | Final Verdict | |
| Visit Site | Compare |
Whether you’re looking for an online payment solution, an mPOS app, or an all-in-one payment processor, you’re undoubtedly going to be looking into PayPal and Square in the course of your research. Both companies provide massively popular tools for merchants large and small, offering a slate of products with strikingly similar feature sets and pricing. Assuming you’ve narrowed your focus down to these two companies, how do you go about picking a winner in the Square vs. PayPal debate?
Table of Contents
Square VS PayPal: Quick Comparison
Square and PayPal offer similar services and pricing. Online transactions for both process at 2.9% + $0.30. PayPal makes sense for many merchants, especially eCommerce specialists. Plus, PayPal is a household name among consumers. However, Square’s excellent free point of sale system and superior in-person tools give it the overall edge.
We've done in-depth research on each and confidently recommend them.
Products & Services
Winner: Square
One of the challenges in comparing platforms such as PayPal and Square is that they are so massive and include so many different services. The best approach is to break them down into similar categories, so we’ll look at how PayPal vs. Square stack up in regards to the following:
- mPOS apps
- Online payments
- Invoicing and virtual terminals
We’ll also talk briefly about some of the tangential aspects of using Square and PayPal, including developer tools.
An Overview of Square’s Services
| Reader | eCommerce | Retail | Food Service |
|---|---|---|---|
 |  |  |  |
| Free App & Reader | Square eCommerce | Square for Retail | Square for Restaurants |
| Get Started | Get Started | Get Started | Get Started |
| Free, general-purpose POS software and reader for iOS and Android | Easy integration with popular platforms plus API for customization | Specialized software for more complex retail stores | Specialized software for full-service restaurants |
| $0/month | $0/month | $60/month | $60/month |
| Always Free | Always Free | Free Trial | Free Trial |
mPOS Apps
Square’s free mobile POS app is called Square Point of Sale (the people in charge of names at Square aren’t big believers in originality). It was previously called Square Register, but that name now refers to an all-in-one register setup that we’ll talk more about in the Compatible Hardware section. PayPal’s free mPOS app is called PayPal Here.
As far as core features are concerned, you’re going to get the same experience from both. That includes:
- Accept all forms of credit
- 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
- Receipts via email/SMS
- Cash drawer support
- Invoicing
That said, Square’s app is very nearly a full-fledged POS, and it sports more advanced capabilities than PayPal Here. Two notable areas where Square beats PayPal Here are inventory management and offline mode.
Square’s inventory management tools allow you to track quantities in the mobile app, set low-stock alerts, and even bulk-upload your inventory. You can also adjust your stock to account for returns, damage, theft, etc. Square has also recently added support for partial quantities. However, multi-location inventory management requires a subscription to Square for Retail, one of Square’s premium iPad POS apps.
The customer database allows you to associate a purchase with a specific customer (which also links up with loyalty and marketing) and even access a stored card on file to complete a transaction rather than requiring a customer to present their card. It’s also possible to track sales and activity at different locations.
PayPal Here, sadly, doesn’t have any of these features. However, it does have one advantage: you can create up to 1,000 free sub-user accounts, so every employee, volunteer, or helping hand can have their own login. To be able to issue employees their own unique logins within Square, you need to enable employee management, which comes at a monthly fee per account.
Compatible Hardware
Both Square POS and PayPal Here operate on iOS and Android phones and tablets. As for card readers, both companies offer a selection of devices.
PayPal Card Readers
Let’s take a moment to look at the options, starting with PayPal.
- Mobile Card Reader (Magstripe Only): PayPal still offers a magstripe reader that connects to mobile devices via the headphone jack. It was once free, but as PayPal moves to de-emphasize magstripe payments, that’s no longer the case, and it now costs $19.99. Additionally, per PayPal’s website, opting for the magstripe reader will place limits on your account:
*Sales over $500 in a 7-day period made with the Mobile Card Reader are subject to an automatic 30-day reserve where funds are held in your PayPal account to cover the high risk associated with these types of transactions.
If you’re looking to avoid the limitations of the Mobile Card Reader, go with one of PayPal’s chip card readers.
- Chip & Swipe Reader: The Bluetooth-enabled Chip and Swipe Reader usually sells for $24.99 but is now being offered for free to new PayPal Here accounts until June 30, 2020. The Chip and Swipe Reader even comes with a mounting clip to attach it to your phone or tablet.
- Chip & Tap Reader: If you want to be able to accept contactless payments, the Chip and Tap Reader sells for $59.99 and supports all three payment methods. You can get it with the charging dock for $79.99. Check out our unboxing review of the Chip and Tap reader for a more detailed look.
- Chip Card Reader: PayPal’s final card reader is also the first one it rolled out: the Chip Card Reader, a rebranded Miura M010 that PayPal sells for $99. I’ve reviewed this device previously (Square and Shopify have also offered their own branded versions of it), and I do like it quite a bit. It’s also worth noting that if you opt to integrate PayPal with a POS system, such as Vend, this is the reader you must use.
Square Card Readers
- Square Reader For Magstripe: Square, for the moment, still offers a free magstripe reader with no limitations on processing. You can get it with a headphone jack or a Lightning connector. However, you should absolutely look into getting a chip card reader, as it will protect your business against liability for fraudulent swiped transactions.
- Square Reader For Contactless & Chip: Square’s Reader for contactless and chip connects via Bluetooth to an iOS-enabled device and accepts EMV and contactless transactions. It doesn’t accept magstripe transactions, but you will get a free magstripe reader included in the purchase. The Square Reader for contactless and chip goes for $49, and you can get a dock for it for an additional $29.
Now, let’s look at Square’s countertop POS devices.
- Square Stand For Contactless & Chip: The Square Stand, which sells for $199 (or $18/month for 12 months) and includes the Contactless + Chip Reader and the dock, is one of the devices that makes Square so recognizable. It turns your iPad into a point of sale, and the sleek swivel stand and affordable price make it an attractive option.
- Square Register: If you want something a bit more sophisticated, there’s the Square Register. It comes at a much higher price tag ($799 or $39/month for 24 months), but it’s quite an elegant machine. Square Register is a custom Android tablet with a 13.25-inch display and a 7-inch customer-facing display with integrated card reading capabilities. Furthermore, with the Square Register, Square states that it can create custom pricing packages for some businesses that process more than $250K annually in credit card sales. Check out our review of the Square Register for a more in-depth look!
- Square Terminal: Square’s newest POS device is the Square Terminal. It combines the concept of the Square Stand and the traditional credit card terminal into one device that can be used as a countertop POS but is also portable. It accepts contactless, magstripe, and chip transactions, and even includes a built-in receipt printer. It currently goes for $299 or $27/month for 12 months.
One thing that makes Square very competitive for small businesses is its financing. You can put any hardware purchase above $49 on a payment plan, and Square’s markups are very reasonable.
Finally, PayPal Here and Square both accommodate a variety of receipt printers, cash drawers, and even barcode scanners. And depending on what you need, you can get a pre-assembled bundle of hardware directly through Square. You’ll save over buying each item individually, but prices vary depending on what equipment you want. In addition to the standard area of POS equipment, Square now even integrates with scales in case you’re selling items by weight.
Online Payments
PayPal started its life as an online payment processor, and that’s still the core of its business. Square has only recently begun beefing up its eCommerce offerings, and I think that shows.
Square first made waves with its free online store — an easy way to get started with eCommerce. The free store is now powered by Weebly, which Square bought in the spring of 2018. The free version is pretty basic, but you can upgrade to one of Weebly’s other plans for more features.
If you don’t like Weebly, Square does support other integrations. The one thing you won’t see with Square is the ability to create payment buttons or donation buttons for nonprofits. The only way to do this would be to bring in a developer to create a solution for you. Beyond that, Square doesn’t offer a lot of customization in the checkout process, either. (See our Square eCommerce review for further information.)
PayPal doesn’t offer a free website, but there’s a pretty extensive list of ready-made third-party integrations that are compatible. PayPal also offers a pretty robust set of tools to create custom payment buttons for purchases. You can also create donation buttons and allow donors to choose whether to make a one-time or recurring donation.
Like Square, PayPal doesn’t offer a lot of customization (or, well, any) 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.
It’s also worth noting that you can 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.
Invoicing & Virtual Terminals
Square and PayPal both offer invoicing as part of their standard feature set. There’s no charge to send an invoice; the only fees you pay are the processing fees (2.9% + $0.30). Their feature sets are incredibly similar, though you may not find them as advanced as some of the paid invoicing software solutions out there.
With Square‘s invoicing feature, you can generate custom invoices with your logo and business information and attach photos and other files. You can also create templates with saved messages that include your terms of service. You can also schedule recurring invoices and even allow your customers to store their cards on file for easier billing down the line. Plus, Square allows you to add discounts, sales tax, and even a spot for customers to add a tip to their payments. You can pull customers from your existing customer database as well as products from your inventory.
Recent additions to the Square lineup of features include the ability to request a downpayment on an invoice as well as offer installment payments.
For businesses that rely heavily on invoicing, Square also offers downloadable contract templates for a variety of industries, and a few tailored to home improvement in specific states. You don’t need a Square account to access these, which I think is a classy move.
PayPal’s invoice creator also lets you create custom designs with your logo and business information. You can add files and photos, include terms and conditions, add notes for your clients, and even create a memo to yourself if you want to make a private annotation. You can add discounts, sales tax, and tip, plus allow for partial payments.
The most notable difference between PayPal and Square is the lack of an integrated customer database and linked inventory as well as the inability to store cards on file. However, you can request down payments on invoices and enable partial payments, so customers can pay off the invoice over time.
Let’s move on to the virtual terminals. I need to point out that to access PayPal’s virtual terminal, you will need to upgrade to PayPal Payments Pro, which will cost you $30/month on top of processing fees. Unless you plan to use the virtual terminal frequently, this may not be a good option for you. Square’s virtual terminal, on the other hand, is free and syncs up with the rest of Square’s tools (such as the customer database and stored cards on file).
Overall, Square and PayPal are well-matched in terms of invoicing. Square’s customer database feature and inventory are helpful and put it ahead of PayPal, but only if you plan to use those features anyway. The free virtual terminal is a mark in favor of Square — but again, only if you plan to use the feature. Still, a virtual terminal is a good backup if you don’t have a card reader handy and need to accept a payment without an invoice.
Other Features
The mPOS app, the online payments, and invoicing/virtual terminal reflect the core PayPal and Square offerings, but they’re not the only ones. So let’s look quickly at some of the additional features you get access to:
- Developer Tools: I’ve alluded to this somewhat already, but Square and PayPal both offer a 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 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 for its inventory tools, reporting and analytics, and back-office management as well as online and in-app payments. PayPal’s additional developer tools include invoicing and subscription management and an easy mass-payout tool. Its marketplace tools are new and still very limited, but that could change. All of this is pretty powerful, but it’s still not quite at the level of some of the most developer-friendly platforms out there (such as Stripe or even the PayPal subsidiary Braintree).
- Merchant Financing: Need some capital for new hardware, inventory, or, well, any of the numerous expenses that business owners encounter? Both PayPal and Square now offer their own financing programs for eligible businesses. However, they shouldn’t be your go-to sources, as you may have other, more competitive options.
- Reporting: Both Square and PayPal offer an array of reports that you can run and use to monitor your business. I’m inclined to think that Square provides a better platform for reporting than PayPal. However, I also don’t think that reporting features should be the deciding factor in choosing a payment processor unless all other matters are equal.
All in all, the consensus from merchants is that Square and PayPal are both fairly easy to use, and their features are adequate for most merchant needs.
A Note About Square’s Cash App & PayPal.Me
Square’s Cash App is one of Square’s many products, but it’s rather disappointingly the only one that doesn’t work seamlessly with the rest of the Square suite. It was designed to compete with PayPal’s consumer wallet, a way for friends to transfer funds to each other. The app has come quite a long way since its inception, and now it also provides a way for merchants to accept payments, too. Customers can send funds in Cash App using Cashtags (essentially your user name, preceded by $), or they can go to a website page linked to your cashtag: cash.me/$cashtag and send funds that way.
However, Cash App doesn’t allow for inventory or sales reports or any of the Square features you might be accustomed to. Additionally, your funds and your business are entirely separate from a standard Square account. On the other hand, I am happy to say you can finally send your Square funds to your Cash App balance, in addition to sending Cash App balances to a designated bank account. The fee structure is still 2.6% + $0.10 per transaction.
I wouldn’t necessarily recommend Cash App as a supplement to your business simply because of the lack of compatibility. However, if you need a “Square Lite” or a similar solution, it could work for some small businesses or even nonprofits looking for an easy way to accept donations. For a more detailed look at Square Cash for businesses, I recommend checking out our Cash App review.
A significant reason why PayPal works so well is that it powers digital wallets for some 250+ million people worldwide. PayPal blurs the line between consumer and business products. But that’s a good thing because unlike with Cash App, there’s a massive amount of interoperability. For example, I can send money to my friend’s business PayPal account to reimburse her for, say, buying movie tickets or lunch, and mark that transaction as “friends & family,” which would exempt it from the business fees. Likewise, she can send money to my personal account in exchange for doing some menial tasks for her (stuffing envelopes with marketing materials) and mark it as “goods & services” without me needing a business account.
PayPal’s also taken inspiration from Square and introduced its own PayPal.me pages, which work identically to the Cash.me pages. Unlike Cash App, however, PayPal’s implementation is seamless with the rest of PayPal’s features.
While these are interesting features, you shouldn’t consider them a core function of either company. Just know that Square Cash doesn’t work the same for consumers as PayPal does, so if you’re looking to appeal to customers with digital wallets, you should choose carefully.
Integrations & Add-Ons
Winner: Square
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.
| Webstore | Integrations | Developers |
|---|---|---|
Build Your Webstore Quickly & Easily | Integrate With Popular eCommerce Software | Developer-Friendly Tools For Customization |
|
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Highlights:
| Integrate with:
| Highlights:
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Instant Account Setup Fast Funding 2.90% + $0.30 for online sales | Instant Account Setup Fast Funding 2.90% + $0.30 for online sales | Instant Account Setup Fast Funding 2.90% + $0.30 for online sales |
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, plus event management, email marketing, and invoicing/billing.
This is a different approach than that taken by Square, which will act as your primary control for just about every aspect of your business if you want it to. Square offers several of its own add-ons for merchants who want a seamless experience, starting with employee management (the standard package is free, while Team Plus is $35/month per location), payroll ($29/month plus $5/month per employee), marketing (starting at $15/month), and loyalty (starting at $45/month). 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.
As far as third-party integrations, Square also offers POS, eCommerce, and accounting integrations as well as solutions for invoicing, time-keeping, inventory management, and industry-specific solutions for healthcare, event management, and restaurants.
If the free mPOS apps aren’t to your liking, both PayPal and Square offer some alternatives in the form of third-party integrations. You’ll find that both integrate with Lavu, TouchBistro, and Vend, for example. Both also have some integrations that are unique to each company. As far as availability of POS integrations, I feel like the companies are more or less evenly matched. However, it’s worth mentioning that PayPal has negotiated exclusive rates for Vend merchants, which might make PayPal + Vend more attractive than Square + Vend for some merchants.
In all, while Square’s list of supported integrations isn’t as large 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. Square is more open and flexible in its partnerships and allows more centralized control for different aspects of your business beyond payment processing.
Did you know that PayPal integrates with Vend POS?
And don’t forget, both Square and PayPal offer APIs for custom integrations if you need something that isn’t on the list of ready-made integrations, though you’ll need a developer to put in the work.
Fees & Rates
Winner: Tie
Square and PayPal 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. Here’s what you’ll pay:
- Swiped/Dipped/Tapped: 2.7% for PayPal, 2.6% + $0.10 for Square
- Online & Invoiced Transactions: 2.9% + $0.30
- Keyed Entry: 3.5% + $0.15
The lack of a per-transaction fee for PayPal swipes makes it favorable to low-volume businesses and small-ticket merchants. The $0.10 per-transaction charge recently introduced by Square has not been well-received by smaller-ticket sellers, as it can really add up when you’re dealing with smaller transactions. For most merchants, however, the difference in price between PayPal and Square for swiped transactions is quite marginal. PayPal ends up being a bit better for small-time 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.
Additional PayPal Costs
- Hosted Payment Page & Virtual Terminal: $30/month
- Recurring Billing: $10/month
- Micropayments Plan: 5% + $0.05
- Mass Payouts: 2%
- Nonprofit Discount Rate: 2.2% + $0.30 for online transactions
- Chargeback Fee: $20
Additional Square Costs
- Virtual Terminal: No monthly fee
- Recurring Invoice/Card On File: 3.5% + $0.15 per transaction
- Chargeback Fee: None
If you want a more in-depth discussion of each company’s pricing, check out our articles, How Much Does Square Charge and The Complete Guide to PayPal’s Fees, Rates, & Pricing.
I do want to point out that PayPal’s micropayments option is really good for merchants who sell digital goods valued at less than $10, and Square has no comparable alternative. (Square, in general, isn’t a particularly flexible option for digital merchants.) Also, PayPal charges $30/month for its virtual terminal and another $10/month for recurring billing, which is a hefty price tag considering Square offers a free virtual terminal and no monthly fee to use its recurring invoice function. However, you don’t get subscription management tools like PayPal’s recurring billing, either.
One other compelling feature to note: Square charges no fee at all for chargebacks and even offers merchants up to $250/month in chargeback protections for qualifying purchases. I haven’t seen this kind of feature implemented anywhere else, but I do like it because chargebacks are awful, and everyone knows that.
Also, whereas PayPal focuses on its integrations with POS apps, Square has developed its own niche-specific advanced POS systems with their own subscription costs and different processing rates:
- Square For Retail: $60/month per register per location, additional registers $20/month, 2.5% + $0.10 per transaction
- Square For Restaurants: $60/month per register per location, additional registers $40/month, 2.6% + $0.10 per transaction
- Square Appointments: Individual plans $0/month, 2.6% + $0.10 per transaction; two to five employees $50/month + 2.5% + $0.10 per transaction; six to ten employees $90/month + 2.5% + $0.10 per transaction
All these work with the rest of the Square suite of products, too, which is a big advantage.
The pricing for Square and PayPal’s core features — the mPOS and eCommerce suites — are virtually identical, and pricing for supplemental services only matters if you intend to use them. There are so many variables and possible combinations of services that it’s hard to say which one would be less expensive. So if you plan to go for any of the add-on services, run the numbers for yourself and make sure you’re getting the best value.
Funding Options With Square & PayPal
A big advantage to PayPal is how quickly your money is available: Any mobile payments you accept are available almost instantly in your PayPal account. That means if you have the PayPal business debit card, you can spend your money right away. There are no fees to use the debit card, but you can also transfer funds to your bank account. Non-instant transfers are free but can take up to three to four business days (one to two business days is more common).
In my experience, PayPal typically deposits money in my bank account the next business day. You can also initiate instant transfers for 1% of the transfer amount. (Square offered this first, for the record.)
Square sends its payments to your bank account within one to two business days, depending on when the payment was processed. Payments taken before 5 PM PT are available the next business day; payments made after 5 PM PT are available the second business day. However, you can also initiate an Instant Deposit for 1% of the transferred sum. As of January 2019, Square has also implemented a sort of digital wallet for merchants if you order The Square Card. When you get your card, Square automatically begins accumulating your funds in a wallet that you can access with your Mastercard-backed debit card. The Square Card has no fees, and you can still manually transfer funds to your linked bank account.
Contract Length & Cancellation
Winner: Tie
Neither Square nor PayPal makes you sign any contracts — if you find you don’t care for either service, just stop using it and find another payments service to use. And no contracts means no termination fees, as there is no contract to terminate!
Additionally, neither company imposes any monthly fees for payment processing. It’s not a bad deal at all.
Sales & Advertising Transparency
Winner: Tie
Generally, both Square and PayPal deliver on their primary product: an effective payment solution with upfront pricing and no hidden fees. Costs and features are clearly laid out and easily understood. And unlike with many merchant account providers, you don’t have to deal with aggressive sales agents.
That said, both services could stand to spell out some policies more clearly. Specifically, the unexpected funding holds are a huge point of contention for merchants, who understandably want their money as soon as possible. There are no standardized limits on transaction sizes, though it seems larger-than-average transactions can trigger reviews of an account. Neither company spells out any other criteria that can trigger a hold, nor do they clearly explain what to do to prevent one.
If you’re interested in a more in-depth look at what behaviors and actions to avoid, check out our article on how to avoid merchant account holds, freezes, and terminations.
Regarding other transparency concerns, you’ll find both PayPal and Square have active social media and social media support channels too. I would expect no less from these two companies. Additionally, Square has recently been putting out a lot more content to help merchants get the most from their Square accounts.
Customer Service & Technical Support
Winner: Tie
Neither Square nor PayPal is known for having top-notch customer support. In fact, both can be quite spotty, much to the dismay of merchants. Square has invested a lot lately in its customer support channels and improving the overall quality. PayPal, meanwhile, focuses on being more flexible and supportive of merchants. But there’s one rather significant disadvantage with both of these companies, which we’ll get to.
Square support options include:
- Help Center: Comprehensive and detailed, covering just about any topic you might need. If you’re having trouble setting up or using your Square account, start here, and all your questions should be answered.
- Social Media: Square’s support Twitter feed is active (though not as active as PayPal’s), and its YouTube channel is full of instructional videos. Square even lets you post directly to its Facebook page now, something it previously hadn’t allowed.
- Phone & Email Support: The biggest flaw in Square’s phone support is that it’s only available if you have a code, which some people have reported having trouble getting. If your account gets terminated, you lose all access to phone support. Square generally strives for a 24-hour turnaround on responding to emails.
- Seller Community Forum: Get advice from other Square users as well as from Square staff on this growing forum. I’ve personally found the forum to be a great resource when I have questions about some of Square’s features.
PayPal Here’s support goes through the main PayPal system. Again, you can pick the option that suits your needs:
- PayPal Hub Home: Start here to get all your questions answered. The help center is organized by topic, with FAQs you may have.
- Social Media: Facebook and Twitter — specifically, tweet PayPal Monday-Friday from 9 AM to 5 PM CST, and they’ll go find you an answer.
- Phone & Email Support: The online consensus about PayPal’s phone support seems to be that the service is inconsistent at best. Fortunately, most of the answers you need are available through the help desk, community forum, or social media.
- PayPal Community Forum: Get answers from other PayPal users. PayPal’s forums are active with extensive archives, which is no surprise given how many PayPal users there are and how long the company has been around. However, I should note that Square’s Seller Community is more helpful and comprehensive than PayPal’s forums.
Both have a lot of options for support. For most technical questions (“how do I…”), you should be able to use the self-help or community options and get an answer. However, the problems usually start to arise when a merchant encounters a hold.
Both companies will typically request a variety of documents relating to your business and/or a specific transaction. You don’t have many options except to comply and provide as much information as you can to verify your processing history and transactions. Sometimes you can get the matter cleared up quickly — PayPal seems to be more forgiving in this regard.
Then, of course, there’s the worst-case scenario: an account termination. Unfortunately, there’s not much you can do if this happens to you. Both companies’ user agreements say they can terminate any account at any time with no justification.
Most of the complaints about Square and its customer service derive from account terminations. When it happens, Square shuts merchants out of the phone support system, which is an endless source of frustration, to be sure. You’ll get an email with no reasoning and no chance of appeal. Complaints about the quality of service for active merchants who have questions are getting to be less frequent.
PayPal’s complaints are a bit more of a mixed bag, but spotty phone service is a key issue. Some sales reps can help. Others can’t. It does not appear that PayPal locks merchants out of phone support after a termination, though I also haven’t seen proof that calling can help get your account reinstated, either. But if you need assistance and everything else fails, you can usually get help through the BBB, which we’ll get into in the next section.
We can’t call a clear winner here because each company has different strengths. Just rest assured that you can get clear and fast answers to most technical issues from either company, usually without ever having to talk to anyone.
Now, on to the subject of complaints!
User Reviews
Winner: Tie
Unsurprisingly, the comments from actual merchants about Square and PayPal are pretty similar. They’re very similar services with nearly identical pricing and the same sort of limitations, after all.
What a majority of the complaints boil down to is this: Square and PayPal are both third-party payment processors, which means you as a merchant are always dealing with a certain amount of risk in terms of account stability. If PayPal or Square flags a suspicious transaction, they may place a hold on your funds or, in a worst-case scenario, terminate your account entirely. You can mitigate your risk by learning how to prevent any account holds and freezes. But if you’re not willing to change your practices — or if you’d simply prefer to run your business with a greater sense of security and stability — a traditional merchant account may be better suited to you and your business.
Due to this inherent risk, there’s a veritable sea of complaints about both Square and PayPal regarding sudden terminations or holds on funds. In fact, it’s the single most common complaint about both companies. However, while the numbers can be overwhelming, I need to point out that the total number of complaints is still a very, very small percentage of the overall user base. Check out our article on negativity bias to learn more about how we process and analyze user reviews.
In addition to the complaints about holds and terminations, you’ll also see the occasional complaint about the quality of customer service. From what I have read, a lot of these complaints tend to relate to holds and terminations, but not all. I generally believe PayPal and Square try to provide quality customer service, even if they sometimes fail in the execution, especially concerning account terminations. The good news is that except for account-related issues, you can often find the answers to questions without having to contact either company directly.
Let’s delve into the nitty-gritty:
- Praise For Square: Square merchants seem to love how centralized the entire platform is for managing their business and how portable it is. This is a big draw, especially for businesses that don’t have a physical storefront (photographers, for example), who can accept credit card payments wherever they’re working rather than relying on cash or check. They also seem to generally like the pricing — specifically the lack of monthly fees. What’s more, inasmuch as these kinds of trends are difficult to quantify, I’ve been noticing somewhat more positive commentary about Square’s customer support than that of PayPal as of late.
- Praise For PayPal: Merchants seem to love the ubiquity of PayPal and appreciate how easy it is to accept payments both online and offline. They say PayPal is generally easy to set up, and they appreciate the lack of monthly account fees. Many of the comments that I’ve seen focus on the online payments aspect of PayPal, but generally speaking, users seem to be happy with the PayPal Here mPOS as well, and they like being able to accept credit card payments on the go.
Hey, I did say that the user reviews for both companies were rather similar.
Final Verdict
Winner: Square
I don’t want to proclaim Square as the unequivocal winner in this Square vs. PayPal title bout. PayPal does make sense for some merchants. Merchants who primarily focus on online sales and sell through multiple channels (such as eBay) might enjoy the ubiquity of PayPal and access to a global customer base with digital wallets. It’s nice to have an all-in-one platform that allows you to receive payments from multiple channels in the same account. Furthermore, PayPal does offer a nonprofit discount for online transactions and the ability to create a donation button with on-time and recurring donation options. And let’s not forget that you can more easily accept PayPal as a supplementary online checkout option than you can with Square.
However, there are plenty of reasons to consider Square as well. First of all, Square’s payment processing rates are on par with PayPal’s, with no monthly fees or contracts to worry about. Second — and this is crucial — Square offers more advanced features than PayPal in some regards, and it charges no monthly fees for the use of its virtual terminal or recurring invoice features. Third, Square offers a vast assortment of add-on products to centralize management of your business as well as an extensive array of ready-to-go integrations and a suite of developer tools. Square truly is a tremendous value bundled in an easy-to-use package.
If you’re still deciding between these two payments giants, go read our full Square review and our full PayPal review for some more in-depth analysis. If you decide to go with PayPal, read our piece on how to set up a PayPal business account, and if Square’s your choice, read up on how to establish a Square account.
Have you already chosen between Square and PayPal? If so, what was the deciding factor? If you’ve used both, which do you prefer and why? We always love hearing from merchants, so if you’ve got experiences to share or even a question to ask, please drop us a comment!
We've done in-depth research on each and confidently recommend them.
Melissa Johnson
Melissa Johnson has been writing about payment processing and mobile payments since 2014, and has been quoted in articles for Credit Karma and The Next Web, among others. She graduated from The University of Kansas in 2010 with bachelor's degrees in English and journalism.
Latest posts by Melissa Johnson (see all)
- Square POS VS SumUp: Which Mobile App and Card Reader Is Right For You? - November 25, 2019
- These 6 Online Credit Card Processing Companies Are A Cut Above The Rest (Plus Everything You Need To Know To Get Started) - November 21, 2019
- Become A Hero & Save Your Charity Money With Discounted Credit Card Processing For Nonprofits - November 12, 2019
- Why PayPal’s Credit Card Processing Isn’t A Merchant Account (And Why Not Understanding The Difference Puts Your Business At Risk) - October 17, 2019
- How Much Does Square Charge? - October 16, 2019
The presenter gave opinions clearly and honestly it seems.
It is a shame he used some jargon in places (e.g. SDK and API) without explaining them, plus another category of online business I never have heard of, so I have no idea what he said in those components of his presentation.
I have been using mobile Square for years. It is wonderful, but if you get lost you might as well take the client’s info by pen and paper and enter it later. Very difficult to recover quickly.
I provided service to an American firm not knowing how, or even if, they intended to pay. I chose PayPal as I did not know my Square account would work for their method so I chose the more obviously “American” PayPal.
PayPal has been a nightmare with whom to register our business, but since we haven’t done any transactions yet I don’t have an opinion so far on that.
Considering the presentation and my experience so far with Square and PayPal, we will be shifting totally to Square.
Thanks to the Merchant Maverick!
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We are a non-profit organization and accept payment via credit card. Currently using PayPal for online payment. Can we open an account with Square or PayPal for card-swipe payment ? Does PayPal have the offline service like Square ? Does either one have lower service charges/rates for non-profit organizations ?
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Hi there Alex,
For in-person payments, there’s no discount with either Square or PayPal. PayPal offers a discount for online payments, but Square doesn’t. If you’re already using PayPal, I would recommend sticking with PayPal Here just to keep everything unified. However, that said, PayPal doesn’t have an offline mode like Square. PayPal is fractionally cheaper than Square, but you’d have to be processing several thousand dollars a month in person to see any sort of substantial saving.
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Hi, I use square now, but I do not like the fact that you will receive a 1099 if you have 200 transactions in a single year. Does Paypal Here have a single year transaction limit? I do agree on the IRS reporting limits, just not the transactions limit. My business sells a lot of small items sales.
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Hi Luz,
If you are processing 200 transactions AND at least $20k in sales per year, you should expect to get a 1099-k from either Square or Paypal. It appears to be pretty standard across the board, with the exception of Massachusetts and Vermont, who have a lower reporting threshold. That said, if you process 200 transactions, and don’t hit the $20k mark, you shouldn’t be receiving the 1099-k.
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I use square as my POS and paypal pro for online reservations for my tourism based company. I am thinking of switching to Square now for the online reservations to save myself the $30 a month from Paypal, however my question is does Square allow for pre-authorizing credit cards from online reservations without charging like Paypal? And if they do is there any fees?
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Hi Tonya!
Interesting question! It looks the closest thing Square supports is pre-payment with Square Appointments. We don’t often say this, but you might actually be able to do this with Clover. You may want to look at getting Payment Depot or National Processing and get a Clover Flex or the Clover Mini and you could probably benefit from interchange-plus pricing.
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I’m And independent hairstylist. So essentially I rent a chair in the salon, And run on business. I have been using PayPal since already had it set up from doing business on eBay. But my question is i more specific Regarding my industry and fees.
Thank you
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Hi Boris,
Thanks so much for reaching out! If you want to send us an email with your specific question, we’ll do our best to answer it! You can reach us at service@merchantmaverick.com.
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I’m a Independent Consultant for Pink Zebra. I’m currently using PayPal business. I’m not happy with the company. Was wondering should I switch to Square?
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I have a brick and mortar but would like to sell thru facebook using the email address. I am small so only using Square point of sale right now. Would my best option on facebook be to use paypal or square as payment. I know that in Square I can build my future website plus send free invoices but cannot pay with paypal. So thinking ahead but as for FACEBOOK which is my best option for the customer paypal or square using email ? Thank you.
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Hi Cynthia!
Thanks for your question. In order to manage a shop on Facebook you would have to choose either PayPal or Stripe — the alternative might be to use Facebook Messenger to send invoices for orders that are paid for in Square, but that would be difficult to manage logistically.
PayPal would probably be a workable option if you’d like to centralize things by selling online through Facebook and also sending invoices — but there’s a third option that perhaps you haven’t considered: Shopify.
With the Shopify Lite plan ($9/month), you get access to the mPOS, plus a Facebook shop and the ability to create “buy” buttons for a website, as well as send invoices. The only shortcoming would be that to work with barcode scanners, receipt printers, or cash drawers, you’d also have to pay for the Retail Package ($49/month). Otherwise you can send receipts via email or SMS, and just use a manual cash drawer. The good news is that if the online channel does take off and do well, upgrading to a full fledged Shopify plan will make selling online super easy. And, you can set Shopify up to accept PayPal payments as a secondary option to Shopify Payments. This would be our recommendation. Good luck!
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Starting a new side business where we will have sporadic transactions throughout the year however sometimes the transactions will be large orders (over 10k on one transaction for example). I’m looking for a processor, I fear our funds will be put on hold etc. since we’d be sporadic and at times, large amounts.
Is the best I can do is contact the merchant before the transaction occurs to let them know it is a legitimate charge? I was looking into merchant accounts (not aggregators) but didn’t want a lot of fee’s but am open to one that will go smoother for us all around. Thanks.
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Hi, Ree!
Based on the criteria you’ve given me, I would suggest CDGcommerce or Payline Data as a merchant account provider for you. That’s absolutely the way to go to reduce your chance of a funding hold. I would also suggest looking at invoicing for the largest transactions rather than just swiping a card. You can check what invoicing services work with CDG and Payline when you talk to the sales team. They’ll also be able to advise you on the best ways to mitigate your risk given your situation.
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I’m just starting off as a book seller and plan to sell to both individuals and schools (both on my online website store and in person). I’ve seen concerns regarding funds held by both Square & PayPal for unusual volume. Would Square or PayPal – or a merchant account be best to avoid “a hold” on my funds as a startup business?
Also – which ecommerce tool is best for selling to nonprofits (i.e., schools)?
Thank you for such an informative article and great comment page!
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Hi, Josie!
Generally speaking, merchant account are always going to be more secure than a third-party processor such as Square or PayPal. However, it’s a matter of trade-offs: merchant accounts are more secure but they are usually only cost effective when you’re dealing with about $10k per month in credit card transactions. Below that and PayPal and Square tend to be more affordable, and some merchant accounts won’t approve you at all. You also have to jump through fewer hoops to get an account set up with PayPal or Square. And for context: PayPal has 17 million merchants and Square has well over 2 million. So the complaints about holds are valid, but I don’t think account issues happen as frequently as people imagine them to, just based on complaint volume. You have to look at the overall user base, too.
I think that using invoices would help protect you for large orders. Square actually has some really cool tools for uploading contracts to your invoices. However, that’s not a perfect solution. One of the reasons transactions get flagged and held is a very sudden, very large sudden spike in business. Steady growth over time will actually help off set this, but if you’re selling 10 books a month and suddenly you get a single order for 1,000 books, that might signal that something is wrong and lead your processor to hold funds.
As for ecommerce tools: it doesn’t really matter who you’re selling to. So there really aren’t any tools or services that are designed to help you sell to nonprofits and schools. Just make sure you have a well designed site with all of the relevant details and information. You might put up a notice and tell them that bulk orders are available by invoice or something. (It’s hard to be specific without any other details about your business.)
So it really comes down to priorities. Can you afford monthly fees for a merchant account? If you can get a merchant account, are the costs comparable to Square or PayPal, or will you pay more? Is that acceptable to you? Do you want tools like Square, which offers a free website and built-in invoicing plus a mobile POS? Or would you rather pick a merchant account and then pick your website provider and your invoicing tool? (Also worth noting, some merchant accounts offer a unified platform like Square’s with all the tools built in).
I know it’s not a definitive answer, but I do hope this helps you get started!
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Hello
I’m starting my credit repair business and I planning on having a website. I would like your input on which merchant service would be the best. I will have a monthly recurring fee. Thank you!
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Hi Steven,
It looks like you may need a high risk merchant account, actually. Square bans credit repair businesses and Paypal bans “certain types” of credit repair businesses. Stripe isn’t an option either. I’d suggest reading through this post on high risk providers to find some suitable options. You can also give our filtering tool a try for a more tailored recommendation. I know this probably isn’t the news you were hoping for, but I hope you find it to be helpful. Best of luck to you!
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Hi Melissa
I am a crafter and sell my wares at various craft shows. People have asked me to start taking credit cards and I would like to do that. A friend advise me that PayPal gives direct funding immediately and the square takes a couple days. I prefer the PayPal but I’m not really sure how to go about doing this. I don’t have a PayPal credit card but I do have a PayPal account with my credit card linked to it. How does this work?
Joan
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Hi, Joan!
Honestly, either solution will work for you, though in my experience more artists seem to prefer Square. Square also has slightly more inventory management and invoicing features that you might find useful as a crafter!
PayPal offers “immediate” funding in that it’s available in your PayPal balance almost right away. It’s not in your bank account. However, if you have the PayPal for Business debit card, you can spend your PayPal balance anywhere that accepts MasterCard/debit cards. In addition, you can instantly transfer your balance from your PayPal account to your bank account for $0.25 per transfer.
Square generally takes 1-2 business days depending on the time of day when the transaction is processed (there’s a cutoff time, which is fairly standard for most businesses). If you want your money right away, you can initiate an instant deposit for 1% of the transaction value. However, there are limits (minimum and maximum amount and more stringent limits for new sellers).
If you go the PayPal route, you’ll need to make sure you get a Business account to use PayPal here, not just a personal account. Upgrading is easy, but you should make sure you upgrade and get everything with PayPal Here squared away well ahead of your next show. Likewise, make sure you apply for a Square account up front and early, too!
Also, when you start accepting credit cards, please make sure you opt for an EMV/chip card reader! It’s really important that every merchant be able to accept chip cards to protect themselves against fraudulent transactions.
I hope this helps!
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Hi,
We are planning our 30 year class reunion this year. I would like to know which option Square or PayPal, would be best for people to pay online? I’ve researched both, and to me Square would be the BEST choice, but would love your input. Thanks in advance.
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Hi, Glenda!
I think in your case, both PayPal and Square would be really good options. As far as online payment options, they’re pretty evenly matched. It really depends on how you want to set things up. Do you already have a website? Do you need to build one? (Square has a free website that you could use, though the design options are pretty limited. With PayPal, you’d have to set up your own site, which is pretty easy with software like Weebly.) Would you rather direct people to something informal such as paypal.me or cash.me to send their money, or do you need something that’s a bit more structured where they purchase official tickets? Do you want people to be able to make donations in addition to buying tickets? (PayPal might be the better option for donations because creating donate buttons is very easy.) In both cases you can get a card reader to accept card payments at the door, too.
I know this isn’t much of an answer, but there are so many variables that it’s hard to say definitively without knowing all the details!
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Hi there, I am starting a dress hire business and at this stage I don’t have any clue when it comes to payment processing. I’ve just download your free email course to get me started. Thank you.
I will have 2 options where the customer can view and try on and pay and also and an online hire service where customer will view the garment via Instagram and direct message me with their inquiries and if happy to proceed I send the garment via postage. Can you please reccomend your preference please in this situation. Also I need to take a copy of credit card details just in case the garment is late or damaged. What is the best way to do this?
Thank you in advance 😉
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Hi, Rachael!
I’m sorry to say I don’t have an easy answer for you because the type of business you’re describing faces several kinds of risks. In an ideal world, a processor that supports pre-authorization and capture would work. But most processors, including PayPal, have a limited time frame for those pre-auths and place limits on how much you can increase the transaction size beyond the initial amount. Square does offer invoicing and card on file capabilities, which could work — but generally speaking, charging customers for additional amounts without their authorization can get your account terminated. So you’d be facing possible lost income. Square doesn’t support pre-authorizations for anything except its Appointments software, either.
This is one of those cases where I think your best bet is to talk to a few processors directly and see what they recommend and whether they’ll support your business model. Square, obviously, would be a good start. Helcim and CDGCommerce are also worth looking into!
At the very least, I also recommend having an actual webstore, not just Instagram. This will help you with appearing legitimate, both to customers and to processors. There’s nothing that says you can’t also post to Instagram to attract customers! You’ll also want to make sure you have a very strong contract prepared that outlines the costs and fees and penalties, and make sure your customers read and sign it when you complete a transaction.
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Thankyou Melissa, you have given me much to think about. ;-)))
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Not really a review but more of questions!
I am in DS. Usually all of my online sales are thru PayPal by invoicing. I however have 2 customers that buy from me that don’t have an email so I take their card info and manually type it into square. I don’t mind the wait to be put into my account usually 24 hours! I just recently learned about PayPal having a free reader. Since I really don’t use it I was thinking about switching to the PayPal reader that way it is just put on my business card. But since I plan to start doing events to get my business out there now I’m not so sure if I should stay with square or go with paypal. Right now my card reader does not do even close to $500. Because like I said most of my sales are thru PayPal invoicing. So guess my question is which would be better for me?
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Hi there!
I think it would be smart to condense your payment processing into one service. Both Square and PayPal offer invoicing and a free card reader (but you should get an EMV reader; it’s worth the extra cost). The one thing to consider is that if you’re going to continue relying on a virtual terminal for customers who don’t have emails, Square is actually a better option. Its virtual terminal is free. PayPal has one, but it costs $30/month, which is absolutely not worth it for you. Square gives you Card on File and recurring invoicing options and no additional charge, which I think would be to your benefit!
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My wife and I own a vacation rental business in the Caribbean and we typically use Paypal for invoicing and taking credit cards for guests. Recently we started also taking reservations and transactions for cabs, cooking services, etc… a whole host of additional services which we offer as part of the whole experience. Our guests want to pay at the time the services are provided… which means on the Caribbean island while they are there. We do allow then to establish a line of credit before hand to be settled at the time of their stay, but it is more convenient to be able to take credit card transactions on the island. Getting this to work has been very problematic as the local banks in the Caribbean wont even talk to us unless we provide some minimum amount of business. Our experience is that Paypal and Square do not work outside of the USA… so where to go from here?
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Hi Bill,
Unfortunately there is no quick and easy fix that we are aware of. We agree that the way you are currently handling payments is probably the best method for your situation. Best of luck to you!
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Question: we are a small company, using credit card payments from customers only 1 or 2x a month (the rest we receive by checks).
I was told we could just process Square inbound payments using a computer–no other hardware needed. Is that true? I have gone directly to Square to ask but via phone their system only allows existing customers with codes!
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Hi Debbie,
I think what you are looking for is Square’s virtual terminal. You may also want to check out their invoice feature as well. I hope that helps!
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I’m in a service field and really there’s just a couple of people every month who forget their checkbook or cash so I wouldn’t really be using a credit card reader for much maybe 500 a month do you think Square is still the best for me
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Hi Ariella,
Yes, it sounds like Square would be a great option for you!
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Melissa,
Thanks very much for sharing your time and insights!
Divine Blessings,
Linette
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I had a Square but terrible customer support. After using Square for a year it one day would not allow me to log on. Said email address was wrong. Tried contacting customer support but support is not available without email address, which I had not changed but Square did not recognize. Tried ordering replacement but got message that my email was already linked to a device. Catch 22. There is no support!
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Excellent write-up Melissa, yet I still find myself on the fence in knowing what is the “best combination” of applications to support my needs; i.e. mPOS paired with best accounting/book keeping SW plug-ins.
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Thanks for the helpful and thorough review!
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Square’s register function does not have a calculator function, ie. I want to sell 2.5 yards of fabric at 12.99 per yard. I have to do the calculation separately then enter it. Paypal allows me to do the calculation in the register. Is there any workaround to the Square register to allow me to do this? Customer support for the last 1 1/2 years has said, “this is a good idea, and we’ll look at it,” and of course, they haven’t.
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Hi, Brian!
I’ve got a couple of suggestions. This is a topic that’s actually come up in Square’s community seller forum, and something other users suggested is price points: you can pre-program the costs for particular lengths (1/8, 1/4, 1/2, 1) and then just plug in the quantities until you get the right measurement.
https://www.sellercommunity.com/t5/Using-Square/I-sell-fabric-is-there-a-way-after-scanning-bolt-to-choose-1-2/m-p/13158
Square also has variable price points — which might work if you’re looking to keep sales records and don’t mind plugging in the cost manually still.
https://squareup.com/help/us/en/article/5328-item-variants-or-price-points
I hope that helps! IT would be nice to see Square add pricing by weight or yard in the future though, for certain.
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I’ve been using paypal for several months and was really happy until PayPal started holding over $500 in “Rolling Reserve.” My business is small, and new. $500, right now, can make or break a month for me. Does the Square do anything like that: hold your money, that clients have already paid, in a reserve for 30, 60, or 90 days?
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Hi Courtney,
You might want to check out the “Account stability issues/funding holds” section in our review of Square. Unfortunately Square has been known to put holds on funds as well. If you want to shop around, we have compared a handful of top rated mobile payment companies here with links to each of their reviews for further reading.
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I have the card reader from square and never got the one from paypal however is like to go through paypal. Can I use the square reader with the paypal app?
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Hi Charlie,
Unfortunately the card readers are not interchangeable, so you won’t be able to use the Square reader with Paypal Here.
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Up until today I’ve been very happy with Square. I use Square for on-site purchases when customers come to my studio and also for custom orders, I send out a Square invoice. My website uses PayPal and I have never had an issue. My biggest frustration with Square was this morning when my password didn’t work – the same password that I’ve had for three years. I finally requested a reset and the verification code they sent didn’t work. And yes, I began to freak out because there is literally NO WAY to contact Square if you can’t access your account. They require that you ‘log in’ to contact them – well how do you log in if your password isn’t working??? The fact that Square’s customer service can’t be accessed if your account goes down is just plain bad business. I spent most of the morning trying to resolve this and finally after the third verification code I was able to access my account. But this has caused me serious concern over continuing to use Square.
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I just signed up for Square, im still hesitating with Square and paypal.
When I received Square payment does it go directly to my bank account?
For Paypal. If I invoice my clients I can accumulate it thru paypal and transfer the balance to my bank account?
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Hi Ivy,
Great questions. Yes, when you sign up with Square, you will have the opportunity to sync your bank account. For PayPal, yes, you can transfer the balance to your bank account once your clients pay you. I hope this helps.
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Hey so, with “square,” am I able to capture payment remotely? I’m working in e-commerce, and can go door to door for my marketing services today, but I would like to be able to live anywhere in the world and travel, so is it possible to type in payment through square, if they send their information?
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Hi Michael,
Yes, you will be able to accept card-not-present transactions but the transaction fee is going to be higher. I hope this helps and if you have further questions please let me know.
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I was told that customers cannot securely key in their own credit card information using Square. I want to be able to email my customers an invoice and allow them to pay online….and then receive an email when the payment has been made. This can be done using PayPal but can it be done using Square?
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Hi Kim,
You can send invoices with Square. Here is more information on how to do that. I hope this helps and if you have further questions please let me know.
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After what I just went through in the last couple of days with Pay Pal I will forever discourage people to get PayPal and go with square. I run my own PC repair/support business…I was approved, having already been with PayPal almost ten years I thought it the best way to go…well listen up…. My first three transactions were with typing in the credit card, since I usually work from home, and of course, their cc reader hadn’t arrived… What was that for???!! , after your first $500 PayPal actually holds the amount for 30 days or more. I called the representative and I was like “well I’ve had PayPal for years so what’s the problem” they proceeded to tell me “that’s how it works until you develop better selling habits??” I run a computer help and repair, where I remote into my clients servers, or PCs and fix the problem, so accepting a credit card payment over the phone shouldn’t be a biggy?? Right?? Wring! So basically I did two days or about $1,500 worth of of work, they gave me the first $500 and the other $1,000 is in there or in my pending balance for the next 30 days, just because I typed in the credit card. Mind you I sent them the receipts for the transactions. This is incredible, and a joke. I think it’s horrible 30 days?? This day and age maybe 2 or 3 days for it to clear, I can even do seven for it to clear with the bank but really 30 days???smfh Square took me through a two day process and after sending them my ID and a copy of my receipts everything went smoothly. It goes into my bank account after a day or so, or I can choose to have it immediately sent to my account for a 1% fee. The choice is clear. Hope you don’t babe l make same mistake.
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I just went through the same thing Jorge, and was looking for feedback about switching from PayPal to Square. Does anyone know if Square does the same thing? I had no idea PayPal would hold my funds for 30 days from a $500 transaction. The other issue I’ve had with PayPal, that I’m hoping Square doesn’t do, is the ONE time I did the manual key in, it held my funds then too.
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Keira, you’re very likely to see similar behavior from Square. They are both third-party processing services, meaning that instead of you having your own unique merchant account (which is what traditional processors used), all accounts are lumped (or aggregated) into one large account shared by everyone.
On the plus side, it means you don’t have to do much to create an account and start processing. However, because the fraud/underwriting departments don’t do much research or assessment if you or your business model, they’re a lot more finicky about holding funds for transactions. We unfortunately don’t have any information about exactly what criteria either company uses to identify problematic transactions, but manually entering large transactions is usually enough to create a red flag. Likewise, sudden large transactions can raise suspicions — particularly when you’ve got very little processing history or you’ve only processed small transactions until that point.
Depending on what industry you work in, sometimes it’s better to get a high-risk merchant account. And no matter what industry, use invoices or the virtual terminal features instead of keying transactions into the mPOS app if you can.
Hope this helps!
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Excellent review for Square vs. Paypal! One thing u left out. U didn’t explain if the device used such as the little square reader can be used for either or. I’m looking to purchase a physical square reader but if I use the app for PayPal will it still work even if I’m using the square device and the app. Is there such a thing?
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found your article, thanks for the info. however i don’t know when this changed but the paypal reader is no longer free. The reader is 14.99 and they also have a chip card reader for a whopping 149.00
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NOT happy with PayPal. If I sell over $500.00 in a given week, they hold my funds for 30 days. I called and they said they couldn’t do anything about it. Has anyone else had an issue with this? I’m thinking of changing to Square.
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I have used Paypal for years now and have been fairly happy with them until recently. Paypal does have easy to reach customer service which is nice but the problem is the person your reaching isn’t much help. The Paypal staff seems to be very clueless and confused about their own pollicies. With my experience with Paypal I’ve learned its more of a company for Buyers not Sellers. There are many strange policies Paypal go by. For instance just recently I sold an item on Etsy. It was a custom made custom ordered item specificly built just for this customer. On the Etsy listing we quote 3 weeks for delivery. We did our part we built the item, shipped it, and had good comunication with the customer all within the quoted time frame. For some reason at the very last minute as the item was still in transit the customer chose to cancel the item. Which of course we don’t offer cancelations on custom built items. The customer filed a claim on Paypal because they did not want it anymore. When the item arrived the customer refused delivery. By doing so it basicly is like the customer never recieved the item and we never shipped it in the eyes of Paypal. Even though we had proof it was there but customer said they did’nt want it. Because of that refusal to accept the package Paypal sides with the customer and refunds their money. We’re out time to build the item, money for materials, and shipping fee to ship the item…. Now stuck with a custom built sign with a long unusual last name carved into it that we will Never get rid of. Paypal customer service Rep called it a loop hole in their system. I have encountered many strange situations similar to this from Paypal. Now I dont know what Square would do in that situation but I would hope they would not allow a last second cancelation like this to happen to their seller becuase of a loop hole in the system. Paypal just is more of Buyer favored site.
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David,
I could not agree with you more. A customer of mine also filed a chargeback under the false claim that he never authorized my company to charge his card. I sent the proof to PayPal as requested. (Email correspondence between the client and I who give his authorization and permission) The representative at PayPal informed me that I had nothing to worry about because I had the correct documents as proof. About 3 days ago, I saw the money withdrawn from my PayPal balance! When I called customer service they informed me that the client’s bank decided to issue him a refund so they had to deduct the money from me.
I was so angry because I have to suffer for this. Even though I provided all documents requested – PayPal refused to cover my loss. They don’t care about small businesses! It’s such a shame that I’ve given them so much money to be treated like this! Not to mention they even threw on a $20 chargeback fee on my account as well.
I have moved to Sqaure. I do hope it will be better with this Merchant.
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Indeed a great article. I have been using Paypal for years, and I find the company easy to use and available on the phone when needed. My only complaint is actually their card readers. The little triangle stinks! I have to swipe several times some times, which is useless. I usually bring 2 or 3 to my sales. I’ve seen people use the square reader and it seems like a breeze. The delay in depositing is not so good, but I plan for it.
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I have been using PayPal Here for several months and wanted to switch to Square for a more robust POS. I called to sign up with Square and when I said my average transaction would be less than $10, they said transaction fees would be 2.75% + $0.15 per transaction. Is this the same for every quick-serv merchant that has smaller transactions?
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Hi, Alex!
Unfortunately, yes. as far as mobile/pay-as-you-go options are concerned, PayPal is the only one that offers a micro-transaction pricing option. 2.7%-2.9% is pretty much standard across the board. A few places might have marginally lower rates (check out Intuit GoPayment or Spark Pay, for example) but they aren’t as robust as far as the app goes.
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Thanks for the prompt reply. Square’s biggest draw is that 2.75% flat fee and I can’t find anywhere that outlines the additional .15 per transaction other than what the sales rep said. If you sign up online do they freeze your account or change pricing once they see what your sales transactions are?
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My mom is going to start a website and Facebook page for her crafts. She sells homemade crafts (such as these cute trendy banners for weddings, showers, parties, home decor, etc.) mostly to local people and meets them and they pay with cash. However, she is looking to expand her business to having it online and having people purchase her products with a debit/credit card. She wants to know which is most safe for her to use? Thanks, if you can help!
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Hi Megan,
I would recommend taking a look at Square.
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I’ve used PayPal for years and have recommended it to several entrepreneurs. Paypal does have a debit card which , merchants can use to access money immediately. The card is accepted by most companies that accept Mastercard, although I have run across some companies who don’t accept it. However I have now decided to use square for two reasons. Reason one the new Emv reader and lower cost, reason two direct deposit to my bank. Since I haven’t used square long I can’t say whether I prefer it or not.But for right now I’m going to continue to have paypal on my website and use square for in person sales.
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With Square can customers purchase online from my website?
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Hi Sharon,
Yes, your customers should be able to purchase online. Here is more information on how you can integrate online purchasing with Square.
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Not sure if you mentioned it, but I have the PayPal Here with the (free) debit card, and not only is their swipe rat a tiny bit lower than square’s, but they give you 1% back on what you spend each month, too. 🙂 So, in reality, your swipe rate lowers.
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Only Paypal has a Windows Phone app (as of early 2016). Yes, some of us still use Windows Phones. I don’t want to carry a separate phone just to swipe credit cards.
If Square had a Windows Phone app I would use them over Paypal. I don’t like having to “manually” transfer funds from Paypal to my bank. (Square deposits directly into my bank automatically). But no Windows Phone app. Nothing is ever perfect, is it?
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I’m pretty sure you can link your PayPal account to your bank account and/or debit… Although, the easiest thing to do is just have PayPal send you a debit card. It is definitely worth it. 😉
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What about a security comparison? Square boast PCI Compliance, whereas PayPal Here is silent on the issue.
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I will be moving to square. Two big points with square is the ability to track inventory with their system and the automatic transfer to your bank account. I am sure their customer support will become better as more people start using them.
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Thank you so much for the comparison. It’s very helpful.
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Thank you for sharing the insight! I was just wondering which credit card reader to get, to get ready for my upcoming sales events at major dance studios! The last thing I want is hearing potential customers saying ‘ oops I don’t have any cash’, and watching them walk away…
Personally I think that, if you’re just starting out, have a small transaction volume, then you really can’t lose choosing one over another.
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Great article. Very helpful. So if I’m reading it write; the only real downside to Paypal is the $25 chargeback fee.
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I’ve been using PayPal for almost 10 years, and frankly I’m delighted to move to Square. PayPal is painful to deal with. They withhold funds if the wind changes direction, and are quick to take take funds from your account. The biggest drawback that hasn’t even been mentioned in this review is that PayPal is effectively its own bank. If you want to use your funds, you might have to move them to your bank, which takes up to 4 days. Square deposits money directly to your bank account, which I find way more convenient.
I’m thrilled to have a realistic contract-free alternative to PayPal!
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This was a great article. I’m just starting my first retail business and am trying to figure out which way to go.
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This is a great article and it helped me narrow down my decision of which credit card reader to use for my organic bodycare biz, small biz since we just started a couple months ago.! Thank you for posting 🙂
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Anytime Holly! Glad to help. 🙂
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