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In the world of payment processing, Square and PayPal are two powerhouse names that almost need no introduction. Whether your business is brick-and-mortar, an online store, or a mix of both, the two offer reliable solutions for accepting payments from anyone and anywhere.
But let’s take a closer look at the pros and cons of both options, so you have a better understanding before making a decision on your payment processor.
And before reading our comparison, how about taking a look at Wise Business? With Wise, you can send and receive payments in over 70 countries at exchange rates big banks can’t compete with—and you can save up to 19x on fees.
|📝 Table of contents|
To start, both PayPal and Square offer card readers for in-store sales.
PayPal calls their POS and card reader product PayPal Here and offers a range of card reading devices. The lowest-cost option is the chip and swipe reader, which is free for new PayPal Here accounts and $24.99 otherwise.¹ But if you want to take a step up and add contactless payments, they offer the PayPal Chip & Tap reader at $59.99.²
With Square, you have many card reader options to choose from based on the needs of your customer base, but the Square reader for contactless and chip is the low-cost solution for small businesses at $49. If you want to take a step up, they offer their Square Terminal at $299.¹
To compare and contrast, we’ll look at the two mid-range options offered at a similar price: the Square Reader for contactless and chip and the PayPal Chip & Tap reader.
The key difference between these readers is that the PayPal Chip & Tap reader also accepts swipe payments, whereas the Square Reader for contactless and chip does not. For magnetic stripe customers, Square users will need to use a small, backup swipe reader, which is free when you sign up.
Last and most important, these mid-range readers will not work independently. Both devices require that you connect—via Bluetooth— to a smartphone or tablet that has their payment processing applications installed.
To take a payment, simply enter the amount or select a product from your preloaded product library and then select the card payment option. From there, the app will process the payment via Wi-Fi or over a phone network. If your internet is down, both services offer an offline mode, so you can take a payment and process it later.
For processing fees, Square and PayPal have a lot of similarities. They both offer their services with $0 monthly fees and charge the same or similar transaction fees for online sales and swipe, chip, and keyed-in transactions.
However, it’s important to note that Square does charge an additional 10 cents on top of the percentage fee for contactless and chip transactions.
The biggest differences in fees are with processing international payments and on chargebacks. For a breakdown of all the fees, let’s have a look at this table:
|Online transaction fee||2.9% + 30¢¹¹||2.59% - 3.5%, depending on payment type⁸|
|Currency conversion fee||Not available||Fixed fee per currency +, 4.00% currency conversion fee (or such other amount as may be disclosed to you during the transaction)⁸|
|Fees for swipe, contactless and chip transactions||2.6% + 10¢¹¹||2.7 %⁸|
|Fees for keyed-in transactions||3.5 % + 15¢¹¹||3.5 % + 49¢⁸|
|International card fee||$0¹¹||1.5% (waived for American Express payments)⁸|
|International payment fee||Not available||1.5% international card fee (waived for American Express payments) + fixed fee per currency +, 4.00% currency conversion fee (or such other amount as may be disclosed to you during the transaction)⁸|
|Chargeback fee||$0⁶||Fixed fee according to currency ($20 for USD)⁸|
Currently, Square is available in the US, Canada, Japan, Australia, and the United Kingdom. However, your account and the currency in which you process payments is locked to the country where you open the account.⁴
Also, cross-border payments are not allowed—meaning you can process debit cards and credit cards from other countries when in your Square account’s active country, but you cannot take payments while traveling abroad.⁵ And Square has no fees associated with chargebacks.⁶
On the other hand, PayPal charges a fixed fee on chargebacks based on the currency—currently $20 in the US.⁷
With PayPal, you’re free to accept other currencies and process payments while traveling, but there’s a catch. PayPal charges a fixed fee per currency plus a 3-4% currency conversion fee, or another amount disclosed to you during the transaction.⁸ Those fees can really start to add up if you’re processing a lot of international payments.
|If you'd like to save on hefty international transfer fees, how about trying out Wise Business? You can receive payments in multiple currencies without those high recipient or conversion fees. Plus, you can convert and move money at the real exchange rate.|
Let’s face it, at some point you’re going to need help to complete a payment or troubleshoot with a card reader. So the quality of customer service and support is a huge factor when weighing these two credit card processing services.
Square Customer Support options:
- Online Help Center - Square offers an online help center that covers a variety of topics from basic to advanced issues
- Social media support account - @sqsupportca is available, but typically they’ll send a direct message with the same information offered at the help center or on a community forum.
- Phone and email support - Square offers email and phone support, but you’ll need to use your customer code to access the phone support.
- Community forum - Square has solutions on their community forum from Square staff and other customers.
PayPal Customer Support options:
- Online Help Center - PayPal also has an online help center with extensive FAQs and guides to help you work through issues and setup.
- Social media support account - @askpaypal is available for support, but it’s like Square in that you’ll get a direct message steering you to information available elsewhere.
- Phone and email support - Phone support is available, but definitely try the online help center or community forum before reaching out.
- Community forum - PayPal also offers a community forum which is comprehensive and full of answers from staff and users.
With card readers, fees, and customer service and support broken down, let’s lay everything out with all the positives and negatives, so you can make an informed decision.
- No doubt, the Square POS system is very easy to use, and it’s application comes with a lot of excellent features. Their pricing model is both transparent and affordable. And while it won’t fit every business model, for most small businesses, Square is a great choice.
- The company and its applications are versatile. And for a company that started out offering only mobile strip readers, their compatibility with different business models has certainly expanded. They even offer free developer tools, a basic website builder, and social media integrations on their payments platform.
- While PayPal offers a micropayments plan, this is not available with Square. If your business deals with a high volume of microtransactions—usually less than $10—then PayPal is the only viable option.
- Also, Square falls short when it comes to international payments. They do not offer cross-border payments or the ability to accept payments in currencies outside of the country where you opened the account.
- If you need to sell internationally, PayPal has a huge advantage over Square. PayPal accepts ecommerce payments from most currencies—with fees—so you have the ability to establish your business in other markets, and reap the benefits of going global.
- Speaking of global, PayPal is also a globally recognized institution for payment processing, and the strength of their brand transfers organically to your business. When customers see the PayPal button on your site, it’s a brand they trust, and it says that the checkout process will be secure.
- Unless your item is covered by the PayPal Seller Protection Policy, PayPal will charge a chargeback fee of $20. Their protection policy has a lot of rules tied to it, so if you’re going with PayPal, be sure to familiarize yourself with the policy. Otherwise, you may find yourself paying out every time a customer asks for a chargeback. Keep in mind, that as of April 13, 2020 PayPal will extend their protection policy to intangible items like digital goods.¹⁰
- Also, even though PayPal accepts international payments, they charge an international card fee along with other currency conversion fees. So if you take your business global, you’ll be paying out additional transaction fees to PayPal with every transaction.
It’s hard to say which company is better. Square is very easy to use and has a lot of great features and integrations. Plus, their fees are very straightforward and transparent. But there’s the issue of establishing your business on the international market, and their policy towards micropayments can be a dealbreaker if that’s the core of your business.
PayPal, on the other hand, does accept international currencies which can help you expand your business. And their brand is globally recognized, which can put any security concerns about a transaction at ease and give your business clout.
Ultimately, it depends on what you need the services for. If your business deals mainly in domestic transfers, there isn’t much difference between the two. For international cards, Square doesn’t charge a fee and PayPal does.
However, international payments are not available with Square, and you can’t receive money in a different currency. And while PayPal does take other currencies, the fees can start to add up very quickly as shown in the table above.
- Get an IBAN, routing number, sort code and more—within your one account.
- Pay 1,000 people at once—all without without hefty transfer fees.
- Receive international payments without high recipient or conversion fees.
- Pay invoices in 70+ currencies and save up to 19x on fees.
It takes just a few minutes to open an account—join Wise Business and take advantage of its perks today!
Yes! Though PayPal has an advantage on ecommerce with their international options, both companies offer card reading and online payment solutions built for small to mid-range businesses.
No. Square only charges fees based on transactions. Their fees are transparent, and there are no monthly fees.¹¹
Yes. Square offers Square Secure with every account which offers fraud monitoring and fraud experts who will reach out if they see suspicious activity. Also, Square does not charge a chargeback fee when a customer disputes a charge.¹²
Yes. Square is a legitimate company offering secure payment processing services for businesses. They’re registered with the BBB and listed on the New York Stock Exchange with the symbol SQ.
- Square - Card Readers
- PayPal - Credit Card Readers
- PayPal - Card Readers
- Square - Can I accept multiple currencies with Square?
- Square - International availability
- Square - Chargeback 101
- PayPal FAQ - What to do with a chargeback?
- PayPal - Merchant Fees
- PayPal FAQ - How can I update my payment preferences for micropayments?
- PayPal FAQ - What is the Payment Protection Policy and what items aren’t covered?
- Square - Fees and Payments FAQ
- Square - Square Secure
All sources checked on 26 March 2021
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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