Square Vs PayPal: Which is Best For Your Small Business?

Ruling the Online payment processing industry, both Square and Paypal have marked their grandeur in providing the most efficient payment processing features. Paypal vs Square, If you have narrowed down to these two smart payment processing options, let's make it easier for you to choose between the two in this read. Although the pricing of both the payment processors falls in the same range, there are fine-tuned granulated differences you might want to know before finalizing your choice.

We know you have numerous questions revolving in your head, like what is PayPal and Square, what are their features, how much does PayPal charge, PayPal Billing Agreement, what are Square reader fees, which among the two is best for my business, etc. We will answer all your queries in this read.

Comparison: Square vs Paypal

Square:

Square is one of the leading Merchant Service Aggregators, Square is a mobile payment company providing financial services, hardware payment products, and a set of business software to businesses of all sizes. They market the most meticulous POS (point of sale) services for free, which is extensively used by millions of businesses for their everyday undertakings.

Square works best for small businesses that run a cash flow of not more than $10,000 per month. Also, they do not charge any fixed monthly costs and offer a free POS system, making it the best payment processing solution for small businesses.

PayPal:

Paypal for business on the other hand is primarily a payment processor that provides online payment service, where businesses and individuals can transfer money electronically. You can simply make or receive online payments (local & abroad), do online shopping and auctions at eBay or other equivalent websites, and safely donate or receive donations. In simple words, you can exchange cash with anybody across the globe.

The sender can transfer funds to anyone with an e-mail address, the recipient need not have an account in Paypal. Although to receive the payment successfully, the recipient needs to have their email address associated with Paypal. They offer free payment processing services to all the transactions made in the US and basic PayPal accounts across the globe. Additional charges are applied only on international transactions, sellers, and PayPal credit card processing.

Also, you can link your personal or business bank accounts and credit cards with Paypal for easy addition and withdrawal of cash. PayPal for business also provides PayPal debit cards to make online and offline purchases. You can also use the card in the ATM to withdraw money or request a check in the mail.

Pre-Requisites (Initial steps getting started)

Pre-Requisites for Square:

Before getting started with Square Transactions, you will need a few information and details well in hand to create an account in Square like:

• A valid Email Address

• Last 4 digits of your Social Security Number (for confirmation purpose only)

• Home Address

• Shipping Address

• Legal Name

• Phone number

• Bank account number (to link for direct bank transactions)

You will NOT need the following details, therefore the payment processor is safe to use.

• Bank statements

• Revenue Proof

• Your full social security number

• Tax documents

• Credit check

The following procedure to set up your Square account may seem overwhelming, but the process will only take you 10 minutes.

Steps to Create a Free Square Account

• Head to the official Square sign up page and click on the “Sign Up With Square” button. You will need to enter your email address, create a password, and choose your country. Check on the terms and conditions box, notifying them that you agree with all the terms and conditions associated with Square. It is advised to read the terms and policy thoroughly before lending permission. Finally, hit 'sign up'. 

• You will be directed to a new page, you need to select the user type- individual, business, charity, or a religious organization.

• Type your business name. Note that the same name will be showcased on all your transaction receipts.

• Choose your plan on processing payments- mobile, online, and square invoice. You can choose all of the above as well.

• Enter your choices on the services you would like to be offered. You can tick any number of options.

• For each of the services, you are provided with a 30-day free trial of Square.

• Now head to the 'let's talk about you' page to fill in your legal information. Enter the last four digits of your social security number or ITIN, legal name, business address, and phone number. And then click 'continue'.

• You will be directed to a Square setup form page, where you need to select your Square credit card reader to receive payments in person.

• Next, choose the type of magstripe Square credit card reader according to its compatibility, and what works best for your business setup. 

• Once you choose the magstripe reader, Square will automatically guide you with multiple retailers selling the product via mail. Also, free shipping!

• Enter your shipping address and click 'order'.Square sends you an email with the order details immediately.

• Congratulations, you have completed your Square Account setup process successfully.

 Pre-Requisites for PayPal

To get started with your Paypal Integration you need to undergo a four-step process:

• Creating a Paypal account

• Creating a REST API app

• API credentials

• Creating sandbox accounts (testing)

1)Before creating a PayPal account, choose what type of account you wish to create. There are mainly two types of PayPal accounts: Developers account and Merchant account.

• Developer account – Here you need to fill in your country of residence and email address. Also, it allows sandbox API calls only.

• Merchant account – In addition to the above-mentioned details, it requires a few more steps. This provides many more features. To get your API credentials, you need to have a merchant account.

Steps to create a PayPal Developer account:

• Log in to the Paypal Dashboard.

• Click 'Sign Up'.

• Enter your country of residence, email address, and password.

• Click 'Create Account'.

Steps to create a PayPal Merchant account:

If you have a developer account, you can upgrade it to a Merchant account.

• Log in to the Paypal Dashboard.

• Select 'My Account'.

• Under Business Account, select 'Upgrade'.

• Complete the online form.

Likewise, complete the following procedures including Creating a REST API app, API credentials, and Creating sandbox accounts (testing) to successfully integrate your payments with Paypal.

Pricing Plans: PayPal vs Square

Both the payment processors offer extensive payment features at affordable prices. Although there are minute differences in the services, yet with similar pricing.

Square charges

Square provides robust payment features along with hardware device services at a reasonable price. Square charges a nill amount for most of the basic features.

• No charges for registering cash, gift certificate payments, and checks.

• Square charges 2.6% + $0.10 for contactless payments like Swiped/tapped/dipped payments.

• Manually entered card on File or Virtual Terminal Keyed Entry fee is 3.5% + $0.15.

• Free Chargebacks 

• $0 for Virtual Terminals.

• 2.9% + $0.30 for Invoice and Online Square transactions.

• Recurring Square Invoicing/Card On File/square transaction fee is charged about 3.5% + $0.15 per transaction.

Additional Square Reader fees-

Square for Retail:

They charge $60/month per register per location and for additional registers, they charge $20/month, and 2.5% + $0.10 per transaction.

Square for Restaurants:

They charge $60/month, per location and for additional registers $40/month, and 2.6% + $0.10 per transaction.

Square Appointments:

Their fee structure for individual plans is completely free, and 2.6% + $0.10 per transaction; two to five employees $50/month, 2.5% + $0.10 per transaction; six to ten employees $90/month, and 2.5% + $0.10 per transaction.PayPal Fees | How much does PayPal Charge?

Well known for its payment processing feature, Paypal is a cost-friendly payment processor picked by small businesses and individuals, especially for international payments.

PayPal Billing Agreement

•  2.7% for Swiped/dipped and tapped payments. 

• 2.9% + $0.30 for Online & Invoice Transactions.

• Hosted Payment Page & Virtual Terminal(VT) fee is $30/month.

• Nonprofit Discount Rates are 2.2% + $0.30, for online transactions.

• 2.9% + $0.30 for recurring subscriptions.

• $20 for chargebacks.

• Bulk Payouts are 2% chargeable.

• Micropayments Plan is usually 5% + $0.05 or a fixed fee based on your currency.

• Manually entered Virtual Terminal Entry fee Or Card On File fee is 3.1% + $0.30 plus $30/month for VT use.

As mentioned above, both Square and Paypal provide the same range of pricing for credit card processing in free apps. Also, both do not charge a single penny for regular transaction services. Although any amount exceeding the minimum transaction amount is chargeable every month. In both processors, you can add services according to your business requirement.

While Paypal's primary focus revolves around integration and transaction, they have not designed any Paypal fees for such extensive services, whereas, Square has developed an extensive range of services and has Square reader fees designed likewise.

Features: Paypal vs Square

Compatibility: Square and PayPal

If you run an offline store and offline store, your payment processor ought to have additional software functionality and a compatible hardware system.

Both Square POS and Paypal are compatible with Android and IOS tablets and phones. You can further enhance the experience by purchasing an additional number of terminals according to the requirement.

When compared, Square provides more robust options when it comes to hardware devices. The contactless and chip reader from Square costs you 49$ only. You can also add a free Square credit card reader (magstripe reader) from Square.

If we talk about compatible hardware from Square, they have Square Stand and Square Register as well. PayPal has not introduced any such comprehensive devices in the market yet.

Aforesaid, Square gives free magstripe readers to their customers, whereas Paypal charges $15 for each magstripe reader.

PayPal offers a comprehensive system like Miura M010. But it requires an external POS system like Vend POS to work with. Square on the other hand comes with an inbuilt POS.

In addition to this, both Square POS and Paypal Here offer cash drawers, bar scanners, and receipt printers which can be attached to them for extra functionality.

Ease of Use: Square vs Paypal

Before jumping into any payment processor purchase, it is very important to analyze and understand your business requirements. For example, if you need a magstripe reader connected to your POS for offline payments or if you need current checkout services or if you need android and IOS app credit card payments, and so on.

Considering the ease of use, both Paypal and Square are designed with simplicity and are user-friendly. All the components and services required are available in the store, irrespective of the device format (desktop or tablet).

Currently Square is one of the best choices for beginners if you plan to conquer the online and offline world.

However, on the other hand, Paypal offers a super easy payment processing system.

PayPal can be a great alternative to Square in terms of payment processing. However, the payment process for the end-users is simpler in Square in comparison with Paypal.

Mobile POS and Payments | Square and PayPal

Talking about the POS app differences, Square has a striking back-end dashboard with BTS and payment access. It also has inventory management and offline mode. These tools aid in tracking payments and quantities in the app and also notifies you with low stock alerts and sweeps in bulk load inventories. In addition to this, the customer database in Square enables you to link purchases with a particular customer who later links up with Square Loyalty and Square Marketing. They offer premium add-ons, free marketing templates, notes space, habit tracker, card file storage.

PayPal Here does not offer any of these features, however, it lets you create sub-user accounts for free, whereas, in Square the same feature is chargeable.

Robust Business tools | Square and Paypal

PayPal does not provide extensive business tools like Square but offers ready-made third-party integrations. It also provides you with a set of tools to create customized and quirky payment buttons for your conversions. You can create donation buttons as well.

Square on the other hand offers multiple extensive ecommerce tools like a free website and Square Checkout.

Reporting Features: PayPal and Square

Both Paypal and Square are providing enhanced reporting features with timely detailed summary submissions specified by payment type, salesperson, number of items, etc.

However, Square sports additional features like most used modifiers to orders. They also provide special gift cards to track all the online payment activities from the Dashboard.

Apart from these, both Square and Paypal have multiple awesome features in common like:

• Mobile POS app is compatible with almost all devices for free.

• Support Keyed transaction 

• Cash transactions are recorded automatically.

• Multiple discounts are applicable

• Well built Item library with product descriptions, images, and variants.

• Receipt printing

• Email/SMS receipts

• Invoicing

• Recurring billing

• All credit cards are accepted

• Barcodes and SKUs available

• Full and partial refunds are issued

• Cash drawer support

Policies: PayPal & Square

Chargebacks

Square offers free chargebacks, but they ensure to withhold the payments until the dispute is resolved. PayPal offers similar chargebacks, but they charge $20 in addition to that.

Refund

Square processes free Refunds, but Paypal charges the original transaction fee (applicable currency + cross border fee). In both cases, the receiver is paid with a full refund amount including the transaction fee kept aside for the original payment.

Payments

During the online payment process Square offers easy customization in the checkout process, Paypal offers similar features if opted for their Paypal payments Pro plan ($30/month).

As mentioned earlier, Paypal requires additional linking of developer tools, whereas, in Square, the tools are inbuilt in the processing system for free.

Customer Support

Sadly both the payment processors are not well known for their customer service and support.

Square Customer Support

• Help Center: it offers a basic yet detailed online helpdesk. 

• Social Media: the support system is quite active on Twitter and they have provided detailed information about Square on their Youtube channel.

• Phone & Email Support: Customers can contact the support team via phone and emails.

• Seller Community Forum: This is a separate hub where customers can contact, exchange tips, and learn with other Square Users.

PayPal Customer Support

• PayPal Hub Home: Here the customers can get answers to the most frequently asked questions.

• Social Media: They are active and quite responsive on Facebook and Twitter.

• Phone & Email Support: They claim to provide decent customer support via phone and email. However, it's advised to rely on Paypal Help Center.

• PayPal Community Forums: Like Square, Paypal also has a hub where all the PayPal users can share and help each other regarding Paypal.

Pros and Cons

Like every service provider, both Square and PayPal come with their unique baggage of positives and negatives. We have listed a few major pros and cons of each payment processor to make your decision easier.

Square: Pros

• Extensive features and free add-ons

• This is a one-stop destination for all payments system

• Free eCommerce tools

• Best for small businesses

• Easy to use and set up

• Square Invoicing

Square: Cons

• Unlike Paypal International, Square is not desirable for international sellers

• Not suitable for high-risk industries

• They have major account stability issues

PayPal: Pros

• Highly trusted by consumers

• Reasonable pricing

• PayPal international is suitable for international sellers

• Extensive integrations

• Robust developer tools

• Paypal credit card processing

PayPal: Cons

• They have major account stability issues too.

• Not desirable for high-risk industries

• Customer support is not so great.

To Summarize, 

It's wise to incorporate payment systems according to your business needs. If you want a single payment system with multiple business features (like loyalty, inventory reporting, email marketing, etc), 

a free basic website, easy add-ons, and integrations, etc, Square will be your ideal option. And if your business requires international transactions, exclusive brand recognition, micropayment plans, etc, then Paypal is your go-to payment processor.

Both the processing platforms do not clasp you with tedious contracts, hence they are extremely flexible when it comes to shifting your payment processor. Therefore know your business needs before finalizing your payment processor.

If, you're looking for an automation tool that would import all of your
Square or PayPal transactions to QuickBooks Online, in one place, then you ought to try SaasAnt PayTraQer, A versatile automation tool for QuickBooks.
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Also read:

Square Xero Integration

If you want to know more on how to verify PayPal, Read - How to Verify a PayPal Account?