Square VS PayPal: Which Payment Processor Is Better For Your Small Business?

PayPal and Square are both huge names in the payment processing industry, and they both provide similar core features for the small business — whether that is in-person or eCommerce sales. If you landed here, we can safely assume you’ve narrowed down your choices between the two, so we are going to 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!

Square VS PayPal: At A Glance

Comparing Square vs. PayPal can be a little tricky. Although they have identical pricing at 2.9% + $0.30 per online transaction, you’ll find key differences in the pricing of ancillary services and feature-sets. PayPal supports international growth and makes the most sense for eCommerce, while Square brings a suite of tools you won’t find elsewhere.

Square

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 reader has slowly and methodically become better and more accessible for businesses that are ready to scale and own their niche online, too.

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 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.

Pros

• Impressive feature-set and free add-ons
• All-in-one payments system
• Free eCommerce tools
• Ideal for lower-volume merchants
• Easy to use and set up

Cons

• Not suitable for international sellers
• Not for high-risk industries
• Account stability issues

PayPal

With its highly recognizable payment button popping up everywhere, PayPal has arguable 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.

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.

Pros

• Trusted by consumers
• Predictable pricing
• Enables international selling
• Extensive integrations
• Good developer tools

Cons

• Account stability issues
• Not suitable for high-risk industries
• Inconsistent customer support

Features

Let’s start by laying the groundwork. As far as your core features are concerned, you can expect very similar functionality when it comes to 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’m going to highlight some of the differences in usability and back-end tools that could profoundly affect your decision and clarify what to expect.

Mobile POS App Functionality

Square Dashboard Features

When you look at the POS app differences between Square vs. PayPal Here, it is a really striking difference. 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. Two notable areas where Square beats PayPal Here are 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 that 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 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.

Square VS PayPal: 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 are happy to see that Square recently announced 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 paid plans for more features, and they are very competitively priced. If you don’t like Weebly or want to use your existing site, Square does support many integrations as well as offer developer tools.

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 article, Everything You Need To Know About Using Square Online Payment Processing For Your Business.

PayPal VS Square: 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 Payment Pro plan to take card-not-present sales is pretty steep! Square and Shopify both include their virtual terminal at the dashboard for free. 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, The Complete Guide To PayPal’s Fees, Rates, & Pricing.

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.

PayPal VS Square: 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 also 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

I’ve mentioned this at least a few times already in the post, but it’s worth saying again — 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 (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, 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. 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).

Pricing

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.

As you’ll see below, 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 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 marginal. 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. It’s also a good idea to keep in mind the value of the features that come along with both accounts when you make your final decision. The question of whether PayPal is cheaper than Square comes down to crunching the numbers based on your average transaction. Take a look at Square and PayPal fees below.

PayPal VS Square Fees

Square and PayPal have a very similar pricing structure:

• Swiped/Dipped/Tapped: 2.7% for PayPal and 2.6% + $0.10 for Square
• Online & Invoiced Transactions: 2.9% + $0.30
• Virtual Terminal Keyed Entry Or Card On File: 3.5% + $0.15 for Square — PayPal costs 3.1% + $0.30 plus $30/month for virtual terminal use.

Additional PayPal Costs

• Hosted Payment Page & Virtual Terminal: $30/month
• Micropayments Plan: 5% + $0.05 or a fixed fee based on currency
• Mass Payouts: 2%
• Nonprofit Discount Rate: 2.2% + $0.30 for online transactions
• Recurring Subscription: 2.9% + $0.30
• 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.

One other compelling feature to note: Square charges no fee at all for chargebacks and even offers merchants up to $250/month in chargeback protection 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. Chargebacks can undoubtedly put your accounts with both PayPal and Square at risk, so be sure to understand how to keep them down as much as possible. Check out The Small Business Owner’s Guide To Preventing Chargebacks & (12 Tips For Fighting Chargebacks).

Also, whereas PayPal focuses on its integrations with POS apps, Square has developed 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 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 of these options 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.

Contract Length & Cancellation

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 contract 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.

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 and Square, customer service and support is equally the weakest for both. Neither of them is known for having top-notch customer support and can be described as spotty at best as far as reaching a person quickly.

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. Unfortunately, some users who have had terminated accounts report issues with reaching customer service.
• Seller Community Forum: Here, you can pull advice or instruction from other Square users, and Square 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, so we recommend searching the online FAQ or email help desk support 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.

We can’t call a clear winner here because each company has different strengths. Overall, the answers to most of your 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!

Reviews, Complaints & Criticisms

Square and PayPal have different strengths but are very much the same type of platform, and the vast majority of users seem to reflect they are neck and neck. Here is a snapshot of common customer review platforms:

Capterra:

• PayPal Here: 4.7/5 stars
• Square: 4.7/5 stars

G2:

• Square: 4.6/5 stars
• PayPal Here: 4.5/5 stars

Google Play:

• Square POS: 4.3/5 stars
• PayPal Here: 4.5/5 stars

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, as a merchant, are always going to have some inherent risk in terms of account stability. For the majority of users, you’ll have absolutely no issues. The few 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, however, you don’t have a lot of 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 the majority of 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, plus 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 huge 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. Square is more open and flexible in its partnerships and allows more centralized control for different aspects of your business beyond payment processing.

Which Is Best For My Payment Needs?

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

Choose Square if…

• You want omnichannel 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 want to sell globally
• You want the brand recognition of the PayPal name
• You deal in low-ticket sales, in which case PayPal’s micropayments plan would be best

Comparing PayPal & Square: 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, and that speaks volumes to the overall quality of the platform. You just can’t find the set of features, freebies, and business-scaling tools with PayPal.  However, if you need support for international selling and want the flexibility of one of the most recognized names in 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!