Square vs PayPal: Price, Features & What’s Best in 2020

The main difference between Square and PayPal is that Square offers a complete suite of business management tools, whereas PayPal is simply for accepting payments. This difference makes Square a better option for small businesses processing in-person sales. However, PayPal’s name recognition and easy One-Touch payments make it a better solution for online sales. Square and PayPal invoicing features are tied, and payment processing fees are very similar.

• Square: Best for accepting mobile and in-store payments
• PayPal: Best for accepting online payments

When to use an alternative: If you process over $20,000 monthly, you can get lower rates by using a traditional merchant account instead of Square or PayPal. Our recommendation for cheapest credit card processing is Payment Depot.

Square vs PayPal Overview

Monthly account fees	$0	$0 for Standard account, $30 for Pro account
In-person payment processing fees	2.6% + 10 cents	2.7%
Ecommerce and invoice payment processing fees	2.9% + 30 cents	2.9% + 30 cents
Keyed-in payment processing fees	3.5% + 15 cents	3.5% + 15 cents
Accept PayPal Payments	Only with Square Online Store	Yes - online, mobile app, and invoicing
QR codes for contactless payments	In-app and online	In-app and printed
Chargeback fee	$0	$20
Card reader price	Free magstripe reader, $49 chip and contactless reader	$24.99 for chip and swipe reader, $79.99 for chip and contactless reader with stand
Deposit times	1–2 business days, instantly for 1.5% fee	Immediately in PayPal account, approximately 3 business days to a bank account
	Visit Square	Visit PayPal

Takeaway: Square and PayPal are two of the best credit card processing companies and two of the most popular mobile POS apps on the market with user-friendly and affordable solutions. PayPal’s in-person transaction fees are slightly lower and have the benefit of accepting PayPal payments. If you are an individual looking for low, reliable rates, PayPal is a good choice. However, for business owners, Square is a much more scalable solution that can adapt to your changing needs.

When To Choose Square

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Square is recommended for businesses and individual sellers who want a low-cost way to sell anywhere, accept all types of payments, and manage everything in a centralized POS system. This includes:

• In-store retailers
• Sellers using mobile devices to accept payments
• Service providers sending invoices or using automated payments
• Ecommerce store owners
• Multichannel sellers that combine in-store, online, and mobile sales

With your free Square account, you get access to all payment options plus a full suite of inventory, sales, customer, and employee management tools. You even get a free magstripe credit card reader upon signup. If you’re looking for a payment solution that lets you start with zero cost, supports all types of sales, and helps you manage your entire business, Square is the best solution for you.

With Square, your only costs are your credit card processing fees, and Square’s are competitive with PayPal. What sets Square ahead of PayPal is its feature-packed POS software that lets you manage every aspect of your business―inventory, sales, employees, customers, and more―all for free.

When To Choose PayPal

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PayPal is an online payments powerhouse. If your focus is running an online store, you should seriously consider using PayPal as your payment provider. Online buyers appreciate having PayPal as a payment option, and PayPal’s secure system integrates with virtually all ecommerce platforms.

You can do plenty with PayPal beyond online selling too. PayPal Here is a mobile payments service that lets you accept payments using mobile devices and even set up in-store checkout registers with approved third-party hardware. PayPal also offers virtual terminal and recurring payment options, but both come with monthly costs, unlike Square, which provides them for free.

If you sell online and use your ecommerce platform or an order management system to manage inventory, sales, and customers, PayPal’s POS won’t matter to you. However, if you want to tie together brick-and-mortar, online, mobile, and other types of sales under one roof, Square’s free POS beats PayPal’s hands down.

When To Choose an Alternative: Payment Depot

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Payment Depot may be a better option if: You are an established business looking to save money on processing fees. Square is a great opinion for new businesses just starting out, and PayPal has excellent name recognition for online sales. However, if your business is growing and you want low-cost, reliable processing, we recommend trying Payment Depot.

Continue reading to learn more about how Square and PayPal compare for mobile, point-of-sale, online, and invoice payment processing. At the end, we’ll also compare the companies’ customer support and user reviews.

Square: Best Mobile Credit Card Processing

Square is one of the most popular card readers for small businesses.
(Source: Square)

Both Square and PayPal Here mobile payment processing apps:

• Are free to use with $0 monthly fees—just pay transaction fees as you go
• Support multiple mobile users on one account
• Accept all major credit cards, plus e-wallet payments like Apple Pay and Android Pay
• Have an offline mode to accept payments even without an internet connection
• Have options for QR code and contactless payments
• Support a product list
• Record customer data and send e-receipts
• Record check and cash payments
• Include a variety of business sales reports

Square vs PayPal Mobile App Features

Takeaway: Square tops PayPal in mobile payment processing because it delivers a full range of sales, inventory, customer, employee, and business management features. PayPal offers a reliable payment processing app, called PayPal Here, but it has rather basic business management features.

Why Square Is the Better Choice for Mobile Payments

• Square mobile POS has more features: Square beats PayPal’s mobile POS in many areas, most notably in inventory counts, employee time tracking, and various customer management features.
• Square mobile POS includes a free virtual terminal: A virtual terminal is what allows you to key-in payments rather than swiping a card. You can key-in an occasional payment into PayPal’s mobile POS app. However, if you do this often, PayPal requires the virtual terminal feature for your account to be activated, which costs $30 per month. Square includes this feature for free without limitations.

When PayPal’s Mobile App Is the Right Choice

PayPal Here also has a few key features that might make it a better option for some sellers:

• PayPal payments: PayPal Here mobile POS offers something that Square can’t top―buyers can pay using their PayPal account, including One Touch payments. That may not be a big deal for some sellers, but if you’re leaning toward PayPal for other reasons, it’s a nice plus.
• Lower card-present transaction fees: PayPal Here’s 2.7% transaction fee is the more economical option for vendors selling lower-priced items than Square’s 2.6% + 10 cents fee. That 10 cents does not sound like much but can add up for businesses selling $3 cups of coffee.

Square: Best for Point-Of-Sale Payments

Square offers several different hardware and POS software options for in-store sales.
(Source: Square)

Square and PayPal both:

• Have startup hardware costs around $800 for a full POS register
• Have similar flat-rate transaction fees
• Offer a free basic POS app with unlimited users, transactions, and items in a product list
• Provide general sales reports
• Allow you to create customer profiles, save contact information, and track purchase history
• Offer contactless payment options including QR codes

Square vs PayPal POS Features

Takeaway: Square soundly beats PayPal for managing in-store sales. Square’s major brick-and-mortar strength is its free, and quite robust, POS software. It delivers an array of business management tools geared to help retailers, dining establishments, service providers, and others run efficient, profitable day-to-day operations.

Square has a few other checkout features PayPal is missing, like the ability to open and split tabs. Square’s employee management features include time tracking and tip reconciliation. Plus, Square offers a range of sleek in-store checkout registers suited to any sales need and budget.

The PayPal Here app functions on tablets for in-store payments, but the software’s POS functions are very limited. (Source: PayPal)

PayPal is moving into the in-store sales arena and offers iPad-based registers. While PayPal’s POS system is improving, it has a long way to go before it is a reliable alternative to Square’s feature-rich POS system. For managing in-store sales, Square’s full suite of inventory, sales, employee, and customer management tools beats PayPal, period.

PayPal: Best for Ecommerce and Online Payments

PayPal increases ecommerce conversions by allowing customers to complete orders in a single click with PayPal, PayPal Credit, and Venmo payments. (Source: PayPal)

PayPal and Square both:

• Have a 2.9% + 30 cents transaction fee for online payments
• Offer sleek hosted checkout pages
• Accept credit cards, Apple Pay, and Google Pay

Square vs PayPal Online Payment Features

*Requires a plan upgrade with a monthly fee

Takeaway: PayPal is one of the most widely adopted payment methods and represents 22% of all online transactions. PayPal’s One-Touch checkout means shoppers can check out quickly and securely without having to enter any personal information. Studies show that accepting PayPal increases online sales by as much as 44% compared to credit cards alone.

PayPal also has secure integrations with virtually every ecommerce platform and web builder on the market (including Square Online). Plus, PayPal’s “Buy Now” or “Donate” buttons make it easy to monetize any aspect of any site. These features make PayPal one of the top payment processing choices for online sellers.

Square Online Store and Square Online Checkout can be used to accept PayPal payments.

Though Square’s payment processing tools are more commonly thought of for in-person or mobile payments, Square’s online payment features make a great PayPal alternative. In addition to a free online store with built-in checkout features, Square also offers a basic Online Checkout tool so businesses can create a single standalone checkout page without a full ecommerce website.

If you want to accept PayPal payments online, but don’t have a website, you can actually build an online store with Square, and accept PayPal payments through your Square store.

Square and PayPal: Tied for Invoicing Tools

PayPal’s invoicing tools are easy to access from any PayPal account.

PayPal and Square both:

• Offer free online invoicing—just pay transaction fees as you go
• Can be used to set deadlines and send payment reminders
• Have features for creating and sending estimates
• Track invoice payment status
• Have options for bulk invoicing
• Can record cash and check payments for free
• Let you customize invoices with designs, logo, and business information
• Have options for tipping, sales tax, and discounting
• Save customer contact information for future invoices

Square vs PayPal Invoicing Features

*Available for $40 monthly fee

Takeaway: Square and PayPal both offer online invoicing for free with very similar invoice creation, payment, and tracking features. In terms of online invoicing, neither of the two payment providers are significantly better than the other. Both Square and PayPal let you create invoices and email them to your customers. Customers can then click the “Pay” button to pay online conveniently.

Square’s invoicing tools are very intuitive, plus there is a setup guide to walk you through the available features.

However, there are a few situations where Square Invoicing would be a better fit:

• Appointment-based service providers: Square has a free appointment management system that works seamlessly with payments, invoicing, and online scheduling, so businesses can create and manage invoices before or after each appointment.
• Recurring billing: Square allows businesses to store customer payment information, so you can use the card on file for approved recurring payments. Square also offers recurring billing for free, and PayPal requires a $40/month upgrade ($30 for a PayPal Pro account and $10 for recurring payments).

Although Square and PayPal are tied for most small invoicing needs, there are a few exceptions.

Square and PayPal: Tied for Customer Support

Neither Square nor PayPal has excellent customer support for businesses. They both have limited live support hours and rely on community forums and documentation as a first-line of response. Both help centers have extensive Q&As and instructional content to answer any technical questions. However, for most small businesses, when something goes wrong, you want to get help right away, especially if you are not able to process payments or access your funds.

Square vs PayPal User Reviews

Square and PayPal are both aggregate payment processors. This means that businesses using Square and PayPal to process payments do not actually have their own merchant accounts. Aggregate payment companies process transactions from all their merchants together to get lower rates.

Because of this, both Square and PayPal sometimes freeze customer accounts if there is any suspicion of fraud or activity outside the norm, such as a sudden high-value charge, or a mostly in-person business processing a lot of card-not-present payments. The business accounts will be flagged and frozen by Square or PayPal to reduce risk from chargebacks.

Frozen accounts, unexpected chargebacks, and closed accounts are among the top reasons you’ll see unfavorable reviews for Square and other providers. These complaints are the exception rather than the rule, but customers who face these issues tend to be more vocal in review forums.

Bottom Line

Square and PayPal are both popular, user-friendly options with affordable and transparent pricing for individuals and small businesses. When it comes to online payment processing, PayPal is a solid option, given its well-established user base. For a payment processing solution that meets all your needs, Square is the better choice. Square offers superior POS solutions and hardware. Plus, Square delivers the most integrated multichannel payment solution at the best price.

Every free Square account comes with a free mobile POS app, invoicing, appointment booking, online store, and ecommerce payment processing, and multichannel sales management. As your business grows, you can add features for employee and payroll management, marketing, loyalty, and more. Visit Square to create your free account.

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