The David vs Goliath of mobile card reader battles
When Square Inc entered the payment processing field in 2009, some saw it as just another pretender to PayPal’s throne. At the time, PayPal had more than 80 million customers and a decade’s worth of brand recognition and trust going for it. Square had zero customers and a name that you’d forget by the time you finished reading this sentence.
But Square was quicker off the mark to enter one crucial market segment; mobile card readers. They released the Square Reader to roaring success in 2009, and before long, PayPal was the one playing catch up. 2012 saw the launch of the PayPal Here mobile card reader, and the two mobile point-of-sale (mPOS) solutions have been butting heads ever since.
Today, ‘Square vs PayPal’ is a legitimate question. Both promise to help save you money, and they each sport similar product specs; but you only have room in your life for one mPOS solution. So how do you choose between them? We’ve compared Square vs Paypal and found out that while Paypal is an established player well-suited for small businesses, Square offers better rates and cheaper solutions.
But if you need more information, our side-by-side comparison will help you decide. Read on for a more in-depth look at pricing, user experience and customer support.
Square vs Paypal
Square Reader for magstripe
Paypal Chip and Swipe Reader
Square Reader for contactless
and chip + magstripe reader
|Paypal Chip Card Reader|
Square Reader fees
(Contactless, Chip and swiped)
2.6% + 10¢ per transaction
PayPal Here fees
(Contactless and Chip and PIN)
2.70% for US card payments,
4.20% for foreign card payments
Funds deposit time
Within the next business day,
instant and same day transfers
available for 1.5% of fees
Funds deposit time
Instantly to PayPal account,
two hours to bank account
Between 6am and 6pm on weekdays;
no weekend phone support
Between 6am and 6pm every day
All major card types
All major card types
Card Reader Cost
Square’s magstripe reader ekes out the narrowest of victories, available for free whereas Paypal’s reader costs $24.99. But there are two major differences between these two : Paypal’s one is a chip reader and comes with a 12-month hardware warranty. Square's free magstripe reader only comes with a 6-month warranty.
Square vs PayPal Fees
While the initial investment with Paypal is $24.99 for its chip and swipe reader, the initial cost when opting for Square magstripe reader is completely free. Beware of the transaction fees : In 2020, Paypal charges 2.7% per transaction while Square’s charge per transaction is 2.6% + 10¢.
|Fees per transaction||2.6% + 10¢||2.7%|
|Initial cost||From 0 to $49||From $24.99 to $99.99|
Some card reader companies make it difficult to discover what their transaction fees are (a red flag if ever there was one). Fortunately, PayPal and Square have nothing to hide – you can find all fee information on their respective websites.
PayPal Here Fees
PayPal charges a flat transaction fee of 2.7% per transaction to accept payments from US cards. To accept payments from foreign cards, you’ll pay significantly more – 4.2% per transaction.
Funds deposit into your PayPal account instantly, and you can complete a bank transfer in under two hours.
Square charges a flat transaction fee of 2.6% + 10¢ per transaction. That said, if your annual sales exceed $250,000 (congratulations!), you can ask Square for a discounted rate.
Square payments deposit into your bank account within the next business day. Same-day transfers and instant transfers are available for a fee of 1.5%.
When it comes to online support, Square has the edge. Both companies’ websites offer lots of useful information, but it’s much easier to find that info on Square’s website than PayPal’s, which doesn’t separate small business owner FAQs from ordinary PayPal account holders FAQs.
You can reach a PayPal phone support agent between the hours of 6am-6pm Monday through Sunday (Pacific Time). Square, on the other hand, only opens its phone support lines from 6am-6pm on weekdays, with no support at all on weekends.
On the plus side, both PayPal and Square let you fast track your phone calls by giving you a unique One-Time Passcode (OTP). That means hold times are generally low, even during peak hours. From a Square customer’s perspective, it’s just a shame that phone support isn’t available outside of those hours.
What Do Customers Say?
Both companies’ mPOS apps have good customer review scores. Square’s free app is rated 4.8 out of 5 in the App Store and 4.4 in Google Play. The PayPal Here app has an average rating of 4.3 out of 5 on the iOS App Store and 4.6 out 5 on Google Play. Suffice to say, complaints from Android and iOS users of their mPOS card readers are few and far between.
The picture isn’t so rosy for PayPal in terms of its Trustpilot score. Square’s excellent 4.7 out of 5 rating raises no eyebrows, but PayPal’s terrible score of 1.3 out of 5 is worrying. That said, PayPal’s Better Business Bureau (BBB) grade of A is much more in line with how small business owners perceive the company. The poor Trustpilot rating is likely weighed down by customer complaints from the consumer-facing side of PayPal’s business.
Square vs PayPal: The Expert Verdict
As you’ve probably guessed by now, Square wins by a mile. It costs less than Paypal’s card reader and offers lower transaction fees. Based on customer reviews, the mPOS app provides a smoother user experience, there’s plenty of online support for new users, and you can qualify for lower transaction fees if you take more than $250,000 per year.
Don’t get us wrong; there are really good reasons why Paypal is the mobile card reader of choice for so many small businesses. For 90% of small business owners, the PayPal Here card machine, offering more comprehensive customer support, is the better choice.
Still, if you’re selling products on razor-thin margins, transaction fees are going to be the deciding factor; and Square offers the better rates.
Our card reader comparison service can help you get the best deals mobile card readers. It’s free to use, quick, and can help you save money. Take a minute to fill in our short form and we’ll connect you with top suppliers for bespoke quotes.