Square VS PayPal: Which Is Best For Small Business?
Square and PayPal both have mobile card readers, but there’s a lot more to both platforms. This Square VS PayPal comparison will help you understand which is right for you.
PayPal and Square (sometimes called Squareup) are two of the biggest names in payment processing for small businesses. This article covers the Square vs PayPal debate by comparing the core small business features of the two providers, from eCommerce sales, in-person sales (mobile POS), and business tools like invoicing and reporting. A PayPal vs Square cost comparison is included as well.
After reading this post, you will have a clearer answer to the PayPal vs Square question as it affects your small business. You’ll also know whether Square or PayPal will give you a better value for your payment processing needs.
Table of Contents
- Square VS PayPal Comparison
- Square VS PayPal: At A Glance
- PayPal VS Square: What’s The Difference?
- Square VS PayPal FAQs
- PayPal VS Square Fees & Pricing
- Square VS PayPal Features
- PayPal VS Square: Which Is Best For My Business Needs?
- Square VS PayPal Comparison: Final Considerations
Square VS PayPal Comparison
While Square and Paypal have similar features for payment processing, they differ quite a bit in their respective eCommerce and POS features. Most merchants will find Square offers an all-in-one experience that works out of the box. PayPal offers a choice of integrations to build a custom solution tailored to merchants’ needs but has fewer capabilities on its own.
||Sellers who want to boost sales with an additional checkout option|
|Includes Free Website|
|Next Steps||Visit Site
Square VS PayPal: At A Glance
The answer to the Square vs PayPal question depends on which services you need. PayPal supports international growth and offers more features for eCommerce, while Square provides more in-person selling tools. Regarding PayPal vs. Square fees, Square generally charges less for online payments, while PayPal charges less for in-person transactions.
Pros And Cons Of Square
- An impressive feature set and free add-ons
- All-in-one multichannel payments system
- Dedicated POS systems for restaurants, retail, and appointment businesses
- Proprietary POS hardware options: Square Stand, Square Register, Square Terminal
- Free eCommerce tools, including a free virtual terminal and buy now, pay later (BNPL)
- Lower fixed fee for eCommerce transactions than PayPal
- No chargeback fee
- Not suitable for international sellers
- Not for high-risk industries
- Account stability issues
- Slightly more expensive than PayPal Zettle for in-person transactions
Square’s ever-expanding payments platform is outstanding when it comes to features, ease of use, and transparent pricing. While Square made its name with mobile processing, it now offers complete POS systems, with niche POS packages for different industries and integrations with other POS systems. Traditional retailers, coffee shops, restaurateurs, mobile contractors, and niche creators are all well-served.
With an intuitive website builder, free developer tools, social media integrations, a free virtual terminal, and invoicing, Square is a strong and capable online commerce platform.
Pros And Cons Of PayPal
- Trusted by consumers
- Predictable pricing (once you understand the various rates that can apply)
- Enables international selling
- Extensive integrations
- Good developer tools
- Accept in-person PayPal and Venmo payments
- Slightly cheaper than Square for in-person transactions
- Account stability issues
- Not suitable for high-risk industries
- Inconsistent customer support
- Online processing fees are higher than Square’s for most businesses, especially those with small average tickets
- Added charges for a virtual terminal, chargebacks, recurring billing
With its ubiquitous, globally-recognized payment button, PayPal has dominated the eCommerce payment space for quite some time. PayPal’s all-in-one payment system and international acceptance make global selling accessible to more merchants than ever before. All you need is a free PayPal business account.
PayPal’s expansive suite of developer tools, invoicing, and recurring billing tools makes it a formidable business platform, whether you use PayPal exclusively or as a supplemental checkout option, which you cannot do with Square. PayPal also offers in-person mobile processing with PayPal Zettle and integrations with numerous POS providers.
PayPal VS Square: What’s The Difference?
Square and PayPal have much in common. Both offer flat-rate payment processing and loads of merchant-friendly features. Upon closer examination, however, differences become apparent. PayPal offers more eCommerce features and can be used as a supplemental payment option. Meanwhile, Square is more customizable and offers more in-person sales tools.
Let’s dive deeper into what Square and PayPal share and what distinguishes them from each other.
Both PayPal & Square Offer…
- Free mobile POS app compatible with nearly all devices
- Both inexpensive credit card readers and all-in-one touchscreen terminals
- QR code payments
- Apply discounts
- Item library with product descriptions, images, and variants
- Barcodes and SKUs
- Receipt printing
- Invoicing and recurring billing
- P2P payments
- Buy now, pay later
- Phone support
- 24/7 support via live chat
- Small business financing
Only Square Offers…
- Industry-specific POS systems with advanced inventory, payroll, timekeeping, and team management
- A wider variety of POS registers
- Offline mode for in-person sales
- Appointments and reservations
- Customer loyalty and marketing features
- Multilocation management
- A website builder
- Deeper reporting features
- Payment processing for CBD merchants
Only PayPal Offers…
- Extensive support for international sales
- Multichannel selling
- In-person PayPal payment acceptance (with Square, you can only accept PayPal online)
- Cryptocurrency payment acceptance
- Micropayment rates for some merchants
- Discounted processing rates for nonprofits
Square VS PayPal FAQs
PayPal VS Square Fees & Pricing
Regarding PayPal vs. Square fees, essentially, most merchants will pay less for online transactions with Square, while PayPal charges less for in-person transactions. PayPal’s complex pricing structure means that your per-transaction fee will depend on a number of factors, however.
As for monthly fees, both PayPal and Square offer free plans in which you only pay for processing and any POS equipment you need. While both Square and PayPal offer packages with monthly fees, Square’s premium plans give you advanced POS functionality, while PayPal’s premium plans give you advanced eCommerce features like customizable checkout options, a virtual terminal, and recurring billing (the latter two of which come free with Square).
|Monthly Fee||$0/month; $29-$69/month for specialty POS packages||$0/month; $5/month for Payments Advanced; $30/month for Payments Pro & the virtual terminal|
|Online Transactions||2.9% + $0.30 per transaction||2.59% + $0.49 to 3.49% + $0.49 per transaction, depending on the payment method & your payments package|
|In-Person POS Transactions||2.6% + $0.10 per transaction (2.5% + $0.10 with some specialty POS packages)||2.29% + $0.09 per transaction|
|QR Code Payments||2.9% + $0.30 per transaction||1.9% + $0.10 for transactions over $10; 2.4% + $0.05 for transactions $10 and under|
|Recurring Invoice (Subscription) Billing||Free; 3.5% + $0.15 per invoice||$10/month (free if you use PayPal Checkout); 3.49% + $0.49 per invoice|
|Keyed/Virtual Terminal Transactions||$0/month; 3.15% + $0.15 per transaction||$30/month; 3.09% + $0.49 per transaction|
|Micropayments (For Transactions Under $10)||No available micropayment rate||4.99% + $0.09 per transaction (only available to certain merchants)|
|Sign Up With Square||Sign Up With PayPal|
A few caveats:
- The $20 fee PayPal charges merchants per chargeback is waived if the merchant enrolls in Chargeback Protection, but this means you’ll be charged an extra 0.4% to 0.6% for all transactions.
- Only certain merchants are eligible to enroll in PayPal’s Micropayments plan, which automatically charges you a low fixed fee of $0.09 (in exchange for a percentage fee of 4.99%) for each transaction under $10. Periodically, I have seen reports from merchants claiming to have been denied the ability to enroll in this plan.
- The pricing listed here is US-specific.
- To list every possible charge would be beyond the scope of this article. We have resources that take you through Square pricing and PayPal pricing in greater detail.
Which Is Cheaper, PayPal Or Square?
For online payments, Square’s per-transaction rate is lower than that of PayPal in most circumstances. eCommerce merchants will save even more with Square if they need a virtual terminal or recurring billing, both of which come free only with Square. For in-person transactions, however, PayPal’s processing rates are lower than those of Square.
So, which processor is cheaper? That depends on whether the bulk of your sales will be online or in person and whether you will need additional software. If your business sells both online and in-person, consider your online/offline sales ratio and examine the Square and PayPal pricing articles linked above to determine which option will be more cost-effective.
For many businesses, the cost difference will be small enough to make price a negligible factor when choosing between Square and PayPal. The most important thing is that you get the features your business needs to operate and grow.
Square VS PayPal Features
|Mobile POS||Square POS||PayPal Zettle|
|Mobile Card Reader||
||Zettle Card Reader: Contactless (NFC) + chip + PIN|
|Inventory Count||(only with PayPal Zettle)|
|Low Stock Alerts||(only with PayPal Zettle)|
|Item Variants||(only with PayPal Zettle)|
|Downloadable Reports||(only with PayPal Zettle)|
|Advanced Inventory Features||(with premium iPad POS subscription)|
|eCommerce/POS Inventory Sync||(depends on eCommerce platform)|
|Unlimited Products||Depends on the eCommerce platform|
|Virtual Terminal||(available for free)||(available for $30/month)|
|Recurring Payments||(available with a recurring subscription fee)|
|Gift Cards||(only with PayPal Zettle)|
|Try Square||Try PayPal|
PayPal began as an online payments provider, and it retains an edge over Square in this area. While PayPal doesn’t offer a hosted website as Square does, it facilitates international eCommerce and allows for multichannel sales on platforms such as eBay and Amazon. Plus, its numerous shopping cart integrations mean you’ll have no trouble building your own PayPal-powered website. PayPal offers a more sophisticated set of checkout flow options as well.
While you can use PayPal as a supplementary payment method at checkout with many other payment processors, you can’t do the same with Square. However, if you just plan to sell a few items on your website, Square’s package, which includess a free website and lower eCommerce rates — particularly for sellers with small average ticket sizes — is an attractive option. This is especially true when combined with social selling tools.
For in-person sales features, however, Square comes out on top. While PayPal Zettle is a step up from PayPal’s previous mPOS offering (PayPal Here), it simply can’t match the feature depth of Square’s four different POS systems, which provide specialized features for retailers, restaurants, and offices that need appointment scheduling.
Smaller mobile merchants who don’t require specialized features will find the Zettle Reader (just $29 for your first reader) to be a very capable device. What’s more, PayPal’s in-person transaction fees are a bit lower than Square’s.
PayPal VS Square: Which Is Best For My Business Needs?
We’ve examined each facet of both companies in the Square vs PayPal debate, but which of these services best suits your business needs?
Choose PayPal If…
- You sell mostly online. With features such as multichannel selling (eBay, Amazon, etc.), cryptocurrency payment acceptance, and, most importantly, support for international sales, PayPal has Square beat.
- You want the brand recognition of the PayPal name. Consumers are simply more likely to go through with an online purchase when they see the PayPal name.
- You deal in low-ticket or occasional in-person sales. PayPal doesn’t offer the same degree of POS services as Square, but PayPal’s in-person transaction fees are lower than Square’s, and PayPal Zettle is well-suited to smaller merchants.
- You want to accept in-person PayPal payments. With Square, you can accept PayPal payments online but not in person.
- You already have a payment processor but want to add a supplemental payment option for online sales. Only PayPal can fill this role.
Choose Square If…
- You sell primarily in person. Square offers four different full POS systems along with smart terminals and advanced industry-specific features. PayPal offers a POS app, a mobile card reader, and a smart terminal, but with fewer features and no industry-specific options.
- You want multichannel features and tools in one platform. With Square, you can connect seamlessly to in-house loyalty, email marketing support, and inventory reporting solutions.
- You don’t have a site and want to get one up quickly. With Square Online, you can have a basic eCommerce website up and running in very little time, all for free. For advanced features, however, you’ll need a paid Square Online subscription.
- You want the potential to scale premium add-ons and integrations easily. Compared with PayPal, Square has more third-party software integrations and more in-house add ons, both free and paid.
- You have a CBD business. Though neither Square nor PayPal accepts businesses typically considered high-risk in the processing industry, Square carves out an exception for CBD businesses. PayPal does not.
Square VS PayPal Comparison: Final Considerations
While we can’t proclaim Square as the unequivocal winner for every small business use case, its robust and ever-improving feature set just can’t be denied. Over the last several years, we’ve seen Square’s features and services expand and improve, which speaks volumes about the overall quality of the platform. You won’t quite find an equivalent set of features, freebies, and business-scaling tools with PayPal, particularly if you sell in-person and need robust POS functionality.
However, if you need support for international selling and want the brand recognition of one of the most popular names in online payments, PayPal may better satisfy your business needs. Plus, it’s always easy to add PayPal buttons to your online store to provide an additional checkout option. With over 400 million PayPal users worldwide, many customers will opt for the convenience of clicking that familiar PayPal button at checkout.
Along with their respective service and feature offerings, both Square and PayPal offer the freedom to change processors without being bogged down by a binding contract — an important consideration for growing businesses with evolving needs.