Square vs. PayPal: Which One Is Best for Fees and Payments?
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Square and PayPal are among the biggest names in e-finance. In fact, these payment processors have achieved such a level of mainstream popularity that even a person who never used either one can probably tell you what they are. However, despite ostensibly sharing a niche, the two differ in a few important ways.
In our review of Square vs. PayPal for online payments, we’ll discuss everything you need to know about the services to make an informed choice between the two.
What Is Square?
It’s challenging to imagine that the modern all-in-one payment processing platform started out as a humble phone-plugged card reader company. Square has since grown into a large-scale system that allows companies from across the globe to accept payments, manage sales, track inventory, and run their day-to-day operations.
Square combines hardware, software, and payment processing into one ecosystem. All you have to do to start accepting payments is sign up and connect your bank account to it. However, Square’s software and hardware are country-specific, which means you can only accept card payments in the country where you’ve registered your account.
Designed for easy use and quick setup, Square works best for businesses that sell directly to customers, such as retailers, restaurants, cafés, salons, barbers, fitness studios, and repair services. It is especially useful for companies that operate brick-and-mortar stores or move around, such as market sellers, mobile vendors, pop-ups, events, and on-site services.
What Is PayPal?
While Square is a business-oriented solution available in eight countries (the US, Canada, Australia, Japan, France, Spain, Ireland, and the UK), PayPal is a global payment service that can meet both individual and business needs.
Similar to Square, a PayPal account serves as a middleman between the users and the sellers. Unlike Square, though, PayPal allows you to accept payments in several currencies and supports international transfers. As such, it is a great pick for e-commerce stores, subscription and digital services, and online vendors that frequently deal with foreign clients.
Square and PayPal Pros and Cons
Although both are used by millions of businesses, Square and PayPal are built for different kinds of businesses. Consequently, each platform has its unique strengths and weaknesses.
Square
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PayPal
Pros | Cons |
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Square vs. PayPal: Features and Services Overview
When comparing Square vs. PayPal, the first thing that comes to mind is how similar the two are. For example, both providers offer valuable tools for small and medium businesses: POS suits, invoicing, mass payments, individual transactions, reporting, and e-commerce activities.
Is Square better than PayPal, though? Or is it the other way around? For starters, experienced business owners consider Square the best choice for in-person and mobile payment processing. The platform offers a highly affordable ecosystem of scalable POS products and services, especially useful if you’re only getting started. Meanwhile, PayPal is the go-to choice for online shopping and all sorts of digital transactions. However, both providers have a lot more going on for them — let’s check it out!
Payment Processing
It’s hard to determine a clear winner in this category. Square offers better support for small businesses with its quick setup and predictable rates. Meanwhile, PayPal can handle international payments and dynamic currency exchange, which are must-haves for international vendors. For the sake of an accurate and transparent PayPal to Square comparison, let’s take a look at their credit card processing fees.
Fees by Transaction Type | PayPal | Square |
|---|---|---|
Contactless payments | 2.29% + a fixed fee that varies by currency | 2.6% + $0.15 |
Manually entered transactions | 3.49% + a fixed fee that varies by currency | 3.5% + $0.15 |
International transactions | 1.5% for all commercial transactions + a fixed fee that varies by currency | A standard fee (2.6% + $0.15) |
Chargeback | $20 | None |
Refund | No added refund fee, but seller fees are not refunded | No added refund fee, yet seller fees are not paid back |
Note: The fees are current at the time of writing and may change over time.
As you can see, Square vs. PayPal fees for payment processing look rather similar, at least in broad terms. However, both platforms also have their peculiarities and specific features that cannot be compared directly. Also, you can check applicable fees for each service, solution, or function you are interested in on the official websites of PayPal and Square.
Mobile Payments (mPos)
Both platforms offer tools for accepting in-person payments. Unlike the previous case, here we have a far more obvious winner. Square tops the market of in-person transactions thanks to its unmatched mPOS services (its associated fees are less exciting, though).
The platform offers out-of-the-box feature-rich POS packages for retailers, merchants, restaurants, niche contractors and creators, beauty services, and the fitness industry.
With PayPal, you can develop your own mobile payment solutions tailored to your business needs, but it will be far less robust than Square’s native POS. PayPal also doesn’t provide free terminals and has transaction fees that small-ticket entrepreneurs might struggle with.
E-commerce Solutions
As we’ve mentioned earlier, if you own an ambitious e-commerce company, PayPal’s sophisticated set of checkout options will likely suit your goals better than anything else on the market. The platform has a wide array of e-commerce features, can easily integrate third-party shopping carts, and comes with modern developer tools that allow you to customize your sales system and sync PayPal with your online shop and shipping or accounting software.
Add that to the retail-friendly features we’ve outlined previously — like international sales, invoicing, mass payments, BNPL, and marketing — and what you’ll get is the perfect e-commerce tool. You can use PayPal to handle the entire process for you or use it as an additional payment option via PayPal Checkout.
Square doesn’t offer this level of flexibility. Plus, if we compare Square versus PayPal in terms of digital payment processing capacity, the latter will quickly emerge as the better option.
Security and Fraud Prevention
Despite the recent global turbulence in the cybersecurity sector, 65% of consumers still consider digital transfers the safest way of handling money. When opting for the PayPal or Square payment method, though, they might be right after all. Both providers utilize advanced security measures like 2FA and end-to-end encryption to protect your and your clients’ financial information. Also, both platforms are PCI-compliant, adhering to the most rigid compliance standards and regulatory laws.
PayPal
The PayPal Commerce solution allows you to store your customers’ banking data safely. The brand also monitors transactions to locate fraud and scams, like masking commercial payments as personal ones.
Square
Square stays popular and ubiquitous thanks to its reliability and security. The ISO 27001-certified brand invests in the industry-leading security tech built into every component of its payment processing system.
Square vs. PayPal Fees and Pricing
The difference between Square fees vs. PayPal fees may not be huge, but it will still affect your income. Both Square and basic business PayPal don’t charge monthly minimums or statement fees. But when it comes to transaction fees, things stop being so simple.
Transaction Fees: How Much Will You Pay for Services?
As for credit card payments, you’ll pay less with PayPal fees vs. Square ones, but PayPal also has several hidden commissions. Plus, personal payments are free, while commercial ones will cost you a flat fee. As always, the final choice depends on the features your business needs.
Additional Fees and Costs
Though both brands offer comprehensive pricing plans, PayPal also has additional features like microtransaction processing, charity-focused business discounts, and more. On the other hand, Square allows you to accept recurring payments via its basic package, while PayPal requires you to purchase this feature separately.
Square vs. PayPal: Quick Final Comparison
| PayPal | Square |
|---|---|---|
Primary strengths | Global reach, familiar checkout, international payments | Integrated POS ecosystem, hardware options, easy in-person checkout |
Average fees | Higher online transaction fees | Lower fees for in-person card swipes or taps |
POS and register software | Customizable POS solutions | Native POS solutions with ready-made packages for different sectors and niches |
International sales | Strong support (multi-currency) | Limited to the country your Square account was registered in |
Setup | Effortless | Effortless |
Best for | Online sellers, freelancers, e-commerce, and international vendors | Small businesses and in-person sales, retail shops, food trucks, and service providers |
Paypal vs. Square: Which One Is Better For My Business?
As you can see, it all depends on your specific situation. Which platform will bring your organization more value and better ROI? Weigh the benefits of PayPal vs. Square for small businesses, and find the ones your company needs the most.
In short, if you rely on small-ticket operations or need a robust mPOS system, Square is the choice for you. Otherwise, it would be better to look into PayPal, especially if your business often deals with foreign clients.
FAQ
What is cheaper, PayPal or Square?
Square has lower card processing fees, making it better suited for smaller businesses. With this platform, you also don’t need to overpay to get a virtual terminal and chargebacks. However, if you’re looking for non-profit discounts and cheap in-person payments, then PayPal will fit better.
Do I have to provide my SSN to set up a PayPal or Square business account?
Both platforms follow strict security regulations. You won’t be able to verify your account without adding personal details, including a valid Social Security number (SSN).
Can I move funds from Square to PayPal?
No, since Square doesn’t support direct transactions to PayPal. However, you can always just move your funds from Square to a bank account supported by PayPal, and then transfer money from there.
Do I have to pay for Square and PayPal accounts?
Both platforms offer free personal and business accounts, so you won’t have to pay anything except commissions for currency exchange rates, additional services, and payment processing.
