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

Comparing Square vs PayPal, Square offers better-integrated payment tools than PayPal, but PayPal pulls ahead in ecommerce payments. Online invoicing features are tied. PayPal’s per-swipe fee is 2.7%, and Square’s is 2.6% plus 10 cents. Most users think Square’s free point-of-sale (POS) system and business management system make Square the better choice.

Overall, Square is a better option. It has competitive processing fees and no startup, monthly, or cancellation fees. You also get free POS software for your business and a free mobile credit card reader when you sign up for a free Square account.

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Square vs PayPal Review at a Glance

*All rates are per transaction.

When to Use Square

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.

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When to Use PayPal

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.

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When to Use an Alternative

If you’re looking for an alternative to Square and PayPal, check out Payment Depot. It’s a merchant service provider that provides payment processing at extremely competitive rates using a membership pricing model.

Payment Depot’s pricing is ideal for businesses that process more than $20,000 per month. You pay a flat monthly fee based on the size of your business plus the direct interchange fees. No markups, hidden fees, cancellation fees, or contracts. Unlike most merchant account providers, pricing is the same for online and in-person payments, and both types of payments are included with every membership. Read Payment Depot user reviews to learn more.

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How We Evaluated Square vs PayPal

At first glance, Square and PayPal are very similar. Differences become apparent when you consider the many ways that today’s businesses sell. Some businesses sell primarily online while others sell everywhere―in-store, via mobile card readers, and online.

Based on the many sales scenarios that today’s small businesses face, we evaluated Square vs PayPal using the following criteria:

• Account fees: Square and PayPal have free accounts, but PayPal charges a monthly fee for advanced features, that are free with Square.
• Credit card processing fees: Both services offer a range of in-person and online credit card payment processing services with competitive fees.
• Payout times: PayPal makes funds available immediately while Square deposits take 1 to 2 business days.
• Ease of use: Both payment services offer simple mobile payment apps, plug-and-play ecommerce integrations, and intuitive online dashboards for setup and management.
• Accept PayPal payments: Only PayPal lets your customers pay using their PayPal account online and for mobile sales.
• Online invoicing: Both payment services include online invoicing features for free.
• eCommerce integrations: PayPal tops Square with almost universal ecommerce platform integration for payment processing. However, Square is a very close second.
• Retail POS & business management features: Square soundly tops PayPal in advanced business management features like a retail POS system, appointment scheduling, and free online store.

Businesses that primarily sell online can benefit from PayPal’s near-universal ecommerce integrations. Sellers who want to sell everywhere, including in-store, via mobile card readers, and online, will appreciate the power of Square’s all-in-one sales, payment, and business management system. For most startups and small businesses, Square is our recommended solution.

Square vs PayPal Pricing & Features

Before making your final decision regarding whether to go with Square or PayPal, you must understand how they compare. You’ll want to review features and costs for both providers based on specific sales scenarios. The right solution for your particular business needs will depend on the features that matter most to you.

Square: Best for Mobile Credit Card Processing

Square tops PayPal in mobile payment processing for several reasons. PayPal’s mobile features can’t match Square’s robust mobile POS. Square delivers a full range of sales, inventory, customer, employee, and business management features vs PayPal’s rather basic item lists and payment tools. Unlike PayPal, Square also operates in an offline mode to run payments without an internet connection.

In terms of mobile processing, Square and PayPal are quite similar. Both let you accept payments using mobile devices like smartphones or tablets, and both provide free card readers.

Square vs PayPal: Mobile Processing Fees & Hardware Costs

Both Square and PayPal offer many of the same mobile selling features. These include:

• Support multiple mobile users on one account
• Accept all major credit cards, plus e-wallets payments like Apple Pay and Android Pay
• Accept swipe, chip cards, and contactless (e-wallet) 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’s mobile sales features top PayPal in three key areas:

• Square Mobile POS works offline: If you lose your cellular or Wi-Fi connection, Square lets you swipe cards and complete sales in offline mode. Square’s mobile POS app retains and updates data once the connection is restored. Without a connection, you can’t accept PayPal Here 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 to your account to be activated, which costs $30 per month. Square includes this feature for free without limitations.

The PayPal Here mobile POS offers something that Square can’t top―buyers can pay using their PayPal account. 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.

Square: Best for POS Payment Processing & Store Operations

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. Plus, Square offers a range of sleek in-store checkout registers suited to any sales need and budget.

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. Below is a chart that shows how PayPal vs Square stack up in terms of POS hardware and related fees.

Square vs PayPal: Hardware Costs & In-store Processing Fees

Square vs PayPal: POS Sales & Operations Management Features

If you run a retail store, Square’s free POS software puts a full assortment of management tools at your fingertips. PayPal Here provides some POS management features, but they are limited by comparison and, in most cases, you’ll have to pay for POS services from one of PayPal’s POS partners.

One thing to note is that PayPal Here also accepts PayPal payments from in-store customers. This can be a nice plus but isn’t a game-changing feature for most retailers.

Here’s a side-by-side look at Square vs PayPal for POS features that most brick-and-mortar sellers need.

Square vs PayPal: POS & Operations Management Features

*Advanced features available for low monthly fees.

PayPal: Best for Online & Ecommerce Payment Processing

PayPal tops Square for online payments with seamless integrations with virtually all ecommerce platforms. Much of this is driven by the fact that PayPal is a widely popular payment choice of online shoppers. One of the biggest PayPal competitors is Stripe and, in a comparison of Stripe vs PayPal, it’s clear that Stripe is the best choice for custom checkouts.

Studies show that accepting PayPal increases online sales by as much as 44% compared to credit cards alone. Add to that PayPal’s secure integration with virtually every ecommerce platform on the market, and PayPal is an excellent payment processing choice for online sellers. However, if you’re solely an online seller, you may want to consider some PayPal alternatives.

Square’s big downfall in the online payments matchup is that it doesn’t accept PayPal payments. However, Square is no online sales slacker as it works with many ecommerce platforms, too. You can even start selling for free with the Square online store included in your account, something PayPal doesn’t offer.

PayPal vs Square: Online Sales Features & Payment Processing Fees

If you want to use Square for your business but still accept PayPal payments online, there is a back-door solution. Most top ecommerce platforms let you accept PayPal payments even if you use another payment processor like Square for credit cards. You need to open a free PayPal Express Checkout account, and then connect it to your ecommerce platform.

Another online selling plus with Square is its full integration with top ecommerce platforms like BigCommerce and Ecwid. This connects your online store to your Square POS so that you can manage all of your sales, payments, inventory, and customers in Square. This all-in-one store management solution isn’t something PayPal’s POS software provides.

Square: Best for Automatic Recurring Payments

Square lets you set up recurring payments for free, whereas PayPal charges a total of $40 per month for this service—$10 for the recurring payments add-on and $30 for the PayPal Payments Pro or virtual terminal account. Square soundly beats PayPal in this matchup for most small businesses that use recurring payments for things like repeat services, class tuition, or club memberships

Both Square and PayPal handle automatic recurring payments for things like subscriptions, monthly services, lesson fees, tuition, and so on. However, PayPal’s recurring payments feature is more autopilot than Square and can handle high-volume needs. If you need to manage recurring payments on a volume scale, PayPal’s total $40 per month fee is worthwhile.

Outside of high volume needs, Square is the winner in this matchup. Square’s recurring payments feature is free and simpler to use than PayPal, which involves a complicated setup process.

To initiate recurring payments using Square, customers save their credit card information to Square’s secure vault and approve automatic payments, which is done through an online invoice. Once they do this, each time you generate the repeating invoice, it triggers the automatic payment. Square’s recurring payments tutorial in your free Square account shows you exactly how to set this up.

Square vs PayPal: Recurring Payment Features & Payment Processing Fees

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Tie: Best Online Invoicing Features

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.

If customers choose to pay another way―say via check or cash―you can record those payments to show the invoices as “paid.” Neither service in these instances charges you a fee.

Square vs PayPal: Online Invoicing Features & Payment Processing Fees

*Requires $30 virtual terminal feature.

One place where Square pulls ahead of PayPal for invoicing is in the case of phoned-in payments. If customers call in a credit card payment for an invoice, you must enter this into an online virtual terminal to process the payment. You get a free virtual terminal feature with Square, but PayPal charges $30 per month for their virtual terminal service. Other than that, Square and PayPal are in a dead heat for online invoicing.

Square: Best for Multichannel Sales Management

Square is the recommended solution for multichannel sellers because in-store, mobile, and online payments and sales tracking are all part of Square’s fully integrated service. Moving into another type of sales―like if a retailer wants to start selling online―can be easily accomplished with Square. There are no new integrations, accounts, or add-on services needed.

Square and PayPal both accept a full range of payment types, as was covered in detail earlier. This makes both services decidedly multichannel-friendly since both let you combine an array of in-person, online, and mobile sales under one payment processing roof. But of the two, Square delivers the more streamlined, ready-to-grow with your system solution.

Square vs PayPal: Built-in Multichannel Selling Features

*Advanced features available for low monthly fees.

With PayPal, you must pay for important multichannel payment features, like a virtual terminal or recurring payments. Plus, you must integrate your PayPal account with other systems, like Lightspeed Retail POS―starting at $99 per month―to get advanced in-store selling tools or an ecommerce platform to sell online. All of this takes time and costs money with PayPal, but not with Square.

If you want to start using a free feature with Square, like the free online store, mobile POS, or subscription payments, you sign up for a Square free account. Alternatively, if you want to extend Square’s free features with paid add-ons like customer loyalty programs, gift cards, employee payroll, or more, you turn on and pay for what you need, nothing more. Best of all, everything works seamlessly since all of the pieces are integrated into a simple, streamlined system.

Square vs PayPal: Customer Reviews

Both PayPal and Square are widely-used payment processing solutions. Customer reviews for each option highlight what customers like best and what they like least about each provider. Below is an overview of customer feedback for both Square and PayPal.

Square Customer Reviews

Customers like that Square makes it extremely convenient to process credit cards both online and in conventional and unconventional in-person situations. Users also appreciate that Square provides sales breakdown reports that make it easy to understand when sales activity occurs and what items are selling best. In Square customer reviews, users rave about Square’s various POS hardware solutions, noting the options are attractive, affordable, and easy to use.

One of the most misunderstood aspects of using a payment aggregator like Square or PayPal is that these providers will occasionally freeze accounts. This is done only when fraud is suspected or unusual activity happens on the account, such as a dramatic increase in sales from one source. The reason payment processing providers do this is to protect the business, the customer, and the payment gateway.

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.

Negative reviews for Square mention difficulty getting access to customer service support, which is especially important in urgent situations when a sale is on the line. A small percentage of business customers feel that Square unjustly sides with cardholders too frequently, rather than protecting Square businesses from unsavory customer tactics.

PayPal Customer Reviews

Customers note that one of the best advantages PayPal delivers is trusted name recognition. Businesses realize that their customers feel safe purchasing online through PayPal due to its reputation as a secure online payment solutions provider. Reviews from PayPal customers also mention frequently how easy it is to set up PayPal payments on their websites.

Reviews regarding PayPal’s customer service and support are mixed. Some feel PayPal is excellent with conflict resolution while others feel that PayPal favors the purchaser instead of the small businesses paying PayPal for payment processing. Account holds and unexpected closures without sufficient explanation or recourse are also problem issues cited by an extremely small percentage of PayPal customers.

Alternatives to Square and PayPal

Square and PayPal are among the most popular payment processing solutions, but they aren’t your only options. There are several payment processing alternatives on the market for accepting payments online and in-person.

Here are a few alternatives to Square and PayPal that might be better suited for your company should you have unique payment processing needs:

Bottom Line

When it comes to online payment processing, PayPal is a solid option, given its competitive fees and 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.

You can start enjoying the many perks offered through your free Square account today. Get access to Square’s robust POS software, rich business management tools, a free ecommerce website, and much more. Open your free Square account today.

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