Square VS PayPal: Which Is Best For Small Business?
Square and PayPal both have mobile card readers, but there’s a lot more to both platforms. Learn about the differences between PayPal and Square's fees and features.
PayPal and Square (sometimes called Squareup) are two of the biggest names in the payment processing industry. They provide similar core features for small businesses, from in-person (mobile POS) sales to eCommerce sales to invoicing to reporting.
This article inspects how each platform compares in the most important categories. After reading this post, you will have a clearer answer to the PayPal vs. Square debate as it pertains to your small business, and you’ll know whether Square or PayPal will deliver a better value for your processing needs.
|Supported Transaction Types||Credit/debit cards, Cash App digital transactions, eCheck/ACH, QR codes, Buy now, pay later||Credit/debit cards, PayPal/Venmo digital transactions, eCheck/ACH, QR codes, Buy now pay later, Cryptocurrency|
|Standout Features||Four POS systems tailored to different industries, Offline mode for in-person sales, Free online store||International eCommerce support, Multichannel sales support, Good mobile card reader|
|Next Steps||Visit Site
Table of Contents
Square VS PayPal: At A Glance
The answer to the Square vs. PayPal question depends on which services you need. PayPal supports international growth and offers more features for eCommerce, while Square provides more in-person selling tools. Regarding PayPal vs. Square fees, Square generally charges less for online payments, while PayPal charges less for in-person transactions.
Benefits Of Square
- An impressive feature set and free add-ons
- All-in-one multichannel payments system
- Dedicated POS systems for restaurants, retail, and appointment businesses
- Proprietary POS hardware options: Square Stand, Square Register, Square Terminal
- Free eCommerce tools, including a free virtual terminal and buy now, pay later (BNPL)
- No chargeback fee
- Not suitable for international sellers
- Not for high-risk industries
- Account stability issues
- Slightly more expensive than PayPal Zettle for in-person transactions
Square’s ever-evolving payments platform is a powerhouse when it comes to features, ease of use, and transparent pricing. While Square made its name with mobile processing, it now offers complete POS systems, with niche POS packages for different industries and integrations with other POS systems. That means coffee shops, mobile contractors, restaurateurs, niche creators, and traditional retailers will all be well-served.
With an easy website builder, free developer tools, social media integrations, a free virtual terminal, and invoicing, Square is a solid platform for online commerce as well.
Benefits Of PayPal
- Trusted by consumers
- Predictable pricing
- Enables international selling
- Extensive integrations
- Good developer tools
- Accept in-person PayPal and Venmo payments
- Account stability issues
- Not suitable for high-risk industries
- Inconsistent customer support
- PayPal’s online processing fees are higher than Square’s for most businesses
- Added charges for a virtual terminal, chargebacks, recurring billing
With its ubiquitous, highly recognizable payment button, PayPal has dominated the eCommerce payment space for quite some time. PayPal’s all-in-one payment system and international acceptance make global selling accessible to more merchants than ever before — all you need is a free PayPal business account.
With its broad suite of developer tools, invoicing, and recurring billing options, it’s a formidable business platform, whether you use PayPal exclusively or as a supplemental checkout option. PayPal also offers in-person mobile processing with PayPal Zettle and integrations with numerous POS providers.
What’s The Difference Between Square & PayPal?
Square and PayPal have lots in common, with both offering flat-rate payment processing and loads of merchant-friendly features. Upon closer examination, however, differences arise. PayPal offers more eCommerce features and can be used as a supplemental payment option. Meanwhile, Square is more customizable and offers more in-person sales tools.
Let’s take a deeper dive into what Square and PayPal share and what distinguishes them from each other.
Both PayPal & Square Offer…
- Free mobile POS app compatible with nearly all devices
- QR code payments
- Issue full and partial refunds
- Apply discounts
- Item library with product descriptions, images, and variants
- Barcodes and SKUs
- Receipt printing
- Cash drawer support
- Recurring billing
- P2P payments
- Buy now, pay later
- Phone support
- 24/7 support via live chat
- Small business financing
Only Square Offers…
- Industry-specific POS systems with advanced inventory, timekeeping, and payroll
- Offline mode for in-person sales
- Appointments and reservations
- Customer loyalty and marketing features
- Multilocation management
- A website builder
- Deeper reporting features
Only PayPal Offers…
- Buy buttons that can be added as a supplemental online payment option
- Extensive support for international sales
- Multichannel selling
- In-person PayPal payment acceptance (with Square, you can only accept PayPal online)
- Cryptocurrency payment acceptance
- Micropayment rates for some merchants
- Discounted processing rates for nonprofits
PayPal VS Square Fees & Pricing
Comparing PayPal vs. Square fees is difficult due to factors that can affect the rate you’ll ultimately pay, particularly with PayPal. Nonetheless, the big picture is that most merchants will pay less for online transactions with Square, while PayPal charges less for in-person transactions.
|Monthly Fee||$0/month; $60/month for specialty POS packages||$0/month; $5/month for Payments Advanced; $30/month for Payments Pro & the virtual terminal|
|Online Transactions||2.9% + $0.30 per transaction||2.59% + $0.49 to 3.49% + $0.49 per transaction, depending on the payment method & your payments package|
|In-Person POS Transactions||2.6% + $0.10 per transaction (2.5% + $0.10 with some specialty POS packages)||2.29% + $0.09 per transaction|
|QR Code Payments||2.9% + $0.30 per transaction||1.9% + $0.10 for transactions over $10; 2.4% + $0.05 for transactions $10 and under|
|Recurring Invoice (Subscription) Billing||Free; 3.5% + $0.15 per invoice||$10/month (free if you use PayPal Checkout); 3.49% + $0.49 per invoice|
|Keyed/Virtual Terminal Transactions||$0/month; 3.15% + $0.15 per transaction||$30/month; 3.09% + $0.49 per transaction|
|Micropayments (For Transactions Under $10)||No micropayment rate available||4.99% + $0.09 per transaction (only available to certain merchants)|
A few caveats:
- The $20 fee PayPal charges merchants per chargeback is waived if the merchant enrolls in Chargeback Protection, but this means you’ll be charged an extra 0.4% to 0.6% for all transactions.
- Only certain merchants are eligible to enroll in PayPal’s Micropayments plan, which automatically charges you a lower fixed fee ($0.09) for each transaction under $10. When PayPal changed its pricing in August 2021, I found reports of video game streamers (who rely on small tips) being unable to enroll in Micropayments to alleviate the high $0.49 fixed fee taken out of each donation.
- The pricing shown here is US-specific.
- It’s not possible to list every possible charge here. Check out our articles on Square pricing and PayPal pricing for more details.
Which Is Cheaper, PayPal Or Square?
For online transactions, Square generally has a slight pricing edge over PayPal, particularly if you need a virtual terminal or recurring billing, both of which incur a monthly fee with PayPal but not with Square. For in-person transactions, PayPal’s rates are lower than Square’s rates.
Considering that every business needs its own combination of services and that many businesses sell both online and in-person, you may need to examine the Square and PayPal pricing articles linked above to determine which option will be more cost-effective.
For many businesses, the cost difference will be small enough to make price a negligible factor when determining whether Square or PayPal is the better fit.
Square VS PayPal Features
|Buy Buttons & Checkout Links||
Unlike Square, PayPal began as an online payments service, and it retains an edge over Square in this area. While PayPal doesn’t offer a hosted website as Square does, it facilitates international eCommerce and allows for multichannel sales on platforms such as eBay and Amazon. Plus, its countless shopping cart integrations mean you’ll have no trouble building your own PayPal-powered website.
While you can use PayPal as a supplementary payment method at checkout, you can’t do the same with Square. However, if you simply plan to sell a few items on your website, Square’s free website and lower (in most cases) eCommerce rates are an attractive option.
For in-person sales features, however, Square comes out on top. While PayPal Zettle is a step up from PayPal’s previous mPOS offering (PayPal Here), it simply can’t match the feature depth of Square’s four different POS systems, which provide specialized features for retailers, restaurants, and offices that need appointment scheduling. Plus, with Square, you can take payments with full terminals, while PayPal’s Zettle Terminal won’t be released in the US until later this year.
Smaller mobile merchants who don’t require specialized features will find the Zettle Reader 2 (just $29 for your first reader) to be a very capable device (and much cheaper than Square’s cheapest PIN-capable reader). What’s more, PayPal’s in-person transaction fees are a bit lower than Square’s.
Which Is Best For My Business Needs: PayPal Or Square?
We’ve explored each category in the Square vs. PayPal debate, but which of these services is right for your business needs?
Choose PayPal If…
- You sell mostly online. With features such as multichannel selling (eBay, Amazon, etc.), cryptocurrency payment acceptance, and, most importantly, support for international sales, PayPal has Square beat.
- You want the brand recognition of the PayPal name. Consumers are simply more likely to go through with an online purchase when they see the PayPal name.
- You deal in low-ticket or occasional in-person sales. PayPal doesn’t offer the same degree of POS services as Square, but PayPal’s in-person transaction fees are lower than Square’s, and PayPal Zettle is well-suited to smaller merchants.
- You want to accept in-person PayPal payments. With Square, you can accept PayPal payments online but not in person.
- You already have a payment processor, but you want to add a supplemental payment option for online sales. Only PayPal can fill this role.
Choose Square If…
- You sell primarily in person. Square offers four different full POS systems along with smart terminals, while PayPal only offers a mobile POS app and a mobile card reader.
- You want multichannel features and tools in one platform. With Square, you can connect seamlessly to in-house loyalty, email marketing support, and inventory reporting solutions.
- You don’t have a site and want to get one up quickly. With Square Online, you can have a basic eCommerce website up and running in very little time, all for free. For advanced features, however, you’ll need a paid Square Online subscription.
- You want the potential to scale premium add-ons and integrations easily. Compared with PayPal, Square has more third-party software integrations and more in-house add ons, both free and paid.
Square VS PayPal Comparison: The Final Verdict
While we are hesitant to proclaim Square as the unequivocal winner, its robust and ever-improving feature set just can’t be denied. Over the last few years, we’ve observed that Square’s features and services have noticeably expanded and improved, which speaks volumes about the overall quality of the platform. You just can’t find the same set of features, freebies, and business-scaling tools with PayPal, particularly if you sell in-person and need robust POS features.
However, if you need support for international selling and want the brand recognition of one of the most popular names in online payments, PayPal may better 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 when on the hunt for the right processor.
We also have many reviews and resources to help you get on board with a traditional merchant account, so if that option better suits you, check out our merchant account reviews page.
Lastly, if you have an opinion or piece of advice regarding PayPal or Square, please leave us a comment!