Square Payments Or Paypal Which One To Buy
Square is renowned for the simplicity of its pricing: 2.75% per swiped transaction and 3.5% plus $0.15 per keyed-in transaction. That’s all there is to it; no monthly fees, setup fees, cancellation fees, or other bogus fees. Interestingly, though, PayPal Here slightly undercuts Square with a swiped rate of 2.7% and the same keyed-in rate as Square. When used in conjunction with the PayPal Payments Standard Pricing plan, PayPal Here also includes no other monthly costs.
As of this writing, our review of Square awards the company a “D” rating. Square is showing over 1,000 complaints online, and the Better Business Bureau is awarding it a “B+” rating based on 725 complaints filed in the last three years.
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.
Square Cash is a new service offered by Square that allows for free peer-to-peer fund transfers from an attached debit card. Like PayPal’s traditional transfer service, Square sends payment information via email and takes about one to two days to process. PayPal’s transfer service, perhaps the best-known service of its kind, allows for peer-to-peer transfers between PayPal accounts, linked bank accounts, credit cards, and debit cards. However, PayPal charges a fee of 2.9% plus $0.30 per transaction for debit and credit card transactions. Because of this, Square just barely wins this category. For users who simply want to send money to a friend or associate, Square makes this possible through a free debit card transfer. For users who don’t mind the extra setup necessary for a PayPal account or linked bank account, PayPal is also a good option for free cash transfers.
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Both Square Register and PayPal Here are available on iPads or iPhones running iOS 5.0 or higher, and both services are compatible with Android devices running Android 2.3 or higher. PayPal distinguishes itself, however, through its POS (point-of-sale) integration options and e-commerce compatibility. In addition to offering its own POS system, PayPal is pre-integrated with several other specialty POS providers, providing merchants with more options. In addition, PayPal has been offering seamless integration for online payments for years, while Square can only provide online merchants with payment acceptance through the Square Market. Generally speaking, PayPal offers more payment channels and more streamlined integration.
Square has announced recently that it will discontinue its monthly pricing plan after January 2014. This pricing option was intended for larger merchants and cost $275 per month. Under this plan, all transaction fees were waived for the first $250,000 processed in a year, and this plan only saved merchants money if they were swiping over $10,000 per month. In the wake of its discontinuation of this plan, Square will offer its flat 2.75% (3.5% plus $0.15 keyed) to all merchants.
Both Square and PayPal have very low barriers to entry and emphasize their easy sign-up processes. This ease of setup comes at the cost of a lack of underwriting and approval processes that could save high-risk or ineligible merchants the trouble of sudden cancellation or fund holds down the line. PayPal edges Square on this front, though, for two reasons. For one, the PayPal Pro virtual terminal requires an additional application process for merchants, which marks the only service offered by either company that subjects merchants to review before signup. Also, as with so many other potential issues, reliable customer service can be invaluable to merchants in the event of cancellation or fund withholding. As noted repeatedly, Square does not offer live customer service.
Founded in 1998, PayPal is a wholly owned subsidiary of eBay and is heavily used for payments between buyers and sellers of eBay auctions. In 2003, PayPal founded its “merchant services” division, which allows businesses of all sizes to accept credit card payments, much like a normal merchant account. Since then, PayPal has expanded its services to include the PayPal Here card reader and mobile app, a Payflow payment gateway, and several PayPal Payments service packages with various added services.
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:
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.
Square has the slightly more attractive payout schedule thanks to its next-day deposit into a merchant’s bank account, but PayPal appears to do more overall to protect merchants from sudden cancellations or fund holds.
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.
PayPal also offers three pricing plans with added features for each price increase: Standard (free), Advanced ($5/month), and Pro ($30/month). Overall, Square and PayPal both offer free monthly plans, but PayPal offers a greater degree of flexibility for larger merchants depending on sales volume and desired features.
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.