Square vs PayPal
March 15, 2023
If you’re in the market for a merchant account, you’ll want to know the differences between Square vs PayPal. It’s no surprise to learn that there are several major payment processing contenders, but these two are often on the top of the list. Ever since the massive growth of online shopping and the increasing trend of e-commerce startups, Square and PayPal have taken the payments stage.
But how do you choose which payment processor is the right fit for your particular business? In this article, we will break down the differences between two very popular payment service companies: Square vs PayPal.
Square vs PayPal: Online Fees & Charges
As major payment processing companies, both PayPal and Square have similar standard features. But there are slight differences when it comes to fees and charges for online payments.
Historically speaking, PayPal has been a pioneer in the online payments industry and Square is the innovator of mobile card readers. They offer very similar products and services now, but there are still differences between the two payment processors. Transaction fees are similar, however, the various card readers and terminals offered are aesthetically and functionally distinguishable from one another.
| Square | PayPal | |
|---|---|---|
| Company Logo |  |  |
| Setup Fee | Free | Free |
| Monthly Fee | None | None |
| Transaction Fee | 2.9% + $0.30 per transaction | 2.9% + $0.30 per transaction |
| Currency Conversion Fee | Does not support cross country transactions | 2.5% added to the exchange rate |
| Chargebacks | $0 | $20 |
| Refunds | $0 | Returns the 2.9% fee, but not the $0.30 fee |
Square vs PayPal: Payment Processing
Not all companies sell their products and services online. Some business owners have forgone ecommerce and specifically need card-present options for their payment processing.
One major difference between PayPal’s Chip and Tap Reader and Square’s Reader is support for magstripe. PayPal has a magstripe built into their reader, while you need a different accessory to swipe magstripes using Square. The reader for Square is smaller than PayPayl’s.
Square and PayPal Card Readers
The card readers for both payment processors will not work unless they connect to a supported smartphone or tablet. You then connect to either the Square Point-of-Sale (POS) app or PayPal Dashboard app.
Next, the transactions process through the WiFi or data network of the connected device. A unique quality of Square is that their software has an offline mode, which allows a card payment to swipe and transmit without an internet connection. The software collects the information when you are offline and transmits the next time you connect to the internet.
Card Present Comparison of Square vs PayPal
| Square | PayPal | |
|---|---|---|
| Point of Sale Product Image |  |  |
| Card Reader | - First Reader is free ($10 for each additional one) - $49 for Contactless and Chip Reader | - $24.99 for Chip and Swipe Reader - $79.99 for Chip and Tap + Charging Stand |
| Card Present Transaction Fee | 2.6% + $0.10 per US card swipe | 2.7% per US card swipe |
| Terminal | - $169 for Contactless and Chip Stand - $299 for Portable POS Terminal - $799 for Register POS | - $129.00 for Heckler Design Windfall Stand - $189.90 for Studio Proper Swivel Stand |
| Monthly Fees | None | None |
| Cards and Digital Wallets Accepted | VISA, Mastercard, American Express, Discover, JCB, Interac | VISA, Mastercard, Discover, American Express, JCB, Diner's Club, EnRoute |
| International Payments | Cross-border card payments are unsupported | +1.5% per transaction |
Did Square or PayPal Freeze Your Account
If Square or PayPal freezes your account, customers will not be able to purchase items on your site. Be sure to research alternative options for merchant accounts if this happens to you.
Most likely, you’re a high risk merchant. This term is used by Square and PayPal to describe companies that have certain brand and industry risks associated with their products. For example, subscription billing companies tend to have higher amounts of chargebacks.
Payment Processor Options
You can resolve these issues by finding a chargeback mitigation company. Moreover, another type of high risk issue involves regulatory or legal restrictions.
Let’s say you have an online CBD shop, and you’ve been processing payments for a few months. After a while, PayPal might flag your account because they recognize your growing business is in an industry that goes against their Terms and Conditions.
Don’t worry, there are companies out there, like PayKings, who can help you get your account open fast, and keep your company operational.
Solutions For High Risk Merchants
If you know you’re involved in a high risk industry, be sure to look up merchant providers that are willing to onboard your company.
At PayKings, we quickly walk you through the process of opening a new account. And we have the leniencies you’ll need to process payments online. If you consider the differences between Square vs PayPal, you may also want to look into other options that are more appropriate for your business.
March 15, 2023 | Merchants | Dustin