Square vs PayPal | Our Full Comparison of the Two Payment Processors

PayPal and Square are both solid payment processing options for businesses, but how can you choose between them? It really comes down to your personal needs and business setup. Read on to get the information you need to make the best decision for your business. 

What Is Square?

Essentially, Square is a mobile payment company, but it’s really so much more than that. Square was founded just over ten years ago solely as a mobile payment company that provided small businesses the ability to take card payments using a mobile card reader that can be inserted into a smartphone. This gave businesses the opportunity to take card payments without the need for something archaic like a cash register. 

Square grew over the years, went public in 2015, and acquired the web-hosting service Weebly in 2018. Since then, Square has been able to offer tons of beneficial features and tools that businesses can use to integrate their operations fully.

Square on a phone

Square is still ideal for small businesses as it does not require an application or approval process and charges no monthly fees with no minimum requirements. Instead, its in-person payment processing fees are 2.6% + $0.10 and its eCommerce payment processing fees are 2.9% + $0.30. It provides you with a free magstripe card reader and charges $49 for a chip and contactless card reader. It makes deposits in one to two business days, or instantly for a 1.5% fee. 

Overall, Square is the perfect choice for small businesses with sales volumes of less than $10,000 a month thanks to its pricing setup and additional features.

Pros and Cons of Using Square

If you’re looking for a payment processor that can truly do it all, look no further than Square. Square has come a long way since its inception and is definitely an option you should consider. Here are the pros and cons to help you make the best decision for your business. 

Pros of using Square:

  • Square is considered a full-featured multichannel point of sale system with tons of available features and free add-ons that you can use to take full advantage of the system and customize it to meet your unique business needs. 

  • Square is easy to use and set up. You definitely don’t have to be tech-savvy to learn how to use this platform. 

  • Square is ideal for lower-volume merchants due to its flexibility that allows you to sell just about anywhere -- online, in-person, you name it!

Cons of using Square:

  • Square is not suitable for international sellers due to limited capabilities in this arena. 

  • Square is also not suitable for large businesses that are constantly conducting business. 

  • Square has the potential for frozen accounts and occasionally has account stability issues.

Square logo

What Is PayPal?

PayPal has been in the mobile payments game for a long time. Throughout that time, it has made a name for itself and is considered to be one of the most well-known platforms out there. It allows you to pay for items online using a secure account with information like your bank account, credit card, or debit card. It can also be set as your default payment method within your browser or device so that all online transactions are conducted through PayPal.

PayPal also allows you to send money in addition to receiving it. From there, you can either keep it in your PayPal account or transfer it to your bank account within a few days. A PayPal standard account is completely free, but if you’re a business, you’re going to want a Pro account that will cost you $30 a month. In addition to that monthly fee, PayPal charges 2.7% for in-person payment processing and 2.9% + $0.30 for eCommerce payment processing. 

PayPal also offers card readers for businesses in need, and they charge $24.99 for a chip/swipe reader and $79.99 for a chip/contactless reader. PayPal is ideal for eCommerce businesses looking for an integrative platform that customers trust.

Paypal on a phone

Pros and Cons of Using PayPal

PayPal used to be the king of payment processors; is that still true in 2021? We’ll let you make that determination for yourself based on the pros and cons.

Pros of using PayPal:

  • PayPal has a lot of name recognition and is trusted by consumers to be a safe payment platform as a result. In an age where information and identity stealing runs rampant, you want your customers to feel comfortable using your payment processor. 

  • PayPal can be used internationally as it is a worldwide platform that has recognition all over the globe. 

  • PayPal is easily integrated into online platforms like your website. When a customer clicks to buy, they will be immediately taken to PayPal’s website to complete the purchase -- making the entire experience a breeze. 

  • PayPal payments are immediately deposited into your PayPal account with no delay. This is a great feature that allows you to take full advantage of your funds. 

  • PayPal has predictable and affordable pricing so that you can accurately estimate your costs. PayPal also offers discounted processing fees for nonprofits. 

Cons of using PayPal:

  • PayPal has had some complaints when it comes to customer support issues. Since this is an important feature of any payment processor, you should definitely keep this in mind while making your decision. 

  • While PayPal can be used internationally, it does charge extra fees for international-issued credit and debit cards. If a large amount of your business comes from overseas, you may want to look elsewhere. 

  • PayPal has a limited point of sale features that make it difficult for you to manage your business within the platform. 

  • PayPal experiences account stability issues and have an increased risk for frozen accounts as a result of its use. 

Paypal on a phone with a laptop

How to Choose the Right Payment Processor for Your Business

With all this in mind, how can you choose the right payment processor for your business? While every business is different, here are some suggestions to help you make your choice:

  • If you’re looking for more than just a payment processor, then Square is going to get you the most bang for your buck with its additional features. 

  • If you conduct the in-person business of less than $10,000 a month, then Square is going to be your best bet. 

  • If you conduct business solely online as an eCommerce company, then PayPal is going to be the ideal option. 

  • If your customers are all over the world and you need an international payment processor, PayPal is the system to choose from. 

Payment Processing Alternatives to Consider

But Square and PayPal aren’t the only options to choose from as explained in our 'Best PayPal Alternative' post. In fact, there are countless options out there that may be better suited for your business. Let’s go over some of the best payment processing alternatives so that you can truly find the right fit:

  • Stripe: This platform features amazing developer tools that you can integrate into your website. It’s also a worldwide platform that can be used in North America, the EU, and Asia. Stripe (see Square Vs. Stripe post) boasts flat-rate and affordable pricing at just 2.90% + $0.30 per transaction with no monthly fees or monthly minimums.

  • PaymentCloud: This platform offers a free credit card terminal and shopping cart integration. Its customer support is raved about by customers. This platform doesn’t offer flat-rate pricing but instead uses tiered-pricing, monthly minimums, and initial contracts. PaymentCloud is ideal for high-risk businesses.

  • Fattmerchant: This platform offers great features like QuickBooks integration, customizable shopping carts, and next-day funding options. Its pricing is subscription-based with a flat processing fee, making it ideal for high-volume businesses that don’t want to pay a certain percentage on top of a set processing fee.

Fattmerchant
  • Dharma Merchant Services: This platform is an all-in-one service that combines the features of a payment gateway and a virtual terminal into a single processor. Dharma Merchant is the best option for business-to-business merchants with high volumes, thanks to its interchange-plus pricing format that doesn’t include annual fees or monthly minimums. 

  • CDGcommerce: This platform may be basic, but it definitely gets the job done quickly and easily. It features a free payment gateway and virtual terminal with a variety of different pricing schemes depending on your volume. CDGcommerce’s customer service is consistently excellent.

  • Helcim: This platform combines a ton of different features to make it an amazing all-in-one platform. It offers interchange-plus processing rates and monthly billing services without the need for long-term contracts. 

Also, before deciding on one of these paying options, you can consult with legal professionals from the numerous  formation services and registered agents

Trusted Business Formation Services

Swyft Filings

Swyft Filings is a reliable company that offers budget-friendly payment packages that come with amazing features. Despite only doing business since 2015, their 100% positive reviews are speaking for themselves.

BizFilings

With 20+ years of experience and an A+ rating with the BBB, BizFilings is an established online formation service. Their nifty BizComply online tool keeps track of any important filing dates and compliance deadlines. BizFilings will take you through the whole process with their on-going support. 

SunDoc Filings

When compared to other formation services, SunDoc Filings provides volume discounts for multiple states and entities and equally amazing customer support. However, its basic package lacks some important features and registered agent service fees are slightly higher than its competitors'.

Inc Authority

If you are looking for cheaper services then Inc Authority could be the one for you. Service that make Inc Authority stand out from the rest is tax planning consultation. Taxes are a vital aspect of the business, and you should ensure you comply.

My Corporation

If you want to use a service with amazing customer report, MyCorporation may be the best choice. It is also perfect if you want an annual report service. Otherwise, you may consider hiring competition that offer registered agent service in their packages at a lower price.

The Rundown on Payment Processors

With this information, you’re ready to make your decision and get swiping! At the end of the day, the choice is up to you. However, if you find that you need additional assistance or business advice with anything from payment processors to small business financing, feel free to reach out to us. 

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