PayPal vs Square – Which is Best for Your Business

As a merchant, you’ve probably heard of PayPal and Square before. These two are considered credit card processing giants and they have a lot to offer in terms of features. But which one of these should you use for your business? Let this short guide help you decide.

What makes PayPal and Square Different?

The main difference between these two processors is that PayPal is better suited for online transactions while Square offers unmatched in-person transactions. Don’t get us wrong. Both payment processors offer merchant accounts and in-store and online payments.

However, most eCommerce businesses lean towards PayPal due to its global presence while physical stores enjoy getting Squared due to the numerous POS equipment they receive after joining.

Which is better for Credit Card Processing?

There’s no telling for sure which of the two payment processors is the best. It all comes down to the type of business you’re running. What we’ll tell you, however, is that Square is the better option for small businesses that accept in-person transactions. This is because it was specifically created to help businesses accept in-store payments easily and quickly.

If you’re planning on accepting online payments only, choose PayPal and you’ll see firsthand how your sales will increase. Remember that this processor is extremely popular among consumers, which makes it a go-to for many people purchasing products online.

Which is better for POS?

While both processors offer a wide range of POS hardware and software, it’s clear that Square takes the lead here. It offers contactless readers, mobile magstripe readers, registers, and terminals. There are also in-house POS software features that’ll make accepting payments twice as easier.

This comfort isn’t offered by its fierce competitor. When you create your merchant accounts at PayPal, you’ll get card readers and terminals, but additional POS hardware must be purchased separately through Zettle. The same goes for POS software. This payment processor offers POS software in the form of integrations with third parties such as Shopify.

Fees and Pricing of PayPal and Square

Credit card processing can’t take place without a few fees here and there. So, at the moment know that both processors don’t charge monthly fees but instead they use the interchange plus pricing. They also accept all major cards.

Squared in-person transactions carry a fee of 2.6% + 10 cents while PayPal’s sits roughly at 2.29% + 9 cents. As for keyed transactions, Square charges 3.5% + 15 cents while its competitor charges 3.49% + 9 cents. Lastly, Squared online transaction fees start from around 2.9% + 30 cents and PayPal’s is 3.49% + 49 cents.

Pros and Cons of PayPal

The following are the benefits you’ll gain from using this payment processor.

  • Setting up your merchant account is fast and easy with only a few requirements needed.
  • They work globally and accept over 20 different types of currency including cryptocurrency.
  • Offers extensive integrations with Stripe, Shopify, QuickBooks, eBay, and WooCommerce.
  • Offers fantastic discounts for non-profit organizations.

Here are the drawbacks.

Levies chargebacks and payments from foreign customers.

  • Customer support is inconsistent.
  • Has less variety of POS hardware, making it a poor choice for stores accepting in-person payments.
  • Doesn’t have automatic money withdrawal. You’ll have to manually request the funds’ transfer from your merchant account to your bank account.
  • A virtual terminal for accepting online payments requires a fee.

Pros and Cons of Square

Partnering with Square comes with the following benefits.

  • Has separate pricing for restaurants, retail, and non-profits.
  • New merchants get their first card reader for free.
  • Includes customer and employee management tools.
  • Doesn’t have chargeback fees and fees for accepting international credit cards.
  • Offers an automatic withdrawal process that directly transfers money from your merchant account to your bank account without the need for you to manually request the transfer.
  • Has numerous in-house tools which reduce the need for integration with third-party software.

The negatives of this processor include:

  • Available in only a few countries and accepts only 5 types of currencies.
  • Not the best choice for large enterprises with high transaction volumes.
  • Extremely strict fraud prevention tools that may result in merchant accounts being frozen and funds being withheld.
  • High-risk businesses are often not accepted.


You’ve read our guide and now it’s up to you to decide which credit card processor you’ll choose between the two. It won’t be easy, so you have to weigh everything and come up with a decision that will benefit both you and your business.

Do you want to get ‘Squared’ or ‘PayPalled’? Make a decision and begin accepting credit card payments today!