Paypal Vs Square Payments Features
One of the more intriguing services offered by Square is the Square Market, an online marketplace where Square merchants can establish a store profile and sell their products online for a rate of 2.75% per transaction. Although these online stores are fairly simple in layout, they may be a very desirable option for merchants who simply want to make their products available online rather than fully commit to an e-commerce operation. PayPal does not offer a comparable service at this time, although it does offer solutions for already established e-commerce merchants through various service packages. At this time, Square wins this category for offering a free online store with easy setup and transparent pricing.
Founded in February of 2009, Square (squareup.com, square.com) has seen tremendous growth in a very short amount of time. Square is best known for its square-shaped card reader and accompanying mobile app for smart devices. In addition to the mobile reader and app, Square also offers Square Register (a cloud-based POS system), Square Wallet (a mobile payment app for customers), Square Cash (a direct person-to-person cash transfer service), and Square Market (an online marketplace for Square-enabled merchants). In this article, these additional features will be assessed from a merchant’s perspective.
It is common within the industry for credit card processors to establish cash reserves as a defense against chargebacks or fraud, but these policies can sometimes cause confusion among merchants. Until November 2013, Square’s policy was to withhold all keyed-in payments above $2,002 in any rolling seven-day period for up to 30 days. The company has since discontinued this policy, stating that there is no limit for all transaction types and deposit amounts. PayPal currently has a policy that is similar to Square’s previous policy, but with a slightly higher limit of $2,500. Both processors also freeze large payments that have been flagged as suspicious according to their own internal algorithms. Both companies reserve the right to hold funds for much longer periods (up to 180 days) if transactions meet certain undisclosed risk factors.
Both the Square Wallet and the PayPal mobile payments app provide a free mobile wallet service to users. On the customer’s end, there’s very little distinguishing one service from the other, except for the fact that Square Wallet links to a customer’s credit card while the PayPal app can link to a customer’s PayPal account, credit card, debit card, or bank account. Both Square Wallet and PayPal are making inroads among merchants and gaining popularity, as Square recently signed a POS agreement with all Starbucks locations and PayPal continues to push its PayPal-linked payment card. Merchants will want to pay careful attention to the growth of both services before deciding to offer one or the other in their stores, but PayPal gets the nod for now due to its name recognition and wider array of payment options for customers.
PayPal’s cash transfer service, mobile wallet app, and point-of-sale solution are reliable services for merchants and customers alike, but they lack the innovation and ease of use offered by comparable Square services.
Square and PayPal both offer service plans with zero monthly fees, so merchants can sign up for either service without facing any recurring costs. The potential monthly costs, though, vary depending on what additional services a merchant is interested in.
However, Square takes a slight edge in overall transaction fees with its Square Market service, which allows Square merchants to sell their products online for the same flat rate of 2.75% per transaction. PayPal’s online transaction rates, on the other hand, run from 2.2% plus $0.30 to 2.9% plus $0.30 depending on a merchant’s monthly sales volume. PayPal also includes monthly fees of $5 and $30 for its Advanced and Pro plans, respectively. For e-commerce merchants who process under $10,000 in monthly sales, Square Market is likely to be the cheaper online payments option, while PayPal is the better choice for larger businesses that can afford to pay a monthly fee and need more e-commerce features.
This article will help you compare Square and PayPal head-to-head in order to determine which of these merchant account providers offers a more competitive overall credit card acceptance package. The categories listed below will take into account all services and prices offered by both companies, including, but not limited to, the Square card reader and PayPal Here mobile processing apps. For individual reviews of each company, be sure to check out our Square review and our PayPal review.
PayPal and Square both offer straightforward onscreen guidance during installation and use of all of their payment services. Both companies’ customer-facing features include customizable prompts and simple instructions, largely sparing merchants the trouble of explaining these services to customers. Although the setup for PayPal’s traditional online payment option is slightly more involved than a simple “download and go” model, its business solutions generally require nothing more than a PayPal account for the merchant or customer. Square gets the nod in this category, though, for its simple, sleek card reader and its no-frills Register application, which is clearly designed with an eye toward easy setup and use. Convenient sign-up and installation is without a doubt the primary innovation offered by Square, and it’s enough to beat PayPal in this case.
The Square Register POS app offers analytics and payment reports, a customizable layout, loyalty programs, Square Wallet compatibility, multiple user support, and limited hardware compatibility (for receipt printers, etc.). PayPal Here offers check scanning, integration with multiple POS systems, and PayPal Mobile compatibility. Despite the greater potential compatibility and customer support offered by PayPal Here, Square appears to supply the more robust, ambitious free point-of-sale app at this time. PayPal may be a better option in Square in this section depending on which specialty POS systems merchants choose to integrate it with.
PayPal wins this section due to the company’s support for a wider range of devices and processing options. PayPal also offers live support options and appears to have better hardware and software reliability based on user reviews of both services.
Neither Square nor PayPal charges an early termination fee for canceling service, but both providers may hold any unprocessed payments at the time of cancellation to ensure that the merchant’s contractual obligations are met. According to the companies’ cancellation policies, these withheld funds should be returned to the merchant in accordance with the merchant’s payout schedule and there are complaints filed against both Square and PayPal alleging that these holds can last much longer. However, Square is showing a much higher number of such complaints and the issue is seemingly exacerbated by the company’s lack of a live customer support department. Although both companies offer free cancellation, the potential fund holding times with a Square merchant account appear to be much higher.
When it comes to the full suite of services and pricing models offered by both companies, PayPal is a better overall merchant services provider than Square as of this article. Thanks to its live customer support, wider range of services, time in the industry, and offerings for larger businesses, PayPal has avoided many of the problems that plague Square.
So you are trying to choose between Square and PayPal. Which has the better pricing, customer service, device compatibility, and features for accepting card payments? Figuring all of this out can be a daunting task (this article took over a week to put together), but don’t worry, we’ve done the research and broken it down for you.
PayPal’s per-transaction costs vary depending on a merchant’s monthly sales volume and the method of payment acceptance. Any payments swiped through the PayPal Here reader will receive the 2.7% rate, while online payments are scaled as follows:
Both Square and PayPal offer mobile card readers that are fairly reliable, well-designed, and reportedly secure. However, Square is showing far more complaints about service interruptions and incompatibility issues than PayPal is, despite the fact that PayPal is integrated in a wider variety of machines. Square’s complaint totals are almost certainly inflated by the fact that the company offers no customer support to quickly resolve device malfunctions, but this only makes service interruptions a more serious potential problem for Square users.