Square VS PayPal: Which Small Business Software & Payments Platform Is Best For You?
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|✓||Integrations & Add-Ons|
|Tie||Fees & Rates||Tie|
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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.
Products & Services
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
|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|
|Always Free||Always Free||Free Trial||Free Trial|
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
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.
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.
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.
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
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.
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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?
|PayPal + Vend POS|
|Advanced POS software|
Easy credit card processing integration
|Get Started For $0|
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
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
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
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
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!
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.
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!