In our Square vs PayPal matchup, Square topped PayPal for 4 out of 6 small business payment needs. For in-store, mobile, automated, and multichannel selling, Square offers better payment and sales management features than PayPal. But PayPal pulled ahead for online sales, and online invoicing ended in a tie. Read on to decide which is best for you.
Square vs PayPal: Summary Table
| For: | |
|---|---|
| Mobile sales | Square provides better mobile point-of-sale (POS) software, a free credit card reader, and works in online and offline mode |
| In-store sales | Square provides a complete suite of inventory, sales, and management features for free |
| Online sales | PayPal supports online PayPal payments and integrates with virtually all ecommerce platforms. |
| Online Invoicing | Square and PayPal tie for sending online invoices for free and accepting online invoice payments |
| Automated payments | Square handles automated payments for free, unlike PayPal which charges $40/month for this feature |
| Multichannel sales | Square seamlessly ties in-store, online, mobile, and invoice sales into one complete business management system |
Square vs PayPal: How We Evaluated 2 Payment Giants
Both Square and PayPal are recognized names in small business payment processing. At first glance, their payment services and costs are very similar. But when you dig into the details, many differences emerge, both in service costs and available features.
These differences are especially apparent when you consider the many ways that today’s businesses sell. So, in this guide, we show you how Square and PayPal stack up in different selling scenarios to help you pinpoint which service is best for your particular selling needs.
When to Use Square
We recommend Square 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 point-of-sale (POS) system. This includes:
- In-store retailers
- Sellers using mobile devices to accept payments
- Service providers sending invoices or using automated payments
- Online store owners
In 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 out with $0 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. These fees are very competitive with PayPal, and can be even cheaper in some instances. But what really 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. And if you need advanced features like payroll, a customer loyalty program, or appointment management, you can add just the features you need for low monthly fees.
Where Square falls short of PayPal is in online sales. Square doesn’t accept PayPal payments which is a big deal if running an online store is your main focus. But that doesn’t mean Square is a latecomer to online selling. It provides you a free online store, plus integrates with many top ecommerce platforms. But, if you want to use Square and also accept PayPal, you’ll have to have a separate PayPal account to handle that, which is what many multichannel sellers wind up doing.
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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 payments provider. Online buyers love 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 PayPal’s mobile payments service, and with it, you can accept payments using mobile devices and even set up in-store checkout registers with approved third-party hardware. PayPal even offers virtual terminal and recurring payments options, but both of these come with monthly costs, unlike Square which provides them for free.
The biggest drawback of PayPal vs Square is that PayPal’s mobile point-of-sale (POS) simply isn’t the equal of Square’s robust POS system. Like Square, PayPal lets you accept all types of payments for various selling scenarios using one account, but your sales don’t all tie neatly into one POS system for total business management.
If you just 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. But 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 hands-down.
Now let’s take a closer look at how Square vs PayPal compare in specific sales scenarios.
Processing Mobile Payments: Winner — Square
With a connection or without, Square’s mobile POS lets you sell on-the-go
Square tops PayPal in mobile payment processing because Square’s mobile POS system delivers a full range of sales, inventory, customer, employee, and business management features. PayPal Here’s mobile POS simply pales by comparison, especially in one key feature: offline mode. Square lets you accept mobile payments and complete sales without an internet or cellular connection, PayPal Here doesn’t. That fact alone made our decision easy.
Aside from that, Square and PayPal are quite similar in mobile processing. Both let you accept payments using mobile devices like smartphones or tablets, and provide reliable, low-cost card readers. And their mobile payment processing fees are nearly identical, as you can see below:
Square vs PayPal: Mobile Payment Processing Fees & Hardware Costs
| Mobile Payment Fees | ||
|---|---|---|
| Account Fees | ||
| Swipe, Tap & Dip Sales: Mobile payments & In-store POS sales | ||
| Keyed-in Payment Manually enter a card into mobile POS | ||
| Card Reader Options | ||
| Magstripe Reader For card-swipe payments |  |  |
| Chip & Tap Reader Accepts more secure chip card and eWallet payments |  See more Square readers |  See more PayPal readers |
Both Square and PayPal offer many of the same mobile selling features, too, including:
- Supports multiple mobile users on one account
- Accepts all major credit cards, plus eWallets like ApplePay and AndroidPay
- Accepts swipe, chip cards, and contactless (eWallet) payments
- Supports a product list
- Records customer data and sends e-receipts
- Records check and cash payments
- Delivers a variety of business sales reports
However, Square tops PayPal in 3 key areas that can affect your mobile sales:
- Square’s mobile POS has an offline mode – If you lose your cellular or wifi 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’s mobile POS has more features than PayPal – Square beats PayPal’s mobile POS in many areas, most notably in inventory counts, employee time tracking, and various customer management features.
- PayPal Here limits your usage of keyed-in payments – You can key-in an occasional payment into PayPal’s mobile POS app, but if done too often, PayPal will require you to add their separate Virtual Terminal feature to your account which costs $30/month. Square includes this for free and doesn’t limit keyed-in payments on the mobile app.
But, PayPal offers one mobile selling ace-in-the-hole that Square can’t top: You can accept PayPal payments using PayPal Here. 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.
Managing In-store Payments & Store Operations: Winner — Square
Square’s sleek iPad registers are a cost-effective fit for any sales counter
Square soundly beats PayPal Here 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, it offers a range of sleek in-store checkout registers suited to any sales need and budget.
PayPal Here is moving into the in-store sales arena and offers iPad-based registers, but its POS system has a long way to go. For managing in-store sales, Square’s full suite of inventory, sales, employee, and customer management tools simply beats PayPal Here, period. Here’s how they stack up in costs and key features:
Square vs PayPal: In-store Payment Processing Fees & Hardware Costs
| In-store Payments | ||
|---|---|---|
| Account Fees | $30/month to access the Virtual Terminal to key-in payments | |
| Swipe, Tap & Dip Sales: Mobile payments & In-store POS sales | ||
| Keyed-in Payment Manually enter a card into mobile POS | ||
| POS Checkout Options | ||
| iPad POS Register |  Square iPad Stand: $169 without iPad $498 with iPad (one-time purchase) Includes card reader, dock and USB hub for adding a printer or cash drawer See more Square registers |  Windfall iPad Stand $129 iPad not included Connects to peripherals like card readers, cash drawers, and printers, sold separately See more PayPal Here registers |
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. 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 Sales & Operations Management Features
| POS & Management Features | ||
|---|---|---|
| Unlimited Users | ||
| Inventory/Item List | ||
| Inventory Quantity Tracking | ||
| Business Reports & Analytics | ||
| Employee Management | ||
| Customer Management | ||
| Multi Location Management | ||
| Built-in Online Store | ||
| Print Shipping Labels | ||
| Email Marketing | ||
| Payroll Management | ||
| Customer Loyalty Program |
*Advanced features available for low monthly fees
Next we’ll explore one area where PayPal pulls ahead of Square: Online sales.
Processing Payments for Online Sales: Winner — PayPal
PayPal tops Square in this arena, and that’s no surprise. PayPal is the leading small business online payments provider, mainly because PayPal is a widely popular payment choice for online shoppers. In fact, studies show that online sellers who accept PayPal payments tend to see an increase of 44% in conversions or more. 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.
Square’s big downfall in the online payments matchup is that it doesn’t accept PayPal payments. However, Square is no online sales slacker. 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.
Square vs PayPal: Online Sales Features & Payment Processing Fees
| Online Sales Fees | ||
|---|---|---|
| Account Fees | $30/month for a Virtual Terminal | |
| Online Sales | ||
| Virtual Terminal Phone Orders | ||
| Ecommerce Features | ||
| Credit cards, ApplePay & AndroidPay | ||
| Accept PayPal Payments | ||
| Free online store | ||
| Ecommerce Platform Integrations | ||
If you want to use Square for your business but still accept PayPal payments online, there is a back-door solution. Most ecommerce platforms let you accept PayPal payments even if you use another payment processor, like Square, for credit cards. You simply need to open a free PayPal account, then connect it to your ecommerce platform. Easy fix!
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 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.
Next we’ll look at how Square and PayPal stack up for payments that most service businesses need, invoicing and recurring payments.
Online Invoicing Features: It’s a Tie
Both Square (left) and PayPal (right) let you create, send, and manage online invoices for free
Square and PayPal both offer online invoicing for free with very similar invoice creation, payment, and tracking features, so we’re calling this Square vs PayPal matchup a draw.
Both Square and PayPal let you create invoices online using your computer or mobile POS software and email them to your customers. Once received, your customer can click the Pay button to pay online, and you just pay the credit card processing fee, shown below. If customers choose to pay another way, say via check or cash, you can record those payments to show the invoices as Paid, and you’re not charged a fee.
Square vs PayPal: Online Invoicing Features & Payment Processing Fees
| Online Invoicing | ||
|---|---|---|
| Account Fees | $30/month with a Virtual Terminal | |
| Online Invoice Payment | ||
| Phone-in Invoice Payment | ||
| Record a Check or Cash Payment for an Invoice | ||
| Add products to invoices | ||
| Track payment status | ||
| Customize invoices | ||
| Create & send bulk invoices | ||
| Accept invoice payments over the phone | ||
* Requires 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/month for their virtual terminal service.
Other than that, Square and PayPal are in a dead heat for online invoicing. Next, we’ll see how they compare if you need to set up automatic recurring payments.
Automatic Recurring Payments: Winner — Square
The Recurring Payments feature is free with Square
You can quickly set up and manage recurring payments within your Square dashboard
Square lets you set up recurring payments for free, whereas PayPal charges a whopping $40 per month for this service. So, Square soundly beats PayPal in this matchup for most small business needs. Square’s recurring payments system is a snap to use, too. When a customer receives an online invoice, they can elect to save their payment method for automatic payments, that’s it. Best of all, Square’s PCI-compliant system ensures the security of saved cards.
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 $40 per month fee is worthwhile because PayPal’s recurring payments are pretty set-and-forget.
Outside of volume needs, we’re calling Square the winner in this matchup since its recurring payments feature is free and simpler to use than PayPal, which requires some setup. To learn how PayPal’s recurring payments feature works, visit PayPal’s Recurring Payments FAQ’s.
To initiate recurring payments using Square, customers simply save their credit card information to Square’s secure vault and OK automatic payments, this is done through an online invoice. Once they do this, each time you generate the repeat invoice, it triggers the automatic payment. Visit Square’s recurring payments tutorial to learn exactly how to set this up.
Square vs PayPal: Recurring Payment Features & Payment Processing Fees
| Recurring Payments | ||
|---|---|---|
| Account Fees | Requires the $30/month Virtual Terminal & $10/month recurring payments add-on | |
| Paid Online | ||
| Paid Using Virtual Terminal | ||
| Initiate recurring payments online on a website | ||
| Initiate recurring payments via an online invoice | ||
| Initiate recurring payments via virtual terminal | ||
| PCI-compliant payment vault | ||
| Customers can cancel at will |
Next, we’ll look at how Square and PayPal compare when it comes to tying several types of sales outlets under one roof as a multichannel seller.
Multichannel Sales Management: Winner — Square
Your Square Dashboard puts multichannel sales management at your fingertips
Square is our winner for multichannel sellers because of the ease in which small businesses can expand into any sales arena using Square’s versatile POS and payments features. With Square’s free POS system, every payment option, sales feature, and management tool is part of one fully integrated service. To move into another type of sales, like a retailer wanting to start selling online, you simply start doing it. No new integrations, accounts, or add-ons needed. Heck, you even get a free online store built right in.
Square and PayPal both accept a full range of payment types, as we’ve 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 has the more streamlined, ready-to-grow with you system.
Square vs PayPal: Built-in Multichannel Selling Features
| Multichannel Features | ||
|---|---|---|
| In-store POS | Limited features | |
| Online store | With an ecommerce platform | |
| Mobile selling | ||
| Customer, sales & inventory management across all sales channels | ||
| Subscription payments | $40/month for this feature | |
| Email Marketing | ||
| Customer Loyalty Program |
*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/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, like the free online store, mobile POS, or subscription payments, you simply start using it. Or, if you want to extend Square’s free features with paid add-ons like customer loyalty programs, gift cards, employee payroll, or more, you simply turn on and pay for just what you need, nothing more. Best of all, everything works since all of the pieces are fully integrated in simple, streamlined system.
Square vs PayPal: The Bottom Line
Square is our overall winner in a head-to-head comparison of Square vs PayPal. Square provides stellar payment processing services that cover all types of sales: mobile, in-store, invoicing, recurring payments, virtual terminal, and online payments, with fees that meet or beat PayPal in most instances. Plus, Square’s free point-of-sale (POS) software includes a full suite of sales, inventory, customer, and employee management tools that can benefit all types of businesses, something PayPal can’t match.
PayPal is a payments industry giant and if online sales are your focus, it’s worth serious consideration. But, if you hope to move into multichannel sales, both online and off, Square can be the better choice of these two payment processing heavyweights. PayPal’s features just haven’t kept up in several important offline selling areas, plus you pay a fee for things that Square offers for free, like a virtual terminal and recurring payments.
Have you put Square and PayPal to the test? Who was the winner in your book, and why? We’d love to hear your experiences and insights in the comments below.
jay Higgins
Great information Krista- you write very directly and concise…excellent advise and suggestions for small to medium size businesses based on the payment systems that are available in 2018. – do you do social media marketing as a service or know of affordable home based marketers that could help keep presence in the marketplace…we have social media sites built on most platforms..just need to have coordinate better ……unfortunately online exposure is getting more expensive these days with ad rates going up everywhere on search portals, amazon-etc ……when you started in 2001 – it was so much more attractive online selling. Maybe- based on all your experiences……you could do a new article based on what you would do in social media and multi-channel marketing to be successful in 2018 with a similar format as you did with this article focusing on maybe 5-6 Key areas of implementation and talk about the “evolution” a little bit in a preface . Thanks again for sharing your knowledge-much appreciated
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Hi Jay,
We do have some social media marketing pieces in the works, it’s definitely a major focus for all marketing efforts these days. For the type of services you’re looking for, I’d definitely check out the freelancers on Fiverr.com. You can find a lot of social media specialists there that can help you manage your presence on some or all social channels, help you plan campaigns, and even analyze ad spend. Each freelancer has reviews so you can ensure you’re working with an experienced and responsive pro. I hope this helps, good luck!
Cheers,
Krista
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Marsha
Hello Krista,
Thank you for your up to date information. I am a psychotherapist starting my own practice and need some accounting\ bookkeeping do yo have any suggestions for using square with any other program or app?
Thank you,
Marsha
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Hi Marsha,
Square connects to both QuickBooks and Xero accounting programs for free. You do have to pay for the program, but the Square integration is free for both — here’s Square’s information on those plus some others to look at. I’m pretty partial to QuickBooks since I’ve used it for nearly three decades! But, our accounting pro likes a lot of things about Xero, too. Here’s a link to our Accounting and Bookkeeping section where you can find reviews on other options. I hope this helps, good luck!
Cheers,
Krista
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Tish Henderson
Hi Krista,
This is an excellent article which has assisted me with deciding on which payment processor to use with my two online sales stores. You mentioned in an earlier comment about accounting software. I have four businesses and really need an accounting software than will assist me with online account management. Would you still recommend Quickbooks?
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Hi Tish,
Yes, I ran two business entities on QuickBooks and it’s my hands-down favorite. If you elected to go with Square, it integrates with it rather nicely, too. Good luck!
Cheers,
Krista
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Scott
Krista, great comparison between Square and PayPal. I’d like to suggest adding how each handles chargebacks in a future version. This is an area that many small business owners don’t give any consideration to, but can impact their operations. Thanks again, Scott
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Hi Scott,
Good idea because each does it differently. We’ll probably include that in an update. Thanks for the input!
Cheers,
Krista
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Megan Peeples
I have a small business opening in July. I will have a countertop register to begin with and feel like I should use the Square card reader for card purchases. Is it possible and does it make sense to do that and use PayPal for online purchases if I plan on having a website that is not through Square?
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Hi Megan,
You certainly can use Square for in-store payments and PayPal for online payments. However, you can also use Square to process your online transactions on most top ecommerce platforms including Shopify, BigCommerce, WooCommerce, Weebly (which is now owned by Square), Wix, and many others. If your ecommerce platform supports Square, it can be more convenient to use Square for all of your in-store and online credit card charges since you only have to manage and track credit card payments via one system. You can still take PayPal payments on your online store using the free PayPal Standard payments account, even if you use Square for all of your credit card payments. This lets customers that prefer to use PayPal pay via their PayPal account, but lets you keep all of your credit card payments with one provider. I hope this answers your question, good luck!
Cheers,
Krista
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Kim
Hi Krista,
The article you wrote is in depth and detailed, but unfortunately quite a bit over my head. Do you have advice for someone who is opening an Etsy store for jewelry, & will be selling at local craft shows? No other employees, limited inventory, just wants to be able to take credit cards w/IPad and smartphone at shows & on-line? I appreciate any & all advice!
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Hi Kim,
Simple answer! Etsy handles all of your online transactions within the marketplace for you, so you don’t need to connect a payment processor to Etsy. For your local craft shows, use Square to process in-person payments. Unlike PayPal Here (which is PayPal’s mobile processing service), Square has an offline mode that lets you take credit card payments even if you don’t have a cell or Wi-fi connection. I’ve sold in many markets and fairs over the years and it’s not unusual to find yourself in a space with poor cellular signals — particularly in metal-roofed buildings. If they don’t have a decent Wi-fi system within the space to make up for the lack of cell service, you’ll have a problem using PayPal Here. Square’s offline mode is great since it lets you accept credit cards in these situations — take it from me, been there, done that! Plus, as your business grows, you can take advantage of Square’s inventory management system and other nifty business tools — all for free. Hope this helps — good luck.
Cheers!
Krista
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Laurie
Hi Krista,
If payment is accepted through Square in offline mode, is there any assurance that customer card would not be declined, after they have disappeared with the goods?
A likely scenario for me would be paintings in price range of 1-7k.
Thanks for your extensive knowledge and wisdom!
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Hi Laurie,
No, unfortunately, that’s a chance you take when accepting offline payments with any credit card processing provider. Offline retains the card token so Square can process the charge, but if declined there’s no recourse. For high-ticket sales that might be a concern, unless you work with repeat clientele and have a very low incidence if declined or fraudulent charges. Hope this answers your question, good luck!
Cheers,
Krista
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