Square vs. PayPal: Differences, pros and cons in 2024

In comparing Square and PayPal, both credit card processing services provide easy setups and similar pricing structures. However, there are distinct characteristics that make each stand out. For example, Square provides industry-specific plans and flexible point-of-sale (POS) solutions, whereas PayPal offers a wide range of digital payment options. 

Learn more about how these companies match up in terms of cost, customer support and system features.

Square vs. PayPal: Quick overview

Square and PayPal are two of the most prominent payment platforms businesses use to receive money. Both offer various tools, including POS systems, online payments and invoicing, to help merchants efficiently manage their profits. 

While Square is proficient at processing in-person credit card transactions, PayPal excels at facilitating virtual payments. The following comparison will help you determine which is best suited for your business. 

Pricing and fees

Verdict: Tie

Square pricing and fees

Square uses a flat-rate pricing model for credit card processing where merchants are charged a fixed amount per transaction with no monthly fees. Businesses that are set up with Square’s general POS system will pay:

• 2.6% plus $0.10 for in-person transactions.
• 2.9% plus $0.30 for online payments.
• 3.5% plus $0.15 for manually keyed-in charges.

The company doesn’t have chargeback fees, and all Square accounts come with:

• Fraud protection. 
• A point-of-sale app. 
• A card reader.
• Encrypted payments. 
• Dispute management.

Additionally, Square offers subscription plans specifically designed for retailers, restaurants and appointment-based businesses. These include extra features that give merchants more flexibility in processing recurring payments. The base plan is free, while the Plus plan begins at $29 a month, depending on your business type. Under the Premium plan, businesses receive a custom rate. 

PayPal pricing and fees

PayPal charges merchants a flat fee with every transaction as well, but the company’s processing rates can vary widely depending on what method is used to make the purchase, how much the payment is and the customer’s location. In general, businesses are charged:

• 2.59% plus $0.49 for online transactions.
• 2.29% plus $0.09 for in-person transactions.
• 3.49% plus $0.49 for manually entered payments.

PayPal also provides the option for merchants to participate in international transactions. This requires an additional 1.5% fee plus a fixed rate that’s set according to the currency being received. Also notable is PayPal’s $20 chargeback fee for disputed transactions in the U.S. Other rates vary by country.

Hardware features

Winner: Square

Square has a number of hardware products available to help merchants process customer transactions as well as various kits that offer a complete point-of-sale setup. PayPal takes a more simplistic approach with its POS equipment, providing just a couple of device options that accept payment. 

Square hardware features

Square readers connect to a smartphone or tablet, giving businesses the ability to take payment from any location. The magstripe reader works for credit card swipes, and the first one is free with sign-up. There’s also a Square reader designed for contactless and chip payments, starting at $49 per device. Both are secure and deliver quick money transfers. 

The Square terminal presents an all-in-one solution for processing payments and printing receipts. These devices can be customized with software tailored to different kinds of businesses. The Square register is a fully integrated POS system that supports faster checkout, flexible payments and automated record keeping with two-display functionality. 

PayPal hardware features

The PayPal mobile card reader can accept either swipe or contactless transactions. It seamlessly pairs with the company’s POS app to process payments in seconds. These devices are $29 for the first one and $79 for each additional one. 

With a starting price of $199, PayPal’s point-of-sale terminal has the app built right in and offers portability so merchants can conduct business on the go. 

PayPal also has various accessories merchants may purchase to create a POS system that’s better suited to their needs. These include barcode scanners, receipt printers, cash drawers and card reader docks.

Software features

Winner: Square

Square and PayPal have comparable software capabilities, with both offering free mobile POS apps. However, Square has more customization possibilities for expanding businesses, whereas PayPal tends to be stronger in online and international payment processing.

Square software features

Square’s POS software falls in line with the company’s simple-to-use business model. It supports in-person and online transactions once integrated with any of the hardware devices available. Along with accepting payments, the software allows merchants to streamline their operations by centralizing sales data, managing orders and inventory and handling staff schedules. 

There are also several add-on features merchants may include in their software and options designed specifically to benefit restaurants, retail and appointment-based businesses. Square’s software can’t be used outside of the U.S., Canada, Australia, Japan, the United Kingdom, Republic of Ireland, France or Spain.

PayPal software features

PayPal’s POS software offers more basic functionality. After downloading, it will turn any smart device into a portable payment terminal, and it provides the tools to carry out fundamental business operations. Merchants can accept a variety of payment methods, access detailed sales records, evaluate inventory, take care of staff scheduling and process refunds. 

Where PayPal stands out is in its ability to handle international transactions from a long list of countries. 

Customer service

Winner: Tie

Square and PayPal customers are provided with several ways to reach out for help or ask questions.

Square customer service

Square’s customer support is available by phone, email, live chat with a virtual assistant or human representative and social media. Merchants can connect to a representative Monday through Friday from 6 a.m. to 6 p.m. Pacific Time, which means it could be difficult to resolve issues that arise outside of these hours. 

Square only scores around one star out of five on customer reviews on the BBB. Common complaints on the company’s profile refer to problems with holding funds and account deactivation. 

PayPal customer service

PayPal provides customer support by phone, through instant messaging and in its resolution center. Businesses can also get assistance online from other PayPal users in community forums. Agents are also available to take calls Monday through Sunday from 6 a.m. to 6 p.m. Pacific Time.

On the BBB website, customer reviews rate the company around 1 star out of 5. Complaints are frequently due to account limitations. 

Final verdict

Winner: Square

Overall, Square has a slight edge over PayPal with its industry-specific POS systems and a comprehensive selection of hardware equipment. It also allows merchants to continue processing transactions offline and offers an array of features to help businesses run more efficiently and improve the whole customer experience. 

However, when it comes to e-commerce and international payments, there are advantages to using PayPal.

Who is Square best for?

Square is a favorable choice for brick-and-mortar businesses, especially start-ups since it’s easy to set up and navigate. Additionally, the company’s extensive suite of POS options, various platform integrations and add-ons are better suited to accommodate in-person transactions. 

Who is PayPal best for?

PayPal generally makes more sense for online merchants, as the company accepts a wide range of digital payment methods and supports international currencies. With its lower transaction fees, PayPal is also a good fit for low-volume businesses.

Frequently asked questions (FAQs)

Which is better, Square or PayPal?

Square and PayPal both offer key features that are important in the credit card processing industry. Thus, which is better will depend on the type of business and where it’s located. Square has dedicated POS software for certain industries but is only equipped to handle limited international currencies. On the other hand, PayPal makes it simple to send and receive money internationally, but its POS systems are more rudimentary.

Is Square cheaper than PayPal?

At 2.29% plus $0.09 compared to 2.6% plus $0.10 for swiped payments, PayPal’s processing fees are marginally cheaper than Square’s. However, PayPal does have a chargeback fee, whereas Square does not. Aside from these factors, merchants must consider any hardware purchases and software add-ons they may require to fulfill their needs.

Do I need a business bank account to use Square or PayPal?

Square does not require that customers have a business bank account to accept payments. The only requirement is a transactional bank account that’s capable of receiving transfers and withdrawing funds to support potential refunds and chargebacks.

Though it’s recommended, small business owners and entrepreneurs don’t have to use a business bank account to complete transactions through PayPal. Only corporations and LLCs must open one.

How can I choose the best credit card processing company for my business?

There are a few important considerations to take into account when choosing a credit card processing company. First, think about how your business operates. 

• Are the majority of your transactions done in person or online? 
• How many payments do you expect to process in a month? 
• What kind of payment methods do you accept? 
• Are you viewed as high-risk? 

All of these factors will help determine which company is capable of meeting your needs. 

You should also compare fees and other costs, research each provider’s security and fraud prevention tactics and review customer feedback.