Leeron HooryContributor
Leeron is a New York-based writer with experience covering technology and politics. Her work has appeared in publications such as Quartz, the Village Voice, Gothamist, and Slate.
Rob WattsEditor
With over a decade of editorial experience, Rob Watts breaks down complex topics for small businesses that want to grow and succeed. His work has been featured in outlets such as Keypoint Intelligence, FitSmallBusiness and PCMag.
Leeron HooryContributor
Leeron is a New York-based writer with experience covering technology and politics. Her work has appeared in publications such as Quartz, the Village Voice, Gothamist, and Slate.
Contributor, Editor
Updated: Nov 24, 2023, 4:34pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
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Table of Contents
- Square vs. PayPal: At a Glance
- Square vs. PayPal: Credit Card Processing Comparison
- Square Vs. PayPal: POS Comparison
- Bottom Line
- Top Square and PayPal Alternatives
- Frequently Asked Questions (FAQs)
Show more
Square and PayPal are two of the most popular payment processing platforms for small business owners. While they both allow you to process payments and charge similar fees, they have key distinctions that will make a difference depending on your business. Square is better suited for in-person and mobile transactions, while PayPal is best suited for e-commerce and online payments. Which of these popular services should you use for your business? We broke them both down to help you decide.
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1
Stax
Free Trial
No
Offers
First Month Free
Pricing
$99 per month, 7 cents to 15 cents per transaction plus interchange rate
2
MerchantOne
Free Trial
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$0 Set up fee
Pricing
$6.95 per month, 0.29% to 1.99% per transaction
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Payment Depot
Free Trial
No
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First Month Free
Pricing
$79 per month, 7 to 15 cents per transaction plus interchange rate
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$0 Setup and Net Zero Processing Option available
Pricing
$7.95/month and Net Zero Processing Option or 0.35% per transaction
Square vs. PayPal: At a Glance
Overall, Square is best suited for in-person and mobile transactions while PayPal is a better fit for e-commerce businesses. Many people know Square as the small card reader extensions for a mobile device. Meanwhile, it’s hard to make an online purchase without coming across PayPal.
Square
4.8
Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.
Pricing structure
Flat rate
Monthly fee
$0
Processing fees
From 2.6% + 10 cents
Via partner site
Pricing structure
Flat rate
Monthly fee
$0
Processing fees
From 2.6% + 10 cents
Pros & Cons
- Multiple POS hardware options
- Best for in-store payments
- No chargeback fee
- Fewer options for international payment processing
- No 24/7 phone support
PayPal
3.2
Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.
Pricing structure
Flat rate
Monthly fee
$0
Processing fees
From 2.29% + 9 cents
Read Forbes' Review
Pricing structure
Flat rate
Monthly fee
$0
Processing fees
From 2.29% + 9 cents
Pros & Cons
- Accepts multiple forms of payment, including Venmo, PayPal and cryptocurrency
- Recognizable name customers trust
- Multiple e-commerce features
- Lacking POS features
- Extra fees for international credit cards
- $20 chargeback fee
Square vs. PayPal: Credit Card Processing Comparison
| Square | PayPal | |
|---|---|---|
| Swipe/Chip Transaction Fees | From 2.6% plus 10 cents per transaction | From 2.29% plus 9 cents per transaction |
| Keyed Transactions | From 3.50% plus 15 cents per transaction | From 3.49% plus fee of 9 cents |
| Customer Payment Options | Merchants can accept all major credit cards, Cash App, and prepayment options for appointments | Merchants can accept all major credit cards, Venmo, pay-later options and cryptocurrencies |
| Free Quote Online | No | No |
| Chargeback Fees | No fee | $20 |
| Refund Fees | No fee (when a merchant issues a refund, the customer receives their full payment and the merchant receives the transaction fee in return) | Customers receive the full cost of service, but the merchant does not receive the transaction fee in return |
| Software Integration | Acuity Scheduling, GoDaddy Websites and Marketing, Wix, WooCommerce, Jotform (and more) | WooCommerce, Magento, Wix, BigCommerce, GoDaddy |
| International Fees | No additional fees for international credit cards | Additional 1.50% for all commercial transactions plus fixed fee based on currency |
| Invoicing | Yes | Yes |
Square’s fee for swipe/chip transactions is 2.6% plus 10 cents per transaction while PayPal starts at 2.29% plus 9 cents and goes up depending on your package. Besides the difference in transaction fees, there are other variations in fees to be aware of. Keep in mind that PayPal charges a $20 fee for chargebacks, while Square does not. Additionally, PayPal charges an extra 1.50% for international transactions while Square does not. Finally, PayPal does not refund merchants the transaction fee when a customer issues a return, while Square does return the transaction fee to the merchant.
Regardless, PayPal is the leading company for e-commerce. The company offers more ways for customers to pay, including cryptocurrencies. Plus, customers recognize the PayPal name, which makes it more likely they will follow through with payment online.
Square Vs. PayPal: POS Comparison
| Square | PayPal | |
|---|---|---|
| Transaction Fees | No monthly fees; 2.6% plus 10 cents per transaction | No monthly fees. Card present transactions cost 2.29% plus 9 cents per transaction. Manual card entry transactions cost 3.49% plus 9 cents per transaction. |
| Customer Service | Live chat, knowledge base and blog, no 24/7 phone support | Live chat and knowledge base, no blog (24/7 phone support not specified) |
| Tip Management | Yes | Not specified |
| Software Integrations | SKU IQ, Linktree, Acuity Scheduling, GoDaddy Websites and Marketing, Wix, WooCommerce, JotForm (and more) | Quickbooks, SalesVu, WooCommerce, Big Commerce (and more) |
| Cost for Card Readers | First reader is free and each additional card reader is $10 | First card reader costs $29 and $79 for each additional device |
| Cost for Terminal | Starts at $299 | Starts at $249 |
| Built-In Payment Processing | Yes | Yes |
| Selection of Multiple Hardware | Yes | Yes (through Zettle, which it owns) |
| Read our Square Review | Read our PayPal Review |
In general, Square is a better option to accept in-person payments while PayPal is a better option for e-commerce and online payments. Both Square and PayPal were rated one of our top ten POS systems in 2024, but Square received a significantly higher score.
One of the biggest differences between these two companies’ POS systems is that Square offers more business tools, such as employee management, while PayPal’s features are limited to payment. Square has a feature to schedule appointments within the app so that you can integrate your calendar with your payment platform. Customers can book online and you can send them reminders through the app. The software also enables you to keep client credit cards on file and schedule prepayment before visits.
PayPal’s transaction fees are listed as lower for card-present transactions—2.29% plus 9 cents compared with $2.6% plus 10 cents—however, PayPal does have more additional fees that are less apparent and harder to account for (such as a $20 chargeback fee and additional fees to process international credit cards).
The first card reader Square gives you is free. After that, each additional card reader is $10. With PayPal, card readers cost $29 and $79 for each additional device. Square offers a tip management tool and both companies offer multiple options for software integration.
Bottom Line
Square is a better option for small businesses that focus on in-person transactions. If you plan to receive payments primarily online, PayPal will more likely suit your needs. Square offers business management tools as part of its POS system, while PayPal’s is simpler. Additionally, PayPal issues more fees than Square, such as a $20 chargeback fee and higher fees for international credit cards. However, there are advantages to using PayPal for an e-commerce store or for online payments. PayPal is able to accept a wider range of payment options (including PayPal) and the additional options may help boost sales.
Top Square and PayPal Alternatives
There are many excellent payment gateways on the market. The best fit for your business needs to strike a balance of affordability and scalability. Here are some of the best credit card processing companies that you may also want to consider.
| Company | Company - Logo | Forbes Advisor Rating | Forbes Advisor Rating | Pricing structure | Monthly fee | Processing fees | Learn More CTA text | Learn more CTA below text | LEARN MORE |
|---|---|---|---|---|---|---|---|---|---|
| Payment Depot |  | 4.7 |  | Subscription | $59 | 7 cents to 15 cents plus interchange | Learn More | Via Payment Depot's Website | |
 | 4.4 | | Flat rate | $0 | From 2.7% plus 5 cents | Learn More | Read Forbes' Review | ||
| Helcim |  | 4.3 |  | Flat rate | $0 | From 0.15% plus 6 cents | Learn More | Via Helcim's Website |
Frequently Asked Questions (FAQs)
What are Square and PayPal?
Square and PayPal both offer a variety of services but, at their core, they are credit card processing platforms. Their primary function is to securely verify customer funds and transfer payment to a merchant account, but they also offer additional features, such as platforms for online stores and physical POS hardware.
Who should use Square or PayPal?
Square is a great choice for small businesses that want to accept in-person payments. It offers free hardware that lets you make sales simply using your cell phone, with no monthly subscription fee. PayPal is excellent if you primarily operate online and need to be able to add payment options to an existing website or want to set up recurring donations for a nonprofit organization.
Which is cheaper; Square or PayPal?
PayPal has lower rates, starting at 2.29% plus 9 cents per transaction. Square’s fees are slightly higher at 2.6% plus 10 cents. But processing fees aren’t the only thing you need to consider; be sure to also factor in any hardware or software integrations you may require to meet the full scope of your needs.
Is Square a good credit card processing company?
Square was named one of the top 10 credit card processing companies in 2024. It is especially popular with small businesses because of its ease of use, free mobile card reader and lack of monthly fees.
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