Square vs. PayPal: Which Is Right for Your Business?

Square and PayPal are both well-known payment service providers, but they have distinct pros and cons.
Tina Orem
By Tina Orem 
Updated
Edited by Ryan Lane

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Square and PayPal are payment service providers, or PSPs, that help small businesses accept payments in person and online. PayPal may be better for small businesses with an international customer base, but if price is a priority for you, Square may be your winner.

Here's how the two companies compare.

Payment service providers give small businesses a way to accept online payments through a payment gateway and a merchant account. Here are some things to keep in mind as you shop for a PSP:

  • What kind of pricing structure do you want: interchange-plus, flat-rate or tiered. Of course, your industry, sales volume and priorities will influence your answer.

  • Whether you need an integrated POS system. If you’re selling online, this may be less important.

  • What is your industry? This may influence pricing and other options.

Square pros and cons at a glance

Pros

Transparent pricing.

Free version of its POS includes a lot of features.

Offers related services, such as payroll, that integrate with its POS system.

Cons

Can’t run on Windows devices.

Complex businesses might prefer a more specialized POS system.

PayPal pros and cons at a glance

Pros

One of the most commonly used payment processing platforms.

Easy to use and integrate with website hosts and shopping carts.

Transparent fixed fees in 25 currencies.

Cons

PayPal’s offerings are vast and can be difficult to grasp quickly.

Payment processing can be expensive for small purchases.

Not ideal for high-risk or high-volume businesses.

Square features

Square may be best known for its point-of-sale software and white devices plugged into checkout systems, but Square is also a payment service provider. It works with credit cards, debit cards, corporate cards, prepaid cards and reward cards.

Card payment acceptance with the Square app is available in the United States, Canada, Japan, Australia, Irish Republic, Spain, France and the United Kingdom. However, it doesn't support payment card processing in other U.S. territories, nor does it support cross-border card payments (i.e., you can't receive card transactions if you're outside the country where you activated your Square account).

Square integrates with Wix, BigCommerce, GoDaddy and other e-commerce platforms. The company's application programming interface also allows for customization. Businesses can also invoice customers digitally and take card payments without using the Square POS.

In addition to using its POS hardware systems for in-person payments, Square can process payments in three ways:

Online payments

Square offers online payment services that you can integrate into your online store or mobile app. You can also get a free e-commerce website, add pickup and delivery services, or sell on social media.

Remote payments

Square lets small businesses create and send digital invoices to customers, and those customers can then pay you with a card or by ACH. You can also send customers a link to pay by text or email.

Manual payments

If you need to accept payment over the phone and key the information in, you can do that with Square by either the Square app or by using the company's virtual terminal feature.

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NerdWallet rating 

5.0

/5
NerdWallet rating 

5.0

/5
NerdWallet rating 

5.0

/5

Payment processing fees 

0.40% + 8¢

plus interchange, in-person; 0.50% + 25¢ plus interchange, online.

Payment processing fees 

2.6% + 10¢

in-person; 2.9% + 30¢ online.

Payment processing fees 

2.7% + 5¢

in-person; 2.9% + 30¢ online.

Monthly fee 

$0

Monthly fee 

$0

Starts at $0/month for unlimited devices and locations.

Monthly fee 

$0

PayPal features

PayPal lets small businesses accept and process payments in person and online. It offers two payment gateway services: PayPal Payments Standard and PayPal Payments Pro. PayPal's services work with major e-commerce platforms such as BigCommerce, Wix and Shopify.

PayPal Payments Standard

This product may be best if you don't have coding experience or a developer on your team, as you'll simply need to copy and paste a line of code or integrate a plug-in with your shopping cart. Either option should take only 15 minutes to implement, according to PayPal's website.

PayPal Payments Pro

This is a customizable checkout solution that also provides access to a virtual terminal so you can accept credit cards online, by mobile or with devices that don't have an external card reader. Also, you can accept payments in 25 currencies from 200 countries, accept phone payments and get simplified payment card industry security standards.

Pricing: Square vs. PayPal

Both providers have transaction and other fees. Here's how they compare.

PayPal

Square

Monthly fees

  • $0 for standard service.

  • $5 for PayPal Payments Advanced.

  • $10 for Advanced Fraud Protection service, buyer authentication service or recurring billing service.

  • $19.95 for account monitoring service.

  • $30 for Payments Pro, Payments Pro Payflow, Virtual Terminal or recurring payment tool.

  • $0 for Square POS, Restaurant, Retail and Appointments Free plans.

  • $29 for Square Appointments Plus plan.

  • $60 for Square Restaurant Plus plan.

  • $69 for Square Appointments Premium plan.

  • $89 for Square Retail Plus plan.

  • $192 and up for Square Restaurant Essentials Bundle.

  • Custom pricing for Square Retail Premium plan.

Transaction fees

  • 2.29% plus 9 cents for in-person and QR code transactions.

  • 3.49% plus 9 cents for manual-entry card transactions.

  • 2.89% plus 49 cents for online card payments.

  • 2.99% plus 49 cents for invoicing (payment made with card).

  • 3.49% plus 49 cents for invoicing (payment made with PayPal).

  • Nonprofit organizations get a discounted rate.

  • For American Express cards, the transaction fee is 3.5%. International transactions in other currencies have different fees.

  • 2.6% plus 10 cents for in-person transactions.

  • 2.9% plus 30 cents for online transactions.

  • 3.5% plus 15 cents for manually keyed transactions.

  • 3.3% plus 30 cents for invoices.

  • These rates are for businesses that process less than $250,000 per year and have an average ticket size under $15. If your business is larger, Square will do custom pricing. Note that sometimes the custom rates are more than 2.6% plus 10 cents.

Other fees

  • Optional recurring billing services cost $10 per month.

  • Optional advanced Fraud Protection Services are $10 per month plus 5 cents per transaction.

  • Other fees, including chargeback fees and mobile card reader fees, are on PayPal’s merchant fees page.

  • Online invoices cost 2.75% per invoice.

  • Appointment prepayments run 2.9% plus 30 cents.

  • Manually entered transactions are 3.5% plus 15 cents per transaction.

Square vs. PayPal: Which PSP is right for your business?

Square may be your best option if you want customizable software at a relatively low price. But if a simple setup is more important, you may want to go with PayPal.

Best Payment Processing Companies
ProductPayment processing feesMonthly feeLearn more
Helcim

Helcim

NerdWallet Rating 
5.0
Learn more

on Helcim's website

0.40% + 8¢ 

plus interchange, in-person; 0.50% + 25¢ plus interchange, online.

$0 
Learn more

on Helcim's website

Square

Square

NerdWallet Rating 
5.0
Learn more

on Square's website

2.6% + 10¢ 

in-person; 2.9% + 30¢ online.

$0 

Starts at $0/month for unlimited devices and locations.

Learn more

on Square's website

Stripe

Stripe Payments

NerdWallet Rating 
5.0
Learn more

on Stripe's website

2.7% + 5¢ 

in-person; 2.9% + 30¢ online.

$0 
Learn more

on Stripe's website

Stax by Fattmerchant

Stax by Fattmerchant

NerdWallet Rating 
4.0
Learn more

on Stax by Fattmerchant's website

0% + $0.08 

Plus interchange

$99 

and up.

Learn more

on Stax by Fattmerchant's website