Square vs. Paypal: Which is Best in 2024?

Square and PayPal are two popular names in payment processing. Both are great for quickly launching startups and accepting a wide variety of payment methods at a low cost. Not surprisingly, these similarities often result in a recurring Square vs PayPal debate over which is best for different business types.    

Below we take a closer look at Square and PayPal, how they work, what sets them apart, and when to choose one over the other.

Square and PayPal are just two of the many POS software providers in the industry. Check out other POS systems options in our list.

In this article…

Square: Best all-in-one POS solution for small businesses

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Pros

• Instant merchant account approval
• Free industry-specific POS software
• No monthly fee for payment processing
• Free basic website builder
• Waived chargeback fee of up to $250/month

Cons

• Payments exclusive to Square POS
• Flat-rate fees are not the cheapest
• Account stability issues

Our Rating: 4.28/5

Key features

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Fully integrated POS and payments solution: Square’s POS system comes with a built-in payment processor, Square Payments. There is no extra monthly cost for using the service, just the transaction processing fees. 

Payment methods: Square allows you to accept credit cards, ACH, and digital wallet payments. It supports multiple payment services such as invoicing, recurring billing, and MOTO payments with its virtual terminal. Square has its own buy now, pay later (BNPL) service (Square AfterPay) and a peer-to-peer payment service (CashApp) that can process cryptocurrency payments.  

Native ecommerce platform: Square provides its own ecommerce platform with a free plan that allows users to create and personalize their business website. The website builder uses a drag-and-drop function that makes it easy to complete without any coding knowledge 

Omnichannel payments: Square Payments is fully integrated into the POS system so sales and customer data are accessible online, on mobile and in-store.

Our ratings

Pricing:  4.25/5

Hardware:  4.5/5

Payment software: 4.17/5

Support and reliability: 3.75/5

User experience:  4.38/5

User scores:  4.67/5

Square is an all-in-one POS solution popular among businesses for its affordability and ease of setup. The system includes a proprietary payment processing service built into the POS software with a variety of card and digital payment methods ready to use after signup. With its free basic software plan, Square users can set up a POS and start accepting payments within the day with little to no upfront cost. This makes Square the ideal payment processor for startups and businesses on a budget.

PayPal: Best for businesses looking for versatile online payments

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Pros

• Compatible with most ecommerce platforms
• Fast merchant account approval
• Proprietary POS software
• Instant access to funds
• Trusted consumer brand

Cons

• Complex fee structure
• Poor customer support
• Account stability issues

Our Rating: 4.12/5

Key features

Payment methods: PayPal allows users to accept credit card, digital wallet, and eCheck payments and supports invoicing, cross border, and virtual terminals transactions. Like Square, PayPal also has its own BNPL, Pay in 4, and peer-to-peer payment service, Venmo. 

Checkout integrations: The PayPal Checkout is a customizable payment platform that users can add to their website as the main checkout service or as an additional payment method. PayPal Checkout can also be used without a website with a payment link that can be embedded on emails, digital invoices, and social media platforms.

Trusted consumer brand: PayPal is a trusted brand among online consumers and is well known for boosting conversions on websites with a PayPal checkout.

Proprietary POS software: PayPal Zettle is PayPal’s free mobile POS software for in-person sales. The system can be used on a tablet and paired with the Zettle mobile card reader for an in-store setup or a smartphone for mobile sales.

Our ratings

Pricing: 4.25/5

Hardware: 4/5

Payment software: 4.17/5

Support and reliability: 3.33/5

User experience: 4.38/5

User scores: 4.60/5

PayPal is a pioneer and a trusted name in the payments industry. Like Square, PayPal is easy to set up and can let users start accepting payments within the day. PayPal’s online checkout service can be easily added to any ecommerce platform, and having the PayPal brand is proven for boosting conversions. At present, there are around 400 million active consumers with a PayPal account who readily use the service to make purchases on websites that offer a PayPal checkout. This means having the same number of opportunities to make a sale with a PayPal payment option on your checkout.

How are Square and PayPal different?

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Square and PayPal are both small business favorites mainly for their ease of set up, free merchant account, and pay-as-you-go plan. That said, the two are popular for different reasons: 

Square is the go-to provider for all-in-one POS with built-in payment services. The system is easy to set up because all the components are already integrated; even the hardware is configured and ready to use out of the box. The downside to this arrangement is that all the features only work with other Square products, so business growth is limited to Square’s capabilities.

PayPal, on the other hand, is well known as an online payment services provider. While PayPal also offers POS software, the system is simpler and lacks the versatile features of Square’s POS. However, PayPal’s advantage is that its payment services are designed to work with most online ecommerce platforms and some POS systems. This way users can choose and replace e-commerce and POS platforms based on their business needs without giving up their PayPal account. 

The contrast between Square and PayPal’s POS flexibility also makes the two providers cater slightly to two different types of small businesses. Square’s all-in-one setup makes it ideal for startups making steady/regular sales. Meanwhile, PayPal’s basic mobile POS is a better choice for occasional/seasonal sales, such as those made to tourists.  

For large, enterprise-level businesses, Square focuses more on better in-house POS software capabilities combined with volume discounts for sales greater than $250,000/year. PayPal on the other hand, offers support for wider payment processing functionalities such as global payments, payment optimization and orchestration, and network compliance.

Square vs PayPal: Pricing

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For pricing, it’s important that we first make a clear comparison of Square and PayPal’s monthly account fees. 

Square’s monthly account fee is for its POS system. The built-in payment services feature is free, so users only have to pay the transaction fees every month. Meanwhile, PayPal’s monthly account fee is for its payment services. The mobile POS app Zettle is free but optional, and there are no available upgrades. 

This distinction, again, highlights the difference between PayPal vs Square target users. It also helps to better compare the two for cost-effectiveness. 

PayPal clearly offers slightly cheaper rates. However, unlike Square, PayPal’s payment processing fees are complex and include additional monthly charges for features, such as $30/month for using its virtual terminal and $25/month when using PayPal checkout with a third-party payment processor. 

Between the two, only Square users can upgrade to a paid industry-specific (retail, restaurant, appointments) software plan. Only with Square can users get a volume discount, which, again, makes it the better choice for small businesses with steady sales.

Square vs PayPal: Payment services

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Square and PayPal are equally outstanding in terms of payment services, so the choice ultimately boils down to which provider matches a user’s business needs better.

For example, PayPal offers a more flexible payment gateway than Square because PayPal’s online checkout service can be integrated with most ecommerce platforms and POS systems like Hike and Clover. While Square supports independent payment links that can be added to invoices, social media, and instant messaging platforms, Square’s online checkout only works with the Square ecommerce platform.

Users who often process microtransactions, eChecks, and those who need to accept cross-border and cryptocurrency payments will do better with PayPal. Meanwhile, Square is the better choice for those in the healthcare services and users planning to sell some form of CBD products via Square’s CBD program.

Square vs PayPal: Point of sale

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Square is obviously miles ahead of PayPal in both POS software and hardware. While both Square and PayPal offer a free POS software plan, Square can be upgraded to a paid plan that offers industry-specific features. It also comes with optional products such as payroll, marketing, and loyalty functionalities. 

Square’s POS hardware is also significantly more extensive than that of PayPal, as it offers both mobile and in-store countertop setup. Each proprietary Square countertop hardware comes with a built-in credit card reader/payment terminal.

PayPal, on the other hand, offers a mobile POS app, which can be downloaded onto a smart device and paired with PayPal’s mobile credit card reader. The POS software itself supports simple inventory management along with employee and customer management, as well as reporting tools.

That said, PayPal offers better in-person rates and great discounts for the first mobile credit card reader, making it more ideal than Square for businesses looking for a simple mobile POS setup.

Square vs PayPal: Customer engagement

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Building a customer base and keeping them engaged is a key factor for growing businesses. Square and PayPal’s customer engagement capabilities are different. Square has a more rounded set of features that allows users to connect with in-person and online customers, while PayPal excels at keeping online customers engaged. 

Both Square and PayPal offer multiple platforms for selling and accepting payments—on a website, on social media, via instant messaging, online invoicing, and in-person via mobile or in-store. However, only Square offers a fully integrated omnichannel selling feature for small businesses, primarily because it has a more defined in-person POS functionalities to work with its ecommerce platform.

Meanwhile, PayPal’s checkout services can be integrated with a couple of POS systems (Hike and Clover), but PayPal’s POS software, Zettle, does not integrate with online stores that use PayPal checkout. Omnichannel features are available for larger businesses through developer coding and integrations.

Square also offers native loyalty management and rewards programs, while PayPal requires third-party integrations. Either option will require users to pay extra, so users looking for the easiest setup may prefer Square, but those that have a preferred third-party loyalty and rewards platform may opt for PayPal’s integrations. 

Square vs PayPal: Risk management

Square and PayPal offer similar industry-standard risk management features. Both are Payment Card Industry (PCI) Level 1 compliant payment platforms equipped with machine-learning fraud protection tools and customizable filters.  

Square Risk Manager is free to use and provides users with an array of customizable fraud monitoring and prevention tools. This includes 3D secure that routes the customer data to the card issuer for identity confirmation and a block list that can be used to flag future payments from suspicious card information, emails, and IP addresses. 

Square also provides a chargeback management platform where users can get notified and respond to customer chargeback claims from the merchant dashboard. 

PayPal, meanwhile, offers two risk management options. The basic fraud protection is free and is designed to stop potentially fraudulent transactions based on a set of fraud filters such as purchase price and item ceiling, shipping and billing mismatch, AVS and CVV fails, IP address velocity, and more. 

Advanced fraud protection that costs $10/month includes additional filters for international payments, USPS address validation, IP and email service provider validation, account number velocity, geolocation, and chargeback management platform.

Clearly, PayPal provides more custom fraud protection filters that are ideal for midsize to large businesses, particularly those that accept cross-border payments. However, these advanced tools, including chargeback management, cost an additional monthly fee. 

Square vs PayPal: Ease of use

Both Square and PayPal are popular for their ease of use, earning an identical user experience score of 4.38/5 in our evaluation. Both offer easy sign-up (with no merchant account application process required), easy setup (where users can start accepting payments in minutes), and easy-to-use interfaces. 

What makes Square stand out, however, is that most of the features needed to run a business is available within the Square ecosystem, and offers hardware that can be readily used out of the box. Omnichannel sales is automatic for users intending to sell in-store, online, and on mobile.  

On the other hand, PayPal readily integrates with most online platforms, and its mobile app can accept more alternative payment methods. This makes PayPal a far better option for users selling online and on mobile. 

Which is best?

Square and PayPal are both exceptional business platforms that are similar in a lot of ways but also distinct in some features. 

Square’s all-in-one platform makes it easy to launch any business, but the exclusivity of its features can limit the system’s ability to grow and keep up with business requirements as it grows.

PayPal’s versatile payment services platform gives users the flexibility to expand their business online; however, its POS software is basic and can be easily left behind by businesses with a growing demand for better POS functions. 

Making your choice

When choosing between PayPal vs Square, it’s important to first consider your type of business. If your goal is to create and expand online sales, with or without an e-commerce website, then PayPal will likely be the right choice. However, if you have a brick-and-mortar business that requires a quick and cost-effective POS setup, then Square is the better option.

FAQs

About the author

Anna is a retail software expert and senior staff writer for Fit Small Business. She specializes in POS and payments technology and has evaluated dozens of software for more than six years. She began her career in PayPal customer service, resolving account and technical issues. She also spent 4 years handling business and financial management with hands-on experience in setting up payroll and banking automation for a US Risk Mitigation company based in Singapore.