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

There are no monthly fees and no lengthy application process with Square. It has reasonable processing fees that start at 2.6% + 10 cents. The biggest edge it has over PayPal when it comes to pricing and contract is the chargeback fee—Square waives up to $250 per month. On the other hand, PayPal chargeback fees range from $15 to $20.

Aside from this, the Square POS comes with a free magstripe card reader and virtual terminal so new businesses can start accepting payments in minutes and without any upfront cost. With PayPal, there is an added monthly fee for the use of a virtual terminal, and you will need to purchase your first card reader.

POS Hardware

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

• Square Stand for Contactless and Chip
  • What’s included: Square Stand with a built-in contactless and chip reader
  • Best for: Affordable countertop setup using an iPad
  • Cost: $149 or $14 per month for 12 months
• Square Terminal
  • What’s included: Square Terminal and Receipt paper rolls
  • Best for: Full mobile POS with built-in printer for in-store mobility and curbside sale
  • Cost: $299 or $27 per month for 12 months
• Square Register
  • What’s included: Square Register and customer display with built-in card reader
  • Best for: Retailers wanting a countertop POS that encourages customer engagement
  • Cost: $799 or $39 per month for 24 months

PayPal also does not charge any monthly fees, but while its rates are generally better than Square’s, they can be quite confusing, especially for new merchants. However, PayPal charges a monthly fee for the virtual terminal and unlike Square, does not waive its chargeback costs.

Note that this is a comparison of US prices; if you do business elsewhere, PayPal has different flat-added amounts for different countries. In addition, PayPal offers significant discounts for nonprofits, making it a better choice for many 501(c)3s.

POS Hardware

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

• PayPal Zettle Terminal
  • What’s included: All-in-one standalone terminal
  • Best for: Small businesses, offsite sales
  • Cost: Starts at $199 for the terminal only
• Store Kit Mini
  • What’s included: Zettle Stand 360, Zettle Reader 2, and Zettle Dock 2
  • Best for: In-store startups
  • Cost: Starts at $249 (add $329 for iPad)
• Store Kit Portable:
  • What’s included: Zettle Reader 2, Bluetooth-enabled portable reader, and Thermal Rolls for Portable Printer
  • Best for: In-store mobility and curbside sales
  • Cost: Starts at $339
• Store Kit Standard and Plus:
  • What’s included: Zettle Stand 360, Zettle Reader 2, Zettle Dock 2, Smart Printer, Thermal Rolls for Smart Printer, and optional Barcode Scanner.
  • Best for: Retail businesses issuing paper receipts and handling larger inventories
  • Cost: Starts at $499 without a barcode scanner; and from $699 with a barcode scanner

Square received nearly perfect scores across all payment types we considered. It lost a few points for its limited capabilities in accepting ACH payments and does not accept echecks. On the other hand, PayPal lost points for the extra monthly virtual terminal fee. It also does not have ACH transfers and only accepts echecks.

Mobile Payments & POS System

The Square payment app for mobile is compatible with Android and iOS devices and free to download and use. It also comes with a free magstripe reader that can be mailed immediately after you sign up for an account.

You can set up your inventory in the app and then select items from your library or manually enter the transaction amount. The Square POS app also now has a Tap to Pay on iPhone feature, so you don’t need another card reader for contactless payment if you have a compatible iPhone.

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. You get a complete three-in-one (swipe, dip, and tap) payment setup for $49 with Square. Real-world users also rate Square highly on iOS, with a score of 4.8 from 350,000+ reviews, and Android, with a score of 4.8 from 179,000+ reviews.

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 leading mobile credit card processors.

Ecommerce & Online Payments

If you need hosted checkouts, choose Square, as PayPal charges extra for customizable hosted checkouts. 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 includes a website builder with its free merchant account, so there are no extra fees when setting up an online presence. (Source: Square)

---

Square has the ability to create payment links and buttons to add to your website. (Source: Square)

---

Square offers buy now pay later options for both online and in-person purchases. (Source: Square)

---

Invoicing

Square’s invoicing feature allows you to create, send, and track invoices online or via Square Payments’ iOS and Android apps. Additionally, you can use automatic payment reminders, advanced reporting, and recurring billing. Advanced invoicing features are also available for those wanting a more customized look, plus additional tools like multi-package estimates and milestone-based payment schedules.

Both Square and PayPal 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.

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 or 1% per invoice using the ACH payment method.

Learn more in our ultimate Square Invoice guide.

You can create, customize, send, and track invoices from your mobile device using Square. Users may find Square as a cheaper option especially when accepting larger payments. (Source: Square)

---

Square offers recurring billing and payment features. These features are all available in Square at no extra cost. (Source: Square)

---

You can set your invoicing feature to accept card payments on Square. Additionally, Square supports ACH payments with transaction fees that are significantly better than PayPal’s echeck payment processing fees. (Source: Square)

---

Payment Processing

Both Square and PayPal are secure and easy to use as payment processors. Taking price out, Square simply beats 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.

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.

This provider 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.

Aside from the usual card payment options, Square provides a unique alternative payment method with customization options. (Source: Square)

---

Square allows you to make use of a free virtual terminal to accept payments made over the phone or online. (Source: Square)

---

PayPal offers a wide range of payment options, and it also scored well for payment types. The best thing about PayPal is that most ecommerce platforms offer easy integration with just a few clicks and your PayPal business account details. You also don’t need an online website to receive payments because you can send invoices, use the virtual terminal (with an additional monthly fee), or process in-person payments using PayPal Zettle.

Mobile Payments & POS System

Like Square, PayPal has a mobile app that also works as its POS app. PayPal Zettle is also on our list of the best mobile POS apps and top-recommended mobile credit card processors, so if you prefer PayPal to Square, you are still 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. Although the app does not have offline capabilities, it still scored well on iOS, with a score of 3.1 from 460+ reviews, and on Android, with 4.0 from 42,000+ reviews.

PayPal’s POS 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 in 13 countries. Square, by contrast, only works in six.

Ecommerce & Online Payments

Although Square offers solid ecommerce and online payments capabilities, PayPal is still the better choice for online sales. It has a greater reach, is accepted by multichannel sales like eBay, and can integrate with many ecommerce apps.

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.

PayPal integrates with a range of ecommerce platforms such as BigCommerce and WooCommerce to help you set up and manage your website. (Source: PayPal)

---

PayPal offers the ability to create payment links and buttons to add to your website with more customization features and integration options that allow you to accept payments on multiple platforms. (Source: PayPal)

---

PayPal offers buy now pay later options with better transaction fees but its service is limited to online sales. (Source: PayPal)

---

Invoicing

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 echecks rather than ACH transfers. Regardless of how your customer pays, it charges 3.49% + 49 cents including for echecks, which are also capped at $300 per transaction, while Square only charges 2.9% + 30 cents or 1% per invoice using the ACH payment method. If you send a lot of invoices, Square is the much cheaper option.

You can create, customize, send, and track invoices from your mobile device using PayPal invoicing features. (Source: PayPal)

---

PayPal also offers recurring billing and payment features; however, note that PayPal charges an additional $10 per month for recurring billing and $30 per month for recurring payment tools. (Source: PayPal)

---

You can also set your invoicing feature to accept card payments on PayPal. PayPal supports echecks as an additional invoice payment method. (Source: PayPal)

---

Payment Processing

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 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.

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.

Aside from the usual card payment options, PayPal also accepts Venmo and supports more integrations with other online platforms. (Source: PayPal)

---

PayPal also has a virtual terminal for accepting payments made over the phone or online, but it requires a $30 monthly subscription. (Source: PayPal)

---

Square beats PayPal with its more well-rounded suite of business, banking, and money management features, as well as software tools and integrations—most of them free. Aside from offering working capital loans, it also provides traditional banking services at no extra cost.

These earned Square perfect scores for business management and software tools. A few points were docked for its slower deposit times and limited customer service hours.

Management Tools

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.

Square even offers proprietary, industry-grade hardware in affordable installments, and we find this accessibility a huge plus for small businesses and startups working on a budget.

Square offers money management with competitive interest rates and loans with affordable plans.
(Source: Square)

Customer Service

With Square, you’ll need to pay an additional fee if you want same-day transfer of funds. Square’s customer service is also limited to extended business hours.

Despite complaints of frozen funds and canceled accounts, customers are overall satisfied with both PayPal and Square customer support. However, for Square, only active accounts are given access to phone support, and even then, you will require a customer code when calling. You will need to log in to your account to get a “Call Support” option, including your own customer code.

For those whose accounts are active, chat support is also accessible in the Square POS app—a handy feature. Square’s phone customer support is available from 6 a.m. to 6 p.m. Pacific time, Monday through Friday.

Like PayPal, Square offers good user knowledge bases with an extensive, searchable database of tips, how-to articles, and more.

Although lower than Square’s scores, PayPal still earned above-average scores for its management features. It is among the most popular and widely used payment platforms because of its excellent integration options and international payment processing. Customers and shoppers recognize it as a secure platform for sending and accepting payments online. However, it would have performed better if there were no extra fees for some of the features, such as its chargeback protection.

Management Tools

PayPal also offers business loans to business account users. 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.

Meanwhile, PayPal’s working capital 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.

Customer Service

Customers are generally satisfied with PayPal’s customer support. It offers extended business hours for live customer and technical support. Phone support is available 6 a.m. to 6 p.m. Pacific time, Monday through Sunday.

It also provides an extensive knowledge base which includes step-by-step guides, troubleshooting, and developer documentation.

Both Square and PayPal are excellent choices for payment processors and POS systems. However, Square is a better option for mobile payments and in-person transactions, while PayPal is better suited for ecommerce and online payments.

Square is an excellent option for startups or small businesses processing up to $10,000 a month. Aside from offering an all-in-one solution without any upfront costs, its payment processing rates are competitive for businesses processing low-volume transactions.

Although Square’s flat processing fees are competitive, they can get expensive for large-volume businesses. Nevertheless, Square offers custom pricing for businesses processing more than $250,000 annually, so it is worth checking with Square for custom pricing rates.