Square vs PayPal: Price, Features & What’s Best in 2022

Square and PayPal are popular tools for accepting payments and work well for most small businesses. Both can be used as merchant services in addition to point-of-sale (POS) and ecommerce sales. The primary difference lies in what they do best.

While both offer free POS systems, Square’s is more feature-rich and has add-on software to grow with your business. PayPal’s Zettle POS app is more rudimentary, but PayPal has stronger online and international payment processing tools. PayPal checkout is also a popular payment option with shoppers, making it a great addition to any website.

• Square: Best for mobile and in-store payments
• PayPal: Best for 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. We recommend Helcim. It offers interchange-plus pricing with no monthly fee and automatic volume discounts. Plus, like Square and PayPal, Helcim also offers free tools like a POS system and online store, making it the best payment processor for retailers.

Square vs PayPal At-a-Glance

	Visit Square	Visit PayPal
Payment Processing monthly fees	$0	$0 for Standard account $30 for Pro account
POS monthly fees	$0 for basic $60 for Pro	$0
Virtual terminal	$0	$30 (needs Pro Plan)
In-person payment processing fees	2.6% + 10 cents per transaction	2.29% + 9 cents per transaction
Keyed-in fees	3.5% + 15 cents per transaction	3.49% + 9 cents per transaction
Online and invoice fees	2.9% + 10 cents per transaction	2.59% + 49 cents to 3.49% + 49 cents per transaction
ACH fees/eCheck fees	1% (min. $1)	3.49% capped at $300 (e-check)
Chargeback fees	Waived up to $250/month	$20 for transactions not processed through a buyer’s PayPal account or through a guest checkout
Card Reader	Free magstripe reader, $49 for chip and contactless reader	$29 for your first reader, $79 for subsequent readers
QR codes for contactless payments	2.9% + 10 cents per transaction	1.90% + 10 cents–2.4% + 5 cents per transaction
Deposit times	1–2 business days, or same-day for 1.5% fee	3 business days, immediately to PayPal account, or instant for 1.5% fee
Additional payment types	Third-party Gift Cards Third-party Gift Certificates Cash App Check Digital wallets Health Savings Account (HSA) and Flexible Spending Account (FSA) cards Employment Development Department (EDD) Debit Cards	PayPal Balance PayPal Credit Pay with Rewards Venmo Buy Now, Pay Later Cryptocurrency Digital wallets
Business tools	Business loans, savings and checking accounts, product photography, business events	PayPal balance, working capital, business loans
	Read Review	Read Review

Takeaway: Square and PayPal are two of the best credit card processing companies. PayPal’s card-present transaction fees are lower than Square’s and it has a wider global reach. Meanwhile, Square has a stronger business toolset for small businesses with in-person sales. (See our article on what Square is and why small businesses love it.)

When to Choose Square

Square is better than PayPal for small businesses that sell products or services in person, whether in-store or via mobile. In particular, it works extremely well for:

• Brick-and-mortar stores
• Farmers market or booths
• Restaurants, food trucks, quick-serve restaurants
• Beauty salons, spas, gyms
• Repair shops
• Smaller B2B businesses

While its online component is not as extensive or popular as PayPal’s, it nonetheless offers a synchronized online store, buttons and links for social selling, invoices, and a virtual terminal for phone orders.

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. However, if you need more advanced tools as you grow, Square offers over 100 integrations and paid additions to its plans—even payroll and banking. Visit Square to create a free account.

When to Choose PayPal

PayPal beats Square when it comes to online or international payment processing. It’s also the best choice as a supplemental payment provider. PayPal’s rates are cheaper, and it has deep discounts for nonprofits.

PayPal recently acquired a new POS system, Zettle. It is widely used and well-regarded in Europe and replaced PayPal Here. Like Square, Zettle covers the most important retail functions and has impressive inventory management. However, it lacks some of the tools and integrations that make Square so suited for small businesses and the best bet for in-person sales. See our full PayPal Zettle review to learn more about the solution.

If your primary sales occur online, then PayPal is the better choice. Widely trusted by consumers and with programmable links and buttons that fit from Facebook to emails to the customer support chat, it’s a versatile system. Read more about the pros and cons of PayPal for small businesses, or visit PayPal to create a free account.

Best for Affordability: PayPal

	Visit Square	Visit PayPal
Payment Processing monthly fees	$0	$0 for Standard account $30 for Pro account
POS monthly fees	$0 for basic $60 for Pro	$0
Virtual terminal	$0	$30 (needs Pro Plan)
In-person payment processing fees	2.6% + 10 cents per transaction	2.29% + 9 cents per transaction
Keyed-in fees	3.5% + 15 cents per transaction	3.49% + 9 cents per transaction
Online and invoice fees	2.9% + 10 cents per transaction	2.59% + 49 cents to 3.49% + 49 cents per transaction
ACH fees/E-check fees	1% (min $1)	3.49% capped at $300 (e-check)
Chargeback fees	Waived up to $250/month	$20 for transactions not processed through a buyer’s PayPal account or through a guest checkout
	Read Review	Read Review

PayPal’s rates are generally better than Square’s, even with the changes it implemented in August 2021 (which are reflected in this article). Not only is the percentage part of the fees lower, but so is the flat added amount. This makes a big difference with smaller-ticket items; Square may be cheaper on invoices. This is a comparison of US prices, but if you do business elsewhere, PayPal has different flat added amounts for different nations. In addition, PayPal offers significant discounts for nonprofits, making it a better choice for many 501(c)3s.

While both offer free POS versions, PayPal requires you to have a paid account for using its virtual terminal, hosted checkout pages, and chargeback protection. Square does not charge for these.

Square’s card readers are cheaper, but PayPal’s simplest model does more. When you start looking at POS systems, the prices are close enough to be negligible.

Best for Mobile: Square

	Visit Square	Visit PayPal
User score on Android	4.4 - 139,000+ reviews	4.0 - 39,000+ reviews
User score on iOS	4.8 - 290,000+ reviews	3.5 - 125+ reviews
First card reader	Free—magstripe only	Swipe, dip, tap—$29
Subsequent readers	$10 (magstripe) $49 (contactless and chip)	$79 (contactless and chip)
Full POS on mobile	✔	✔
Backend on mobile	✔	✔
Offline mode	✔	✕
Digital receipts	✔	✔
	Read Review	Read Review

Takeaway: Square’s mobile app is better than PayPal Zettle’s because it does more. And while PayPal Zettle’s mobile card reader includes a PIN pad, it doesn’t have a card swipe option. Real-world users also rate Square more highly on iOS and Android.

Why Square Is Better Than PayPal for Mobile Payment Processing

Square’s POS system and credit card processing make it the better choice for mobile sales. Optimized so you can easily ring up sales on a smartphone or tablet, the POS system does everything on mobile that it does on desktop, including reports. The offline mode lets you continue to take payments and have them sync when the internet is back. Square took the top spots on our list for best mobile POS and best mobile credit card processing.

Square's mobile reader supports chip and swipe payments. It connects to your smartphone or tablet via Bluetooth. (Source: Square)

Square's chip and tap reader also supports contactless payments, giving your customer more payment options. (Source: Square)

Pair your Square card reader with your Android or Apple smartphone via Bluetooth and start accepting mobile payments. (Source: Square)

Create a countertop set-up by adding a card reader dock and connecting it to a Square stand. (Source: Square)

When to Use PayPal for Mobile Payment Processing

Zettle is also on our list for the best mobile POS apps and best mobile credit card processors, so if you prefer PayPal to Square, you are getting a great system. This is especially important if you want to offer Pay by PayPal as Square can’t handle this. While you can put the same Zettle account on multiple systems, it does not distinguish locations like Square can.

Zettle’s card reader is more sophisticated than Square’s simple version. To get PIN pad capability, you’d need to upgrade Square to its $299 card reader terminal.

Zettle’s card readers cost $29 for the first one, then $79 for subsequent ones, and offer more features than Square’s tap and chip reader, which costs $49. (Source: PayPal)

Best for POS: Square

	Visit Square	Visit PayPal
Average user score on third-party sites	4.68 out of 5	3.2 out of 5
POS hardware starting at	$169	$249
Register	Excellent	Excellent
Virtual terminal	✔	$30
Accept PayPal?	Online only	✔
Inventory tracking	Excellent	Good
Clock-in/out	Free add-on	None
Offline mode	✔	None
Appointments/ reservations	Yes, with Square Appointments	None
Restaurant tools	Yes, with Square for Restaurants	Basic
Customer loyalty	From $45	✔
Multi-location management	✔	✕
Integrations	POS, Restaurants, Inventory, Rewards, Marketing, Delivery, Booking and Scheduling	Ecommerce and Marketplaces, Accounting, Shipping, Dispute Management
Add-on features	Advanced POS, Loyalty, Team Management, Marketing, Payroll	Third-party apps only
	Read Review	Read Review

Takeaway: Square’s versatility and breadth of features for specialty stores put its POS system ahead of PayPal Zettle’s.

Why Square Is Better Than PayPal Zettle

Square offers POS systems for various industries. For example, while the main version has some tools for ringing up restaurant items, like open checks, its free Square for Restaurants software includes clock-in, table management, and auto 86ing of items. Meanwhile, the salon version, Square Appointments, lets you set up an appointment calendar. Zettle does not have this breadth of capability.

Square easily integrates with over 100 apps that are geared toward all levels of business. It even has some for the health industry, insurance, and fieldwork. Plus, it has some add-ons of its own. Meanwhile, we found limited integrations for Zettle.

Square POS Hardware Options

Square offers a wide range of full POS hardware solutions with optional accessories such as cash registers, thermal printers, and barcode scanners.

In addition, Square comes with a free virtual terminal. This is great for taking payments over the phone or managing a mail-order service. PayPal only provides this with its Pro plan, which costs an additional $30 per month.

When to Use PayPal Zettle

Like the mobile version, Zettle is a good alternative to Square, especially if you want to offer payment through PayPal. The system has a modern interface that users say is simple and easy to work with. The European version of Zettle had a restaurant version, but PayPal does not mention it on its US website.

Zettle does not have cross-border sales capability at this time but works within a multitude of countries. Square, by contrast, only works in six nations.

PayPal POS Hardware Options

While not as robust as Square, Zettle also offers a range of hardware solutions for its users.

Also, as of this writing, PayPal has announced its launch of the Zettle Terminal, an all-in-on mobile POS hardware similar to Square Terminal. It will initially be available in Europe and will be released in the US in 2022.

Zettle Terminal comes pre-installed with the POS app along and a dock with a built-in printer. (Source: PayPal)

Zettle Terminal is both an in-store and omnichannel solution and gives you seamless integrations with your ecommerce and banking partners. (Source: PayPal)

Best for Ecommerce & Online Payments: PayPal

	Visit Square	Visit PayPal
Accept PayPal	✔	✔
Social selling	Products, subscriptions, appointments	Products, subscriptions
Buy buttons	✔	✔
Multichannel (eBay, Amazon)	✕	✔
Hosted checkout	✔	$0 and 25
Subscriptions/Recurring	✔	✔
Ecommerce integrations	32 ecommerce, 35 delivery, 21 invoicing, 9 ticketing and events	33 online stores, 18 marketplaces, 17 website design systems, shipping label tools, and many more not mentioned on the website
Marketing	Square Marketing, 22 apps	Store Cash programs, Smart payment buttons
	Read Review	Read Review

Takeaway: This was close, but PayPal is still the better choice for online sales. It has the greater reach, is accepted by multichannel sales like eBay, and can integrate with a multitude of apps.

Why PayPal Is Better Than Square for Online Payments

While Square ties tightly to its POS tools, PayPal can work as an independent payment gateway. This means you can have customers pay by PayPal just about anywhere, even third-party sales sites like eBay. Its ability to handle cross-border payments and make currency exchanges is also important when selling on the World Wide Web.

One standout feature for PayPal is its “layaway” or Buy Now Pay Later plan. For example, you can set up high-ticket items with the PayPal Pay in 4 system. This lets customers pay for an item in four installments, and PayPal handles this for you. Alternatively, it can offer customers credit. Some charges may apply.

Start selling online with PayPal's simple button generator. Set up is as easy as copying and pasting a small piece of code on your website's product page. (Source: PayPal)

Use PayPal to sell on social media by generating a product link and sharing it on Facebook, Instagram, and Twitter—as well as via chat and email. (Source: PayPal)

PayPal Checkout offers two partial-payment options for your customers. (Source: PayPal)

PayPal is not as thorough as Square when listing all its integrations, but if you search for a particular ecommerce software, chances are it will list a PayPal integration. However, you can always program your buttons to add to any site. (Square has button programming too.)

When to Use Square for Ecommerce

PayPal charges extra for customizable hosted checkouts. If hosted checkouts are something you want, choose Square. Square also integrates with over 100 applications for online sales. Of special note are all the third-party delivery options. If you run a restaurant, this is a good way to expand your customer base. (Learn more about the best delivery services.) Also, while PayPal has programmable buttons, Square has a website builder to help you design a beautiful online store that integrates with your Square POS system.

Square has an easy-to-use website builder. (Source: Square)

Best for Invoicing: Square

	Visit Square	Visit PayPal
Request deposits/down payments	✔	Can request partial payments
Partial payments	✔	✔
Automated payment reminders	✔	✔
Recurring invoices	✔	✔
ACH/E-checks	ACH only: 1%, min $1	E-checks only: 3.49% + 49 cents capped at $300
	Read Review	Read Review

Takeaway: Both of these systems are good for invoicing, allowing you to create and send custom invoices, handle recurring payments, and send reminders. Square, however, is the cheaper choice.

Why Square Is Best for Invoices

Square is best when you want a completely free invoicing system that accepts ACH transfers. It lets you send multiple estimates, request a deposit, set partial payments by milestones, and more. When paying by ACH, it charges 1% of the invoice, a minimum of a dollar, making it cheaper than PayPal. Otherwise, it costs 2.9% + 10 cents per invoice.

Square lets you make invoices for multiple estimates, split payments, and more. (Source: Square)

You can create and manage templates for different types of invoices for each of your products or service packages. (Source: Square)

With Square Invoice, you can create multiple package estimates and automatically convert the package that the client chooses. (Source: Square)

When to Use PayPal

Like Square, PayPal lets you generate attractive, branded invoices for full, partial, or recurring payments. It boasts a 76% paid rate within the first day of sending the invoice. Unlike Square, it accepts e-checks rather than ACH transfers. Regardless of how your customer pays, it charges 3.49% + 49 cents. This makes it more expensive than Square.

PayPal says 76% of its invoices are paid within a day. (Source: PayPal)

Best for Payment Processing: Square

	Visit Square	Visit PayPal
Reputation for paying merchants	Not great—many complaints	Bad—mostly complaints
Average user score on third-party sites	4.65 out of 5	4.55 out of 5
International commerce	6—also not US territories such as Puerto Rico, Guam, the US Virgin Islands, American Samoa, and Northern Mariana Islands	100 currencies, 200+ markets
Chargeback Protection	Free—Up to $250/month	0.4% to 0.6% on transactions—unlimited for qualifying chargebacks
Fraud prevention	Machine learning, dispute management, risk manager program	Machine learning, seller protection, dispute management
Card on File	✔	Upgrade
Partial Payments	✔	✔
Accounting software integrations	24	12
Administrative integrations	24	24
Business Solutions	Working capital, checking and savings account, product photography, business events	Working capital, business loans, credit cards
	Read Review	Read Review

Takeaway: Both of these payment processors are secure and easy to use. Taking price out, Square simply beat PayPal on features, especially protection and versatility, and fewer complaints about held funds when processing credit card payments with Square. Despite PayPal’s popularity and international scope, Square is the better payment processor for small businesses doing domestic sales.

Why Square Is Best for Payment Processing

Square tops our list of best merchant services. While its fees are higher, it makes up for it in the versatility and tools it includes. Plus, it continues to expand its offerings, not only by introducing a kitchen display system and contactless QR coding, among other features, but in business services. Most recently, it added banking, making it possible to have checking and savings accounts. You can get your money paid out faster to these accounts as well.

Square also stands out in its chargeback protection. In addition to working with you to manage disputes, it forgives the first $250 a month in chargeback fees. If you are an occasional seller, this is probably more than sufficient, and if not, it’s still a big help. Speaking of help, Square has a risk management program for an additional charge if you are concerned about chargebacks and transaction issues.

Aside from EMV, mobile wallets, and digital invoicing, Square lists nine additional methods of accepting payments, including payments unique to Square such as Cash App integration, ecommerce APIs, and appointment prepayments.

Accept Cash App payments and offer loyalty and rewards on your Square POS or Square Online platform.
(Source: Square)

Square's Ecommerce API lets you develop a fully customized, self-hosted, online and in-app payments solution. (Source: Square)

For service-based businesses, you can accept accept appointment prepayments by setting up a reservation requirement on your Square dashboard. (Source: Square)

When to Use PayPal

PayPal, hands down, is the best choice when selling internationally or when offering PayPal in addition to another payment processor. It also provides seller dispute help and protection. It has a chargeback protection program for physical items at an additional 0.4% to 0.6% per transaction.

Another reason to use PayPal is for its unique alternative payment methods. For example, you can include a cryptocurrency option on your PayPal checkout page. Personal PayPal account holders who buy and sell cryptocurrencies using their PayPal account can convert their cryptocurrency holdings into fiat currency during checkout to pay for goods and services.

PayPal users get access to exclusive checkout payment options including PayPal Rewards and Cryptocurrency payments. (Source: PayPal)

An interesting difference between Square and PayPal is that PayPal does not share customer credit card information with you (although you do get data like contact and shipping information). This can be reassuring to your customers, who may not want their card numbers widely shared, but if you need this information, you can pay to access it.

Best for Banking & Money Management: Square

	Visit Square	Visit PayPal
Immediate access of fund within the software	With Square Banking	As PayPal balance
Additional fees for banking and money management tools	None	None
Money Management Tools	Square Savings Square Checking Square Debit Card Working Capital	PayPal Working Capital PayPal Business Loan PayPal Debit Card
Deposit speed to your bank	1–2 business days	Approximately 3 business days to a bank account
Option for instant deposit	Same-day for 1.5% fee	Instant with 1.5% fee
Loan sourcing	1 option	2 options
Loanable amount	$300–$250,000	$1,000–$125,000 (Working Capital), $5,000–$500,000 (Business Loan)
Loan approval speed	Minutes	Minutes (Working Capital), Next business day (Business Loan)
Loan funding speed	Next business day	Minutes (Working Capital), Next business day (Business Loan)

Takeaway: Square beats PayPal with its more well-rounded suite of banking and money management features. Aside from offering working capital loans, it also provides traditional banking services at no extra cost.

Why Square Is Best for Banking & Money Management

Square offers a single platform for Square merchants to manage their finances. Similar to traditional banking, you can sign up for a savings account and a checking account with Square. There’s no minimum opening deposit or balance requirement, and there’s also no charge for service and maintenance fees, as well as overdrafts.

You can set up an automatic saving feature with a Square Savings account, so Square will regularly deposit a percentage of your sales into your savings account, which will then regularly earn interest. On the other hand, a checking account gives you instant access to your funds as your sales proceeds will directly be deposited there. You can then use Square’s debit card to spend your money digitally or in person.

As for loans, Square’s working capital offer is similar to PayPal’s working capital loan, which gives you the ability to choose your loan size and will then provide you with a customized offer based on your card sales. There’s no interest fee, and you pay it automatically with a percentage of your daily card sales made through Square so you never get charged a late fee.

Your Square checking account gives you instant access to your funds, and you don’t have to worry about getting charged a 1.5% fee for instant deposits. (Source: Square)

Whatever your goal for saving, you can set a percentage of your sales revenue that Square will automatically move into a dedicated savings account everyday. (Source: Square)

Square provides you with a customized loan offer based on the loan amount you choose. (Source: Square)

When to Use PayPal

If you don’t process payments through PayPal but have a PayPal business account and want to apply for a loan, then PayPal is your best option. However, unlike Square and PayPal’s working capital, your approval will depend on your creditworthiness, such as your minimum annual revenue and credit score. Repayments will also be automatic; however, they will be deducted from your linked bank account within the agreed payment period.

PayPal’s loan builder is a series of questionnaires designed to determine if your business is eligible for loan.

PayPal’s other financial program similar to Square’s bank loan is PayPal Working Capital. This option is available for PayPal business account holders who regularly accept payments through their PayPal accounts. It essentially lets you take an advance on anticipated credit card sales, which you then pay back with a percentage of those future sales.

Like Square, PayPal Working Capital only charges one flat fee against each of your sales. (Source: PayPal)

Best for Customer Support: Tied

	Visit Square	Visit PayPal
Capterra user Customer Support-specific review score	4.7 - 1,700+ reviews	4.6 - 20+ reviews
JD Power Customer Satisfaction Index Ranking	870	871
Live support	Extended hours, chat	Extended hours, message or phone
Live hardware support	24/7 phone	Extended hours, message or phone
Online knowledgebase	Good	Good
	Read Review	Read Review

Takeaway: Despite complaints of frozen funds and canceled accounts, customers are overall satisfied with PayPal and Square customer support. Both also offer good user knowledge bases with an extensive, searchable database of tips, how-to articles, and more. There are a few illustrations and some videos in each as well.

A 2020 study by JD Powers concerning customer satisfaction for merchant services in the US placed PayPal in third place and Square in fourth. Only BB&T Merchant Services and US Bank Payment Solutions beat them out, and they won over most major banks, QuickBooks, and popular services like Fiserv.

Bottom Line

Whether you use Square or PayPal, you are going to get a strong payment processor with a free, fully-featured POS system and online sales tools that include social selling. Both have complaints about held funds but strong customer satisfaction, nonetheless.

While most of PayPal’s rates are cheaper than Square’s, Square is overall the more robust solution. It has free specialty POS software for restaurants and salons, add-ons for all aspects of a business—from customer loyalty to payroll, and banking services. It’s the most complete solution at an excellent price. Sign up for a free Square account today.

Visit Square