Square vs PayPal: Which is Best For Your Business? (2023)
Square and PayPal are the two go-to POS systems for small businesses, service providers, and mid-sized business owners.
Both provide companies with fast, secure, and easy ways to accept payments online in a variety of situations.
In fact, whether you are thinking about starting an eCommerce business or simply want to sell on Facebook, having a reliable payment processor is key.
However, there are various things to consider while choosing a payment solution for your business.
Here’s a detailed comparison to help you make an informed decision.
Square Vs. PayPal: Overview.
PayPal is a popular payment gateway that you can use for person-to-person payments, online shopping, and donations.
It allows consumers, merchants, and businesses to send and receive payments online through an account.
Square is also a stellar payment solution for point-of-sale and online payment options.
Both platforms allow you to sell, buy, and make online transactions, in person, or from any remote source. They also help you sync your payments, banking accounts, and cash flow.
Some of their similar core features include:
- Fully-featured POS system.
- Ecommerce sales.
- Sell through social media.
- Send shareable payment links through emails and texts.
- Create invoices and buy buttons.
- QR code transactions.
- Issue refunds and discounts.
- Mobile apps for both Android and iOS.
- Cash drawer support.
- Virtual terminal for phone payments.
- Invoicing and subscription management.
- Employee management tools.
- Automated payment reminders.
- Features for small business owners.
- API solutions
There are many differences as well.
While Square does have an edge in the POS department, PayPal is the preferred choice for online and international payments.
Let’s compare their key features in detail.
Square Vs. PayPal: Key Features Compared.
The following are the side-by-side key features of the two payment processors.
1. POS System.
If you’re looking for the best POS app or Point of Sale app, there are a couple of things to consider.
First, what size business are you?
If you’re an ecommerce size operation, you’ll need a different POS than running a small mom-and-pop shop.
Second, do you need both sales receipts and inventory management capabilities?
Let’s see how Square and Paypal compare.
Square:
Square POS System brings a lot of flexibility in how customers pay businesses. It’s a well-rounded point-of-sale system that you can utilize across diverse business landscapes.
It’s convenient for all types of payments, from restaurants to retail selling and from booking appointments to paying for your next movie.
Square’s POS system is also more than just a reader.
For one, it allows you to add devices, locations, and team members with just a couple of taps.
You can accept payments remotely with invoices and over the phone right into your computer.
There are also tons of add-ons, such as Square Payroll, Square Marketing, Square Loyalty, and a free invoice app.
The system also comes integrated with a suite of features like payments, items, inventory, analytics, ecommerce, and CRM.
Square also has a built-in website builder that comes with a drag-and-drop interface.
You can build a business website – automatically synced-up with in-person sales.
This helps you ward off hassles that come with picking online orders, inventory management, and monitoring sales numbers.
Restaurants can particularly leverage it to display their online food menu, offer pickup, and contactless QR code ordering for dine-in.
Another great feature is the ability to integrate the gift cards into the POS system and Square dashboard for easy redeeming.
It also provides excellent dispute protection, replete with fraud protection & monitoring, payment encryption, and PCI compliance for every POS payment you make.
Here’s a quick summary of fundamental features you get with Square’s POS system:
- Accepts all types of payments, including contactless payments.
- Takes orders online (even through Instagram) or over the phone.
- Enables you to manage pickup and delivery directly in the system.
- The ability to build a free website.
- Built-in appointment scheduling tools.
- Comes with its own hardware options and an entire suite of tools for streamlined, built-in payment processing.
- Built-in tools for staffing, customer booking, inventory management, and sales.
In addition, Square is hassle-free and has an offline mode. There’s no long-term commitment, hidden charges, or usage fees either.
Square offers special POS services at a reasonable subscription rate for big online businesses. Businesses can also opt for custom pricing if they process over $250,000 in sales annually, further pushing down their costs.
Get Started With Square.
PayPal:
Like Square, PayPal also has a POS system called Zettle in place.
Money from your Zettle card sales gets deposited into your PayPal merchant account automatically.
You can also use it in tandem with their ecommerce payment features to scale your business.
PayPal claims that their POS system put you in “total control.”
Firstly, you get access to a suite of analytical reports.
You can customize the way you view, analyze, and share sales reports.
It also helps with inventory management and lets businesses keep track of their stocks and inventory in real-time.
You can set cost and selling prices right on the platform, making stock and inventory management more streamlined.
Then you have options to import products in bulk from existing spreadsheets, organize products in groups or lists, automatically update stock levels, add photos and descriptions, and add and scan barcodes.
It enables businesses to build complete customer profiles that save payment mode preferences, email addresses, purchase history, and loyalty status.
Tons of features help you track business metrics, including:
- The ability to track all sales and refunds in one location.
- Ensure your best-selling products are always in stock by pinpointing them.
- Staff management with the ability to sort sales data by date or employee.
- Features to streamline the checkout process.
Overall, the POS is streamlined, fast, and has a narrow learning curve.
There’s no long-term commitment or monthly fees either.
Although, you’ll be paying a standard rate every time you receive transactions from PayPal Zettle.
PayPal also offers custom pricing for the right business.
Here’s a quick fee comparison of PayPal and Square POS system:
|
PAYPAL POS |
SQUARE POS | |
|---|---|---|
|
Card Reader Cost |
$29 for the first card reader; $79 for each additional card reader |
No cost for the first card reader; $10 for each additional card reader |
|
Transaction Fee |
2.29% transaction fee + $0.09 per transaction. No monthly fees. |
2.6% + $0.10 transaction fee. No monthly fees. |
|
Cost for Terminal |
Starts at $249 |
Starts at $299 |
Final Verdict: Square.
While both PayPal and Square have a fully functioning POS system, Square POS has an edge due to its free appointment scheduling software and offline mode.
It also has unique tools for restaurant-based businesses and enables multi-location management.
2. Hardware.
Square:
Square has a user-friendly interface, contributing to its speed, reliability, and flat learning curve.
It’s also backed by top-notch hardware to ring up items and process payments fast.
Businesses can choose from:
- Square Register – Complete POS with two displays, software options, and built-in payments.
- Fully integrated POS terminal – An all-in-one credit card machine for payments and receipt.
- Stand for contactless and chips – To accept contactless cards, Apple Pay, and chip cards wherever you want.
- Square reader for magstripe – For swiping credit cards anywhere on your smartphone or tablet.
- Square stand – To turn iPads into POS terminals and accept payments.
These tools improve the customer experience and ensure that businesses aren’t affected, regardless of their location.
While these devices do not require any additional device to work, you’ll need a lightning connector for some.
The hardware usage also incurs a cost.
The Register is the costliest, billed at $799 for 24 months, and the contactless chip stand is the cheapest at $169 for 12 months.
The Register also comes with a 2-year warranty, while other Square tools have a one-year limited warranty.
PayPal:
PayPal can also be used with POS hardware; however, it doesn’t offer as many options as Square.
There are three devices you can choose from depending on your requirements, including:
- Cash Registers – A sleek cash register for a professional checkout experience.
- Credit Card Readers – Powered by an all-day battery.
- Other POS accessories – Receipt printers, barcode scanners, etc.
You can also use these devices in tandem with your website to give your customers fast and secure checkout experiences.
You can also pair the hardware with phones or tablets via Bluetooth, opening up multiple options for making payments.
PayPal offers free customer support through email and phone support to solve business problems on the go.
Apart from overnight free shipping available across the U.S., PayPal also offers minimal turnaround times for hardware replacement.
Their ready-made store kits feature a handpicked selection of the best capabilities for every kind of business – small, medium, or large.
Not only this, but it also offers an array of supporting accessories like POS printers, barcode scanners, and receipt papers.
PayPal’s UI is also user-friendly with a flat learning curve that further accentuates its acceptability among users, no matter their educational background.
Final Verdict: Square.
3. Online Payments.
Both PayPal and Square are leading payment processors. Let’s see which one works best for your business.
Square:
Square helps businesses of all sizes to accept card payments with no extra fees.
It’s the only payment gateway that provides a free website and website builder that automatically integrates with Square payments.
Square also provides different hardware to accept payments that you can use without any transaction fees.
You can also accept card payments with no extra fees.
Square helps you create digital invoices or receipts and send them to customers via text or emails.
Or you can get customers to pay as soon as they make an appointment.
It also allows you to create a shareable link, buy button, or QR code for anything you want to sell online.
Transfer money to your linked bank account without any fees the next business day, or even get instant transfers for a fee.
They charge a fee of 2.6% + 10 cents per transaction when a customer taps, swipes, or dips their card.
The payments received through the purchases made from the Square online Store lead to a fee of 2.9% + 30 cents.
And if you enter the customer’s card details manually, the cost would be 3.5% + 15 cents.
Calculate the actual rate with Square’s fee calculator before any transaction for better budgeting.
Dispute management services are free for chargebacks since Square covers all the fees for any dispute.
The payment gateway also comes powered with built-in security solutions.
PayPal:
Everyone knows PayPal. It’s a leader in online payments, both for sending and receiving money.
You might even already use the service to make payments.
With PayPal, you can send or receive money without sharing financial information like credit card numbers with the merchant. As long as you link a bank account to your PayPal account, you’re good to go.
PayPal helps send and receive payments using an email address or merchant’s mobile number.
You can also accept credit cards, debit cards, bank transfers, mobile payments, and in-person payments.
It even has its own PayPal Business Debit Mastercard that lets you spend your balance while gaining cash back on eligible purchases.
PayPal’s advanced version PayPal Payments Pro also lets you:
- Accept credit cards, PayPal Credit, and PayPal.
- Embed a customizable cart to your checkout pages.
- Accept phone-based credit card payments.
- Create and manage online invoicing.
- Send and receive payments in 26 currencies from 200+ markets.
The payment gets transferred to your PayPal account within minutes. You can either transfer it to your bank account or use it for other business purposes directly from PayPal. You can manage your orders and transactions in PayPal’s easy-to-use dashboard.
Buy services or products online without any fees or charges in domestic purchases. However, the PayPal Payments Pro version has a monthly fee of $30.
Buying services or products internationally also renders additional fees. International purchases require you to pay an additional 3.0% base exchange fee. Dealing in currencies like USD, AUD, BRL, NZD, etc., results in a 4% rate above the base exchange rate.
A dispute fee is also applicable if the buyer files a dispute claim. For instance, you’ll have to pay 12 AUD if you’re dealing in Australian dollars, 7 EUR if you’re dealing in Euro, and so on.
You’ll also have to pay consumer fees on Withdrawal and Transfer out of PayPal.
PayPal uses advanced encryption, TLS 1.2 only connections for login, and 24-hour fraud monitoring to ensure all offline and online card transactions are secure.
They also implement anti-spoofing, anti-phishing, and 2FA to protect users from identity theft.
Final Verdict: PayPal.
PayPal is the winner here due to its outreach to more countries, currencies, and third-party marketplaces.
A Square account also has an edge in some departments, including its free website functionality and customization in the checkout process.
PayPal also allows you to embed customizable PayPal checkout pages to your online store, but the feature comes with its paid version.
4. Ecommerce Features.
When choosing an ecommerce payment processor, you need to make sure that the features it offers match your needs. Square and PayPal are two of the biggest names in this space.
I will go over some essential aspects to help you decide which one is right for your business.
Square:
Square comes with a complete suite of ecommerce features to help you sell physical and digital items on your website.
You can start with building a website using its array of template options.
They have pre-designed templates for retail stores, restaurants, service-based businesses, non-profits, etc.
The right website templates help businesses connect with the right target group, approach potential customers, create unique brand space – all of which goes a long way in selling the product.
The ecommerce website is entirely free to build and use. Their easy-to-use in-built store builder replaces coding to create a website for businesses with a cash crunch, startups, and small businesses.
Here are the features that you can add to your site:
- Add your branding elements to the site.
- Integrate your Instagram feed with your homepage.
- Add your map, business address, and other contact details.
- Offer in-store pickup, online ordering, and even accept online donations.
- Showcase featured products and services with detailed descriptions, pricing, and more.
- Add Square’s appointment booking page and allow customers to book an appointment with you.
You don’t even need a website to sell your products online.
Square helps you create a shareable link, buy button, and QR code to sell or take online payment without any website.
You can copy and paste the link in your email campaigns, social media, and text messages.
The software even helps businesses turn Instagram feeds into shopping carts.
Businesses can serve customers and take orders in multiple ways, including QR code ordering and additional services like shipping, pick-up, and delivery.
You can also draw customers’ attention to discounts, offers, festive sales, and new arrivals.
In addition, Square ensures your ecommerce website is compatible across devices like iPads, laptops, desktops, Android, and across different browsers.
PayPal:
PayPal’s ecommerce features are also suitable for small and medium businesses.
However, unlike Square, PayPal does not let you create your ecommerce website.
But there are plenty of other perks that make it a big name in the ecommerce space.
Firstly, PayPal has a broader reach than Square and is integrated into thousands of marketplaces and major ecommerce platforms like eBay, Amazon, etc.
It’s also a household name, making it a go-to payment gateway for customers and other businesses.
You can also use it for simple ecommerce activations on websites like Shopify.
Integrated into thousands of seamlessly linked applications, it makes it easier for businesses to make and keep track of transactions in one place.
Plus, you can integrate it with your existing website, a marketplace, or a social media platform to receive payments, withdraw funds, and pay suppliers.
It also helps build checkout pages from the ground up with in-built developer tools.
Businesses can deposit money from marketplace sales directly into business accounts.
Another option is sending invoices with multiple payment options or charging for services with a clickable link.
Having an ecommerce website is also not a requirement to use PayPal.
You can add PayPal’s invoice after finding the right partner to set it up. It partners with Shopify, Magento, WooCommerce, Zoho, Etsy, and more.
If you have a website, you can add the PayPal logo to your homepage, product pages, and checkout pages.
You can also customize the checkout page with purchase details and display the buy button on the shopping cart.
Final Verdict: PayPal.
PayPal is the winner here due to its broad reach, multichannel integration, and integration with almost every major ecommerce platform.
5. International Sales.
Square:
Square accepts all US-issued credit cards and international cards like Visa, Mastercard, Discover, JCB, UnionPay, and more.
It focuses more on domestic or tap/scan payments.
Currently, Square accepts card payments only in the US, Canada, Australia, the United Kingdom, Japan, the Republic of Ireland, and France.
Even their hardware is only approved in the US, making it inconvenient for other countries.
PayPal:
PayPal is available in 26 currencies and over 200 countries/regions. That makes PayPal the most convenient payment method for international buyers.
Transferring money between PayPal accounts is straightforward and takes seconds no matter where you are in the world. The funds get transferred quickly, and the recipient can withdraw them at their convenience.
PayPal Xoom also has multiple options to send and receive international payments fast, including:
- Send money to the recipient’s bank account directly.
- Send money directly to your recipient’s doorstep or for pickup.
- Mobile top-up and bill payments through PayPal anywhere in the world.
While the platform is free to use, either the sender or receiver must pay a fee accrued in international payments.
Here are PayPal’s merchant fee details:
Commercial transactions through American Express Payments don’t get charged. Commercial transactions through non-American Express Payments accrue a fixed fee of 1.50%
Another fixed fee of 0.49 USD applies to all international commercial transactions.
There’s a fixed fee of $0.01 on transactions above $10.01 through QR code scanning. Payment of $10 or less through QR code will cost an additional fee of $0.05.
International payment made through the PayPal Online Card Payment results in a flat percentage fee of 1.50% + $0.49.
Payments made for purchases through PayPal are free, barring a small currency conversion fee.
Final Verdict: PayPal.
PayPal is the obvious choice for international payments.
6. Mobile App.
Square:
The Square Point of Sale mobile app makes it easy to accept almost every form of payment, manage inventory, and get paid. The mobile app is available on both Apple iOS and Android devices.
You can download it from Google Play Store, Apple App Store, and Amazon App Store.
The app allows you to accept chips, PIN cards, and contactless cards with a Square Reader.
Funds will reflect in your bank account the next business day.
You can add items that you want to sell through the mobile app.
There’s an option to add items to the grid with features like Gift cards, Discounts, Redeem rewards, and more.
The app also helps you create and send invoices or receipts via text messages or email.
To eliminate repetitive steps, you can add regular customers to the “New Customers” section. This function lets you send automatic receipts and receive payments without repeating redundant steps.
The POS mobile app also comes with reports to monitor new customers, returning customers, customer behavior, customer spending, visits, and frequency.
Other features include:
- Accepts Visa, MasterCard, and American Express.
- The ability to customize products with names, prices, and images.
- Apply discounts and issue refunds.
- Real-time inventory tracking.
- Use in the offline mode.
- Direct integration Square card reader.
- Connect with receipt printer, kitchen ticket printer, barcode scanner, and cash drawer.
They also have a Square Dashboard app that provides real-time insights into your daily sales summary, category and item sales, and business progress.
Square also has separate POS mobile apps for retail and restaurant businesses, namely Square for Retail and Square for Restaurants. They’re only available for iPhones currently.
Additionally, you can use employee management by Square to send multiple wages automatically, get access to powerful reporting and analytics, track wages, and more.
PayPal:
PayPal’s Mobile App makes it simple to send, receive and manage your money anytime, anywhere – both international and domestic payments. The application is available on both iOS and Android.
The mobile app lets you send and receive payments using an email address or contact number. This negates the need to remember or provide the bank or card details.
Aside from transactions, you can check your account balance, download account statements, and monitor recent activity.
Now you can buy anything you want with your PayPal account and keep track of all your payments.
Online shopping is also a one-step process if you link your credit or debit card with your PayPal account.
Final Verdict: Square.
Square beats PayPal here.
7. Reporting.
Square:
Square comes with Square Analytics and Advanced Reporting options. It gives you insights into your sales summary, sales trends, item sales, payment methods, transitions, deposits, etc.
The Sales Summary report includes net sales, gross sales, refunds, revenue, fees, etc. You can also compare your daily, weekly, and monthly gross sales with Sales Trends reports.
The Item Sales report includes information on net sales, discounts, gross sales, total items sold, and more.
In addition, they have Tax reports to help you manage your taxes and provide information about the taxable and non-taxable sales. You also get an idea of the tax rates accrued in the sales.
Plus, Activity Log helps you get reports regarding complaints, voids, discounts, processed refunds, etc.
There are other advanced reporting options.
For example, you can categorize item sales using filters like device, employee, payment method, and more.
You can also get an overview of top-grossing categories and the number of items sold within each category.
Get all the reports in CSV format that you can open in Microsoft Excel, Google sheets, and more.
PayPal:
PayPal gives you access to statements, account activity reports, financial summaries, transaction details, history, and more.
Monthly and custom statements provide details regarding total debit and credits, beginning balance, ending balance, and currency held in the account.
Then you have User Audit reports that help you track money movements and funding instruments on your PayPal account.
You can also narrow down and customize reports by filtering them by date range, type of activities, transaction, invoice, etc.
Other advanced reports include the Money Management report and Order Fulfillment report.
These reports help you reconcile accounts and give insights into pending and completed orders, shipping status, and more.
You can also download these reports and transaction details in PDF, CSV, TAB, QUICKEN, and QuickBook formats.
However, you must have a PayPal secure file transfer protocol account to access reports.
Final Verdict: It’s a Draw.
Square Pros and Cons.
|
PROS |
CONS |
|---|---|
|
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PayPal Pros and Cons.
|
PROS |
CONS |
|---|---|
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Executive Summary.
Square and PayPal are well-known POS apps and online payment services. They provide an easy way to make payments online, accept in-person payments, and credit card processing, but each has its advantages.
Square is the preferred choice for accepting payments via credit cards and in-person payments. It has a full-fledged POS system, offline mode, a free website builder, and even separate apps for restaurants and retailers.
Get started with Square.
On the other hand, PayPal here is more suitable for online and cross-border payments thanks to its multichannel support, global reach, lower processing fees, and availability of all major currencies.
Further reading on AdamEnfroy.com: Check out my post on Stripe vs. Square, another direct comparison between two payment processing giants.
