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 vs PayPal Overview
Square | PayPal | |
|---|---|---|
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 |
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 |
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.
If you’re not sure whether Square or PayPal is right for you, take this 2-question quiz to find out:
Mobile Credit Card Processing: Why Square Beats PayPal
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-wallets payments like Apple Pay and Android Pay
- Have an offline mode to accept payments even without an internet connection
- 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
Square mPOS | PayPal Here | |
|---|---|---|
Affordable mobile payment processing | ✔ | ✔ |
Instant setup | ✔ | ✕ |
Offline mode | ✔ | ✔ |
Free virtual terminal | ✔ | ✕ |
Accept PayPal Payments | ✕ | ✔ |
Free mobile card reader | ✔ | ✔ |
Inventory tracking | ✔ | ✕ |
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 to your account to be activated, which costs $30 per month. Square includes this feature for free without limitations.
To learn more about why Square is one of the best mPOS apps, read our full Square Payments review.
When PayPal’s Mobile App Is the Right Choice
PayPal’s magstripe reader works on iOS and Android smartphones and tablets, just like Square. (Source: PayPal)
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. 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.
To learn more about the pros and cons of using PayPal Here to accept payments on the go, read our full PayPal Here review.
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
Square vs PayPal POS Features
Square POS | PayPal Point of Sale | |
|---|---|---|
iOS and Android POS app | ✔ | ✔ |
Inventory quantity tracking | ✔ | ✕ |
Customer feedback collection | ✔ | ✕ |
Employee management | ✔ | ✕ |
Multi-location management | ✔ | ✕ |
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. Plus, Square offers a range of sleek in-store checkout registers suited to any sales need and budget.
To learn more about why Square is one of the top-rated small business POS systems, read our full Square POS review.
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
Square | PayPal | |
|---|---|---|
“Buy now” buttons | ✕ | ✔ |
Discounted processing for nonprofits | ✕ | ✔ |
Hosted checkout | ✔ | ✔* |
Accept PayPal Payments | ✔* | ✔ |
*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 checkout 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 Store). 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.
Read our full PayPal review to learn more about PayPal’s online checkout features.
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
Square | PayPal | |
|---|---|---|
Request deposits or down-payments | ✔ | ✕ |
Allow partial payments | ✕ | ✔ |
See when an invoice has been viewed | ✔ | ✕ |
Automatic payments reminders | ✔ | ✕ |
Recurring invoices | ✔ | ✔* |
Can store customer payment information | ✔ | ✕ |
Mobile app | ✔ | ✔ |
*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. Read our Square Invoices review to learn more.
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.
When to Choose Square
Square Strengths | Square Weaknesses |
|---|---|
Full-featured multichannel POS | Potential for frozen accounts |
Online store | Not suited for large businesses |
Faster bank deposits |
Takeaway: 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
PayPal Strengths | PayPal Weaknesses |
|---|---|
Accepts PayPal payments | Potential for frozen accounts |
Instant deposits into your PayPal account | $20 chargeback fee |
Add PayPal “Buy Now” or “Donate” buttons to any website | Limited POS features |
Discounted processing fees for nonprofits | Extra fees for international-issued credit and debit cards |
Takeaway: 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.
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-on features for employee and payroll management, marketing, loyalty, and more. Visit Square to create your free account.
John Zingerella
Krista,
Thank you for the good article comparing PayPal with Square. You seemed to lean a little more toward the square and I can see how a brick and mortar store may see a few very small benefits to the square. However, one of your biggest positives toward the square and negatives about PayPal was the fact that recurring payments were handled differently. You are slightly mistaken about PayPal charging a monthly fee for managing recurring payments, unless they have changed and I am grandfathered in. They do handle recurring payments,ie., subscriptions and recurring invoices free. Now, saying that, I know they do offer a recurring payments feature with more options(I don’t know what those options may be, or why they are needed), for a monthly charge, but again, for standard recurring payments and subscriptions, that’s free.
Amanda Norman
Hi John,
Glad you liked the article, and thank you for sharing your feedback.
You’re right that managing PayPal recurring invoicing is free. I’m not sure if in the past PayPal offered a free way to accept recurring payments, but currently, in order for customers to set up recurring payments, PayPal requires businesses to have the virtual terminal and recurring payment add-on. A nice feature of this also is that PayPal also allows customers to do this online at the time of purchase, making PayPal more automated. Square requires you to send an initial invoice for each customer offering them the chance to store his/her card information to process payments automatically.
I hope this helps clarify. Thanks for stopping by and commenting!
Mandy, Moderator
Graeme-Faye Sassella-Otley
Thanks for this great overview Krista. I am part of a small club that is looking to provide an onl;ine payment system for our club events. We have around 6 events pa and members (some non english/international) reserve a place(s) and also invite guests, which are priced differently. Currently we have a manual system where members send in their form, we collate and manually key in their CC or check the EFT on the bank statement. This is time consuming for a voluntary group and with our new app we would like to transition members to an online system. We are considering PP or Square. Can you advise what would be best fit for us?
Krista Fabregas
Hello,
For this, you’re going to be better off with PayPal over Square right now because Square doesn’t support check payments. However, you really need to look into Stripe for what you’re trying to do. Of the three, it’s the most customizable to various payment scenarios, like events and reservations, and the most flexible in terms of types of payments and international payments. You can do this with PayPal, but Stripe is the easiest when it comes to customizing a payment solution different types of online sales applications — like forms with payments. Plus you can use it for in-app payments if you chose to have an app for reservations and payments like many event companies. I hope this helps, good luck!
Cheers,
Krista
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
Krista Fabregas
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
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
Krista Fabregas
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
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?
Krista Fabregas
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
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
Krista Fabregas
Hi Scott,
Good idea because each does it differently. We’ll probably include that in an update. Thanks for the input!
Cheers,
Krista