October 21, 2019

Square vs PayPal


Small businesses must accept credit cards to compete in today's business world. Is Square safer than PayPal for payment processing? And how do they compare in pricing? Read on to find out.

Square and PayPal are two popular names in small business credit card processing. What does each company offer? Keep reading to see which one provides what your business needs.

Payment Processing Features

Top Choice: Square

Both Square and PayPal offer multi-channel options for e-commerce, in-store, and mobile sales. But Square has more overall benefits.

Mobile Payment Processing
The Square mobile card reader allows businesses to accept credit cards with a phone or tablet even without an internet connection. You can send receipts to the buyer's email address, have access to analytics, and automate tipping as well.

PayPal Here, their mPOS system, turns your smartphone or tablet into a card reader. It calculates taxes, automatically adds tips and applies discounts, manages inventory, authorizes multiple employee use, and runs sales reports.

The PayPal Here card reader normally costs $24.99, but is offered free through 2019.

Virtual Terminal
Signing into your Square app turns your computer into a virtual terminal. You can enter your customer's credit card information into the system or buy a Square Reader for magstripe if you have an Apple computer or Chromebook.

PayPal allows merchants to accept over-the-phone or faxed orders by logging into their PayPal account and manually entering the customer's credit card information.

E-Commerce
With Square Online Store, you can create an e-commerce store with everything you need including order fulfillment, shipping and tax calculations, and integrated multi-channel reporting.

With a PayPal Checkout account, you can add the PayPal button to your existing website to accept PayPal, PayPal CREDIT, or Venmo payments. You can also sign up for a PayPal Standard account to accept PayPal, Venmo, PayPal CREDIT and all major credit cards online.

Pricing

Top Choice: PayPal (barely)

PayPal and Square both offer free accounts, charging you only for each card payment that you accept. But PayPal's fees are slightly lower in some cases.

PayPal charges:

  • 2.7% for each mobile, chip, or swiped payment

  • 3.5% plus $0.15 per keyed-in transaction

Square charges:

  • 2.75% for each mobile, chip, or swiped payment; Square offers a free magstripe card reader, but upgrading the chip reader costs $49

  • 3.5% plus $0.15 for any keyed-in transactions; if you buy the Square terminal, your processing fees drop to 2.6% plus $.010 per transaction

Square and PayPal both offer online payment options and charge 2.9% plus $0.30 per transaction.

Types of Payments Accepted

Top Choice: Square

Square allows you to accept debit cards, prepaid cards, reward cards, and all major credit cards including Visa, Mastercard, Discover, and American Express. All cards have the same processing rates based on the payment method.

PayPal accepts a limited number of payment types. With PayPal Here, PayPal Standard, or PayPal Pro, you can accept all major credit and debit cards, PayPal, Venmo, and PayPal CREDIT. If you use the PayPal Checkout account, though, you can only accept PayPal, Venmo, or PayPal CREDIT.

Which PayPal account should I get?

  • PayPal Here
    Mobile POS similar to Square's mobile card reader

  • PayPal Standard
    Accept payments online through your website

  • PayPal Checkout
    PayPal button for your website rather than a full POS

  • PayPal Pro
    Same benefits as PayPal Standard, but you must self-host your checkout page, including managing the PCI compliance for a fee of $30 per month

Invoice Options

Top Choice: Tie

Invoicing options let you set up subscriptions, recurring charges, or send a single one-off invoice as necessary. Square and PayPal offer free invoicing services with 2.9% plus $0.30 per payment received.

Both services also offer effective invoicing options and features, including:

  • Customized invoices
  • Collect payment online
  • Track payment status
  • Send automated payment reminders
  • Create and send invoices from any device

Hardware

Top Choice: Square

If you accept in-person payments, you need a card reader or other hardware to accept the payment and ring up the sale. Square and PayPal differ greatly in this area but Square offers more substantial options.

These include:

  • Use Square Reader for magstripe swipe, chip, and contactless payments on phone or tablet

  • Use Square Terminal for swipe, chip, or contactless payments and printed receipts

  • Use Square Register for payment processing and a powerful all-in-one POS

PayPal's only hardware options are card readers:

  • Use PayPal Mobile Card Reader for swipe payments

  • Use PayPal Chip and Swipe Reader for swipe or chip payments

  • Use PayPal Chip and Tap plus Charging Stand for swipe, chip, and contactless payments

POS and Third-Party Integrations

Top Choice: Square

You can purchase third-party integrations for both Square and PayPal that turn your credit card processing system into a multi-functional POS system. But Square accounts come with a free POS app that offers inventory management, CRM, analytics, and employee management.

The platform also offers other tools for a monthly fee including payroll, marketing, and rewards programs. If Square doesn't have a feature you need, look to their marketplace.

You can find numerous options for third-party apps, including standard accounting, customer management, inventory, and employee management needs. They also offer restaurant, retail, and healthcare management POS integrations.

A few of their most popular options are:

  • Bookeo
  • GoCentral Appointments
  • WuFoo
  • Vend
  • Wix
  • TouchBistro

PayPal doesn't offer POS services with its accounts—you must find a third-party integration that suits your POS system needs. PayPal partners with a number of third-party POS systems that offer accounting, CRM, and inventory specific to your industry, such as retail or restaurant POS systems.

PayPal's most popular third-party integrations include:

  • Vend
  • Lavu
  • Talech
  • BrightPearl
  • TouchBistro

Payment Frequency

Top Choice: PayPal

PayPal offers instant access to the funds in your PayPal account. Use your funds within PayPal or request withdraws as soon as the money hits your account. If you withdraw the funds, the transfer does take 1–2 business days.

Square offers three payout options:

  • Standard
    Funds undergo a 36-hour hold at which point they are transferred to your bank account. This usually takes one to two business days.

  • Custom
    You can customize your close of business time to ensure that you receive all of the day's payments in one deposit within 1–2 business days (according to your hours).

  • Square Card
    The Square Card is tied to your Square balance, giving you instant access to your funds without the wait time or the fees. Keep in mind that the transfer could take 1–2 business days.

Contract Length
Neither PayPal nor Square require a contract, so you won't pay early termination fees. While you can cancel either service whenever you want, it can be a hassle to change payment processors, so make sure to do your research before choosing your processor.

PCI Compliance

Top Choice: Tie

If you accept credit cards, you are responsible for protecting your customer's sensitive information by using secure systems and proper credit card handling procedures.

Both Square and PayPal handle PCI compliance for you. As long as you use Square for all aspects of credit card processing, including processing cards, transmitting data, and storing card numbers, they handle the PCI compliance for you.

PayPal manages the PCI compliance unless you opt for the PayPal Pro program. This self-hosted e-commerce platform puts the PCI compliance on your shoulders.

Customer Service

Top Choice: Tie

Neither Square nor PayPal offer stellar customer service options for its customers. They both lean toward self-service support, providing an online knowledge center for you to browse for answers.

Both Square and PayPal also offer a community forum. But if you want phone support, you have to jump through a few hoops.

Square requires you to "chat" with its Support Robot first. If the Robot can't answer your question, you'll be directed to phone support.

Square's customer support is available 6 AM to 6 PM PT or you can email them 24/7. PayPal offers a phone number (6 AM–6 PM PT) or email address for support after you log into your account.

Square phone support: 1-800-700-6000
PayPal phone support: 1-888-221-1161 (for U.S. customers only)

Bottom Line

Square works well for brick-and-mortar stores that accept credit cards and need a native point-of-sale system. PayPal excels in online payment processing for e-commerce stores.

But both systems can handle multi-channel operations. That means you can choose one based on your current operations and later expand into other channels.

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