Square vs. PayPal

Square vs. PayPal Highlights

PayPal and Square give merchants an easy and convenient way to accept credit cards and other payment methods. Both provide essential payment processing hardware as well as integrations with multiple platforms. However, the services have some key distinctions. The one you choose will likely depend on your industry and the way you conduct business.

Who Is Square For? 

Square is best for brick-and-mortar retailers, restaurants and appointment-based businesses. Its robust, industry-specific software simplifies managing unique business functions. For example, the Square restaurant software includes menu management, a kiosk function and kitchen displays for the back of the house. Its appointment software gives you a customizable online booking site and allows you to set automatic appointment reminders. As an added bonus, Square’s hardware is sleek and attractive for customer-facing environments.

Square is also ideal for professionals and freelancers who use recurring billing. E-commerce businesses with in-house web developers can benefit from Square’s free online store, integrated email marketing and social selling.

Check out our in-depth Square review for more details about this multifaceted payment processor.

Who Is PayPal For? 

PayPal is best suited as a payment processor for low-volume or seasonal businesses because it has no monthly fee; you’ll only pay transaction fees. Getting approved is easy, so you’ll be ready to accept payments quickly. This quick and straightforward setup makes PayPal ideal for startups, new business owners and merchants who haven’t previously accepted credit cards. 

PayPal is also a great option for setting up an online store because it automatically integrates with top e-commerce platforms like Shopify, BigCommerce, WooCommerce, Wix, Adobe, GoDaddy, Salesforce Commerce Cloud, Squarespace, and marketplaces like Etsy and eBay. To get started with PayPal credit card processing, businesses simply set up a PayPal business account, select PayPal from their e-commerce interface, and enter the required information.

Read our in-depth PayPal credit card processing review for a comprehensive look at PayPal’s payment processing services. 

Square vs. PayPal Service Comparisons

Here’s a closer look at each provider’s services and how they stack up against each other. 

Plans and Pricing

Square

Square’s basic plan has no monthly fee. However, if your business needs more capabilities, add-ons will incur additional fees. 

Here’s a summary of Square’s plans and fees.

PayPal

For your business to accept payments with PayPal, you must have a PayPal Business account. However, you’ll need a personal PayPal account first. Setting up both account types is straightforward (and free). 

PayPal has several checkout options you can mix and match according to your needs. Here’s a breakdown, along with PayPal’s credit card fees: 

There’s no monthly fee for any of PayPal’s programs. The modular nature of PayPal’s offerings makes it easy to choose only what your business needs. In addition to PayPal payments, you can accept all major credit cards, Venmo, PayPal Credit (buy now, pay later), 10 different international bank redirects, ACH, Apple Pay, Google Pay, Samsung Pay and more.

Payment Processing

Square

We appreciate that Square provides multiple ways for merchants to accept payments, including online and via invoicing, hosted checkout payment pages, POS systems, and virtual terminals. In addition to major credit cards, Square allows you to accept Apple Pay, Google Pay, Samsung Pay, Cash App Pay, Afterpay and ACH payments (through Square Invoices).

Square holds your sales revenue in a Square Checking account, where funds are available immediately. You can spend them using the Square Debit Card or transfer them to an external bank account. For external transfers, funds are available within one business day for free or instantly for a 1.5% fee.

PayPal

We like that PayPal helps you accept numerous payment methods. We were also impressed by its intuitive button generator, which is quite handy for e-commerce businesses. For example, it can detect if the customer has Venmo; if they do, it will display a button that allows them to pay with Venmo. This capability can help increase sales because people like using their preferred payment methods.

All business payments go to your PayPal Business account. You can see all transaction data in your business account dashboard. (Note that you can only have one PayPal Business account per individual or business entity. However, you can have separate PayPal Business accounts for distinct legal business entities. PayPal allows you to link them and manage them centrally.)

Transferring money from your PayPal account to your business bank account is free with a standard transfer, which takes one to three business days. You can also do an instant transfer for a fee or access the money through your PayPal debit Mastercard.

One of the major complaints PayPal merchants make is that PayPal has frozen their accounts or held their money because of suspected fraud. While we like that PayPal is sensitive to potential credit card fraud, holding money can cause cash flow problems for merchants who aren’t able to access their revenue. PayPal also has a high chargeback fee of $20 for transactions not covered under Seller Protection.

Third-Party Integrations

Square

Square integrates with hundreds of apps, including industry-specific apps in the retail, restaurant and personal care sectors. Here are some examples:

Square also integrates with platforms for more general use across industries, including the following:

• GoDaddy for web hosting
• Mailchimp for email marketing
• Gift Up to create gift cards
• ZipRecruiter for hiring
• TapMango for loyalty and marketing

PayPal

PayPal’s Zettle system integrates with BigCommerce, QuickBooks Online, Shopify, SalesVu and WooCommerce. Zettle card readers can interface with most third-party POS systems. 

Since PayPal was an early leader in this type of online payment technology, it is already integrated with many of the best e-commerce platforms and shopping cart software. Enter your specific information to link to PayPal. 

PayPal’s e-commerce integrations include the following:

• Big Cartel
• CS-Cart
• Shift4Shop (formerly 3dcart)
• BigCommerce
• Magento 
• Shopify
• Volusion
• Wix
• Squarespace

Hardware

Square

Square designs and builds its own card-processing hardware, which includes the following:

• Square Reader for Magstripe: The compact Square Reader for mobile payments connects to a smartphone or tablet via the headphone jack or Lightning adapter, depending on your device. This reader only allows you to swipe magnetic stripe cards; it doesn’t support chip cards or NFC payments. Your first Square Reader is free when you sign up with Square.
• Square Reader for Contactless and Chip: The Square Reader for Contactless and Chip is another mobile card reader that connects to your mobile phone or tablet via Bluetooth. It allows you to accept credit cards, Apple Pay and Google Pay. It costs $59. 

The Square Reader for Contactless and Chip accepts contactless (NFC) payments and chip cards. Source: Square

• Square Terminal: The Square Terminal connects via Wi-Fi or Ethernet and accepts cards via swipe, tap and insertion. It can also print receipts. The Square Terminal costs $299.

The Square Terminal accepts cards via swipe, tap and insertion. Source: Square 

• Square POS register: For fixed locations, Square has a POS register with a cashier-facing product screen and a customer-facing payment interface. The Square register takes all major credit cards by tapping, swiping and inserting. It can be used alone or with accessories like a receipt printer, handheld scanner and cash box. The register costs $799. 

The Square POS register is a fully integrated POS system with a second customer-facing display. Source: Square

Additional hardware options include the following:

• USB receipt printer for $299
• USB barcode scanner for $119
• 16-inch USB cash drawer for $299
• Square Stand for iPad for $149
• Square Kiosk for $149

PayPal

PayPal provides the following options for accepting payments: 

• Zettle card reader: The Zettle card reader is wireless and accepts swiped, chipped and tapped cards (for NFC mobile payments), as well as contactless digital wallets like Apple Pay and Google Pay. It also has a numeric PIN pad for debit card transactions. Your first Zettle card reader costs $29; additional units are $79 each. 

PayPal’s wireless Zettle card reader and stand pairs with its POS app on a smartphone or tablet. Source: PayPal 

• All-in-one terminal: There’s also a portable point-of-sale terminal with the PayPal Zettle app built in. This terminal can accept payments, update stock, and check inventory. It costs $199 for the POS terminal alone and $239 for the POS terminal with a built-in barcode scanner. Terminal kits with printer and dock start at $269.

The PayPal Zettle app is built into the all-in-one terminal. It can also include integrated features like a barcode scanner and a receipt printer. Source: PayPal

• PayPal Zettle app: The PayPal Zettle app’s Tap to Pay feature lets you use your iOS or Android device to accept payment without additional hardware or fees. 

Additional hardware options include the following:

Software

Square

If your business sells through multiple channels, Square makes it easy to see all your sales in one place. For online transactions, Square allows you to process individual transactions on your site, set up recurring transactions, and even process multiparty transactions by layering in a fee on top of third-party payments that you process through your app. You can use developer tools to integrate Square with your website or use Square Checkout to redirect customers to a Square-hosted payment page.

The Square mobile app allows you to enter card information manually and integrates with Square’s mobile card readers.

PayPal

Many platforms offer built-in integrations that require no coding to integrate PayPal with an online shop. However, advanced customizations may require a web programmer. The integration allows the entire transaction to take place on your website instead of temporarily redirecting to the PayPal site, as with the simplified no-code method.

PayPal’s Zettle is entirely separate from other PayPal payment methods. Zettle is ideal for in-person POS sales and integrates seamlessly with PayPal for multichannel operations (but you’ll still rely on PayPal’s other services for online transactions).

Zettle provides cloud-based POS software with a front-end experience for cashiers to select products or services for checkout. We were impressed by its robust backend. It shows transactions on every payment method, creates sales reports, sends invoices, allows you to sell and accept gift cards, sends digital receipts, issues refunds, and helps manage inventory.

If you don’t accept in-person POS sales, you can use the PayPal Business app (or log in from your computer) to view transaction information. It offers transaction data and sales reports, as well as the ability to transfer money, issue invoices and estimates, and keep track of customers. 

Both the Zettle and PayPal Business apps are easy to use and free to download.

Security

Square

We like that Square encrypts customers’ payment information end-to-end, helping it maintain PCI compliance. Square provides PCI compliance for no additional fee. Its card readers are EMV compliant, which means they accept chips, decreasing fraud opportunities. In addition, Square uses machine learning models to ferret out and isolate suspicious transactions. Square has no chargeback fees and, in a dispute, represents you with the issuing bank.

PayPal

We really like that security is already embedded for customers who pay with their PayPal account since they only need their login and password. No card information or bank details are transmitted; PayPal keeps that data encrypted on its servers. PayPal confirms all transactions via email. It uses end-to-end encryption and machine learning to reduce fraud. 

We were also impressed that PayPal includes seller protection at no additional cost. This feature protects your PayPal balance while disputes are being investigated. PayPal is also PCI compliant. Additionally, its standard Zettle card readers accept EMV (chip) cards, offering a higher security level. The Zettle card readers come equipped with a PIN entry pad for debit transactions for additional security.

Customer Service

Square

Square support is available by phone and live chat Monday through Friday, 6 a.m. to 6 p.m. PST. Premium subscribers get 24/7 phone support. You can also reach out via social media. 

Our research showed Square’s customer service record is spotty. The systems seem to work well for regular, day-to-day operations. Still, when there is a problem, merchants may have difficulty getting help to resolve the issue.

PayPal

PayPal provides customer service via its Message Center. You log into your business account, access the Message Center, and try to solve your problem via the PayPal Assistant. If it can’t help you, depending on the issue, you’ll be directed to call or message an agent. 

If you’re not logged into your account, you can call a number as a guest. Hours are 6 a.m. to 6 p.m., Monday through Sunday. Additionally, there’s a Resolution Center where you can address account and transaction issues. 

Our research revealed customers complain the service isn’t great; the biggest issues seem to be long holds on accounts and the inability to quickly release funds.

Approval and Setup

Square

Square’s application is online and only takes a few minutes to complete. Once approved, you should find setting up your Square account relatively easy. The time it takes depends on the functionality your business needs. If your primary revenue stream is online sales, you may need a web developer to help you set it up. Square offers Square Checkout, which does not require coding, as well as prebuilt third-party solutions that make it quick and seamless to set up. 

Unlike PayPal, Square is unwilling to process credit card payments for high-risk industries and has a long list of business types it is unable to serve. 

PayPal

If you have a personal PayPal account, adding a business account takes only a minute. If you’re starting one for the first time, it takes a little longer. PayPal does not have a list of business types it won’t work with. However, it’s risk-averse and tends to hold funds for operations it deems risky.

Setup time depends on whether you have an e-commerce operation or a brick-and-mortar location. Since PayPal is pre-integrated with many online shopping carts, setting up shop with PayPal for e-commerce is quick and easy. 

Square vs. PayPal Summary

Square is best for brick-and-mortar retailers and restaurants. 

Square is the better choice for fixed-location, in-person retailers and restaurants because of its specialized software and numerous platform integrations. Its attractive, sleek hardware works well for customer-facing locations. Square is also a great option for businesses that issue invoices and set appointments, such as medical, marketing or healthcare operations. Square has the edge in customer service and is less likely to hold or freeze your money.

PayPal is best for startups and newer businesses.

PayPal is the best choice for startups and newer businesses because of its fast, easy application process and high approval rate. Less technical e-commerce businesses will also benefit. They can easily set up and manage payments on their website without hiring a developer — particularly if they use a popular e-commerce platform or marketplace. PayPal allows businesses to accept multiple digital payment methods, including Venmo, which will appeal to Gen Zers and millennials.