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Although Square was one of the first to sell mobile card readers and PayPal was a trailblazer in online payments, they now offer similar services.

PayPal’s shot at in-person payments is now PayPal Zettle (replacing PayPal Here), directly competing with Square Reader. As to online selling, Square has really broadened its offering to match PayPal’s business tools.

The two companies have different fees, payout systems and features. Let’s contrast the two providers of credit card readers and online payment solutions.

Square PayPal
Credit card machines Readers for app:
$0-$59
Standalone terminals: $299-$799
Zettle Reader for app:
$29
POS apps Point of Sale: free
Retail: $0-$60/mo
Restaurants: $0-$60/mo
Appointments: $0-$90/mo
Zettle App: free
Online payments Broad range Broad range
Debit card
Loans
Deposits 0-3 business days 0-1 business days
Square PayPal
Readers for app:
$0-$59
Standalone terminals:
$299-$799
Zettle Reader for app:
$29
POS apps
Point of Sale: free
Retail: $0-$60/mo
Restaurants: $0-$60/mo
Appointments: $0-$90/mo
Zettle App: free
Online payments
Broad range Broad range
Debit card
Business loans
Deposits
0-3 business days 0-1 business days

Very different credit card terminals

Square sells different card machines, Square Reader for Contactless and Chip being the only low-cost solution for both chip and contactless payments. The next one up, Square Terminal, accepts swipe as well.

PayPal Zettle only offers one card reader: the PayPal Zettle card reader. It accepts chip (EMV) and contactless (NFC) cards and mobile wallets, but not swipe.

Square PayPal Zettle
Square Reader
Square Reader
PayPal Zettle card reader
PayPal Zettle reader
Technology EMV (chip), NFC (contactless) EMV (chip), NFC (contactless)
Price $59 $29
Transaction fee 2.6% + 10¢ 2.29% + 9¢ + cross-border & currency conversion fees
Monthly fee None None
Commitment No contract No contract
Accepted cards VisaMastercardDiscoverAmerican Express VisaMastercardDiscoverAmerican ExpressJCBUnion Pay
Contactless ContactlessApple PayGoogle PaySamsung Pay ContactlessApple PayGoogle PaySamsung Pay
Square PayPal Zettle
Square Reader
Square Reader
PayPal Zettle card reader
PayPal Zettle reader
Accepts chip, contactless Accepts chip, contactless
$59 $59.99
2.6% + 10¢ per transaction 2.29% + 9¢ per transaction + cross-border & currency conversion fees
No contract, no monthly fees No contract, no monthly fees
VisaMastercardDiscoverAmerican Express VisaMastercardDiscoverAmerican ExpressJCBUnion Pay
ContactlessApple PayGoogle PaySamsung Pay ContactlessApple PayGoogle PaySamsung Pay

Neither PayPal Zettle card reader nor Square Reader for Contactless and Chip have an inbuilt receipt printer, making them very small.

Whereas PayPal Zettle does not accept swipe cards, Square has a tiny credit card swiper that comes free for new users. Square merchants would benefit from having one of these as a backup for customers still using swipe cards.

Square Reader accepts chip and contactless cards.

Square Swipe Readers

You can get Square Reader for Magstripe with a headset jack or Lightning connector.

Square Reader is the smallest at 1.98 oz. and 0.4 x 2.6 x 2.6 inches, which can be expected since it has no inbuilt swipe functionality. The PayPal Zettle reader weighs 4.41 oz. and measures 0.6 x 4.3 x 2.8 inches, fitting nicely in your hand.

Photo: PayPal

PayPal Zettle reader on dock

PayPal Zettle card reader in charging dock.

These card readers need to be connected to their associated payment app on a compatible smartphone or tablet. The app connects to the credit card reader via Bluetooth (or the plug of a swipe reader) to accept cards.

You take a payment by entering a payment amount in the app, or adding products from your in-app library to the cart, then picking the card payment option.

Transactions are processed over WiFi or the network of the connected cellphone, iPad or Android tablet.

That being said, Square does have an offline mode allowing you to swipe a card when the internet is out. The card payment is then finalized when you’re next online.

Square’s touchscreen credit card machine, Square Terminal does not depend on a cellphone or tablet app. Instead, it has the Square Point of Sale app built into the device for standalone use. It also has a receipt printer built in.

Square Terminal only works with WiFi, not mobile networks. With an optional charging dock, you can connect it with Ethernet, which is great for a fixed countertop. Otherwise, the terminal is ideal for handheld payments around your premises.

Both pay-as-you-go, but different fees

From a quick glance, transaction costs look similar but the mobile card readers have very different prices: $59 for Square Reader for Contactless and Chip and $29 for the PayPal Zettle reader. The first Square Reader for Magstripe is free to order, then it costs $10 per swipe reader. Square Terminal is much more expensive at $299, because it has the POS software built in.

The transaction fee for swipe, EMV and contactless payments is a fixed rate of 2.6% + 10¢ for Square and 2.29% + 9¢ for PayPal Zettle. But if you regularly accept international cards and refunds, or get chargebacks, PayPal can be more expensive.

Square logo PayPal
Setup fee None None
Fixed monthly fees None None
Chip & tap transaction fee 2.6% + 10¢ 2.29% + 9¢
Keyed transaction fee 3.5% + 15¢ 3.49% + 9¢
Online transaction fee 2.9% + 30¢ 3.49% + 49¢
Added foreign card fee None 1.5%
Currency conversion fee n/a 3%
Standard deposits in bank account Free Free
Instant transfers to bank account 1.5% fee added 1.5% fee added
Refunds No refund fee Original transaction fee is retained by PayPal
Chargebacks Free $20 each + possible $15 dispute fee
Square logo PayPal
Setup fee
None None
Fixed monthly fee
None None
Chip & tap transaction fee
2.6% + 10¢ 2.29% + 9¢
Keyed transaction fee
3.5% + 15¢ 3.49% + 9¢
Online transaction fee
2.9% + 30¢ 3.49% + 49¢
Extra fee for non-US cards
None 1.5%
Currency conversion fee
n/a 3%
Standard deposits in bank account
Free Free
Instant transfers to bank account
1.5% added fee 1.5% added fee
Refunds
No refund fee Original transaction fee is retained by PayPal
Chargebacks
Free $20 each + possible $15 dispute fee

Square’s fees are simpler because they don’t differentiate between what country the payer’s card is from – it’s the same fee regardless.

PayPal, on the other hand, can add a fee if the credit card was not issued in the US. For a foreign-issued card payment, you pay the 2.29% + 9¢ base rate plus 1.5% for the fact it is foreign, and a 3% currency conversion rate if paying in a different currency. In total, that is 6.79% + 9¢. To be fair, not all foreign cards incur the conversion rate, so you may “only” pay 3.79% + 9¢ for foreign cards.

There is no currency conversion or cross-border fee with Square even if the credit card is foreign.

Note that you can only accept transactions in US dollars with PayPal Zettle and Square as a registered user in the US.

Keyed payments are similar: 3.49% + 9¢ through PayPal Zettle and 3.5% + 15¢ through Square. As long as you don’t accept an international credit card, PayPal Zettle has the lowest cost here.

Square’s fees are simpler because they don’t differentiate between what country the payer’s card is from – it’s the same fee regardless.

Refunds are free to process with Square, i.e. the receiver gets the full refund amount while the merchant gets the transaction fee paid to Square originally. PayPal, on the other hand, keeps the original transaction fee (including applicable currency conversion and cross-border fees) of payments that are refunded to your customer.

Chargebacks do not incur an admin fee with Square, but the payment amount is withheld until the case is resolved. PayPal also holds the disputed payment amount until the case is resolved, but the company charges $20, plus a $15 dispute fee if the transaction was paid with the buyer’s PayPal account or through a PayPal Checkout (online payment) solution.

When it comes to keyed transactions in the POS app, PayPal comes out slightly cheaper again with its 3.49% + 9¢ versus Square’s 3.5% + 15¢ per transaction. That is, until you accept a card issued abroad – then, PayPal adds its cross-border and currency conversion fee, if applicable.

Online payments through a website are cheapest with Square in all cases: 2.9% + 30¢ versus PayPal’s 3.49% + 49¢.

PayPal Zettle charges 1.9% + $0.10 for in-person QR code payments above $10 or 2.4% + $0.05 for QR code transactions below (the payment is via PayPal or Venmo, not the customer’s card). Square’s QR code payments have a fixed cost of 2.9% + 30¢ each.

Deposits to bank account automatic with Square

Unless you use PayPal for everything, Square is arguably the most convenient for transfers.

PayPal deposits money (minus transaction fees) directly in to your PayPal Business account based online, never your bank account. Then you have to manually “withdraw” the money to a connected bank account, which takes about one business day to process.

Those who want to be able to spend the PayPal takings immediately after making the money can apply for the PayPal Business Debit Mastercard, which can be used anywhere accepting Mastercard, including ATMs for cash withdrawals.

PayPal Mastercard

PayPal Business Debit Mastercard is subject to approval. Photo: PayPal

Square Card gives instant access to funds. Photo: Square

Square also has an FDIC-insured checking account with a free Business Debit Mastercard. This gives instant access to funds, and you can withdraw money from ATMs for free. Alternatively, you can just let transactions clear directly in a connected bank account within 1-3 business days.

For an extra 1.5% transaction fee, you can receive payouts through Square within 20 minutes. This is called Instant Transfers.

PayPal Zettle similarly allows deposits to the bank account within minutes, also at a 1.5% fee, but you still have to withdraw this manually from your PayPal account.

Square has more point of sale options

There’s a reason why Square calls their card reader app “Point of Sale” – it’s a full checkout that can be upgraded or expanded with additional tools. The PayPal Zettle app does similar things, but with fewer features, e.g. no saved orders or eat-in/eat-out options.

Both apps are free to use and can manage product inventory (with photos), show sales reports and have multiple user accounts.

Photo: PayPal

PayPal Zettle iPad reader

PayPal Zettle app on iPad, synced with the Zettle card reader.

Square has its own advanced POS systems called Square for Retail, Square for Restaurants and Square Appointments – and a ton of other add-ons like Square Payroll, Square Loyalty, Square Marketing and a separate invoice app that’s free to use. Oh, and Square integrates with lots of other platforms for e.g. accounting, booking systems or other POS systems.

With PayPal, you only have the Zettle app as a POS system. As of yet, the only other POS software PayPal Zettle can connect with is SalesVu. Apart from that, you can integrate it with QuickBooks, BigCommerce and WooCommerce.

PayPal Zettle and Square work on iPad and Android tablets, perhaps placed in a tablet holder. Both systems allow you to connect to a cash drawer, receipt printer and barcode scanners to form a complete checkout.

Photo: Square

Square Stand with Point of Sale app and POS accessories.

Square has a few extra custom-built terminals for the checkout: Square Stand in which you fit an iPad, and Square Register which is a purpose-built touchscreen register with a stylish touchscreen card reader attached.

Good range of in-store payment options

PayPal Zettle reader accepts more cards: JCB and UnionPay on top of Visa, Mastercard, American Express and Discover also accepted by Square. Apart from that, both apps can register payments by cash, checks, gift cards and manually entered card details.

In-person payment methods PayPal Zettle Square
VisaMastercardDiscoverAmerican ExpressContactlessApple PayGoogle PaySamsung Pay
JCBUnion Pay
Keyed cards
Cash
Checks & vouchers
QR codes
Gift cards
Payment
method
PayPal
Zettle
Square
VisaMastercardDiscoverAmerican ExpressContactlessApple PayGoogle PaySamsung Pay
JCBUnion Pay
Keyed-in cards
Cash
Checks & vouchers
QR codes
Gift cards

Both PayPal Zettle and Square allow you to accept manually entered card details without using a card reader.

You can generate a QR code in the PayPal Zettle app, which the customer can scan with their PayPal or Venmo app to pay through those methods.

Photo: PayPal

PayPal Zettle QR code in app

PayPal QR code displayed in Zettle app.

Square doesn’t have a way to accept PayPal, but the Point of Sale app can generate QR codes for individual items rather than personalized transactions. Scanning these QR codes opens up a browser page on the payer’s phone where they can enter card details to finalize the payment.

Both excel in online payments

PayPal is well-known in ecommerce and integrates with many website platforms, but so does Square.

The companies offer a similar range of payment methods when it comes to remote payments. Square and PayPal have email invoicing, a virtual terminal for over-the-phone payments, payment links and ecommerce options.

PayPal accepts – surprise, surprise – PayPal as an online payment method alongside normal credit card transactions. You can embed ‘buy buttons’ or integrate a PayPal checkout on your website, allowing customers to pay with PayPal credentials or manually enter their credit card details online.

Remote payment method PayPal Square
Email invoices
Payment links
Telephone payments
Buy buttons
Online ordering page
PayPal transactions
Online store PayPal checkout on compatible website Website builder with Square online checkout
Remote
payment
PayPal Square
Email invoices
Payment links
Telephone payments
Buy buttons
Online ordering page
PayPal transactions
Online store PayPal checkout on compatible website Website builder with Square online checkout

PayPal Virtual Terminal (for telephone payments) and premium checkout have monthly fees, whereas Square Virtual Terminal has no monthly cost. Square’s online store is a full website builder with paid subscription tiers. You can even create an online ordering page for free, linked to a QR code to display for touch-free ordering.

In contrast, you cannot build a website with PayPal, only integrate it into an online store as a checkout only.

Does Square accept PayPal? No, Square has no plans for that in their card reader app, online store or other sales channels. On a higher Square Online plan, however, you can embed PayPal buttons on your website, but Square does not actively encourage it.

Reserves affect both, but most users experience no issues

Given how easy it is to sign up with either company, it comes as no surprise that they can impose rigid (read: frustrating) security protocols down the line.

For Square, this means the sign-up is super-easy, but if your business activities fall under a restricted category or you process a suspicious-looking transaction, you can experience a sudden account hold after you have started using the service. In that case, transactions can be withheld while Square requests information from you. Most merchants will accept payments without hassle, though.

PayPal imposes reserves on transactions. For example, there may be a $500 weekly limit on swipe and keyed-in transactions, where money above this threshold is held for 30 days before releasing it in your account. This doesn’t apply to EMV or contactless payments, since those are more secure. The reserve limits are personalized, and transactions can be held for less obvious reasons if PayPal’s algorithms deem them suspicious.

Who is least likely to cause account holds? Customer reviews and complaints talk about similar issues, but there are also many more positive ratings for Square. PayPal’s ratings tend to be lower than Square’s – sometimes much lower.

Which is best for whom?

Square and PayPal are for small-business merchants, whether on the go, running a small shop or café, taxi drivers, beauty parlors and others. Both platforms have many online payment methods, but most cash-strapped merchants would most likely save money with Square whose remote payments have fewer costs involved.

If you’re just accepting domestic cards and it doesn’t matter whether payouts go in a PayPal account or bank account, it might be cheaper to use PayPal Zettle for in-person payments, since it has a lower transaction fee for US cards. If you tend to sell to tourists or business travellers, Square will cost you less in transaction fees.

Photo: Square

Square for Restaurants tools

Square has lots to offer restaurants and takeout businesses.

Lots of coffee shops and small retail stores get started with Square because it has more POS features and integration options that are useful for when your business grows. The hospitality-focused features like tipping and split bills make it great for small food businesses. PayPal Zettle, on the other hand, is more limiting in the long term with its few upgrade options.

Our verdict

It can be easier to go with Square that offers plenty of advanced features for shops, restaurants, freelance professionals and online merchants. PayPal Zettle’s POS system is easy and functional, but not as extensive as Square’s.

On the other hand, online PayPal merchants preferring the best integration with face-to-face sales may prioritize PayPal Zettle to have all transactions in one place.

Although PayPal has been around for longer, Square is an expert on what small face-to-face businesses want in a card reader service. PayPal can seem a tad complicated compared to Square’s simpler fees and direct transfers to a bank account.