PayPal and Square are two different kinds of payment platforms. Here are their key differences:
With Square, small vendors can use their smartphone to make credit card or debit card payments. You sign up and download the Square Register app, and then you get a free card reader that you will need to plug into your mobile device.
Square now has a way of allowing you to send cash through email. Let’s say you want to send $100 to your daughter who’s a hundred miles away. You just type firstname.lastname@example.org in the CC field while the subject line reads “$100.00”. Send the email, and Square emails you a link to enter your debit card number. Your daughter will then receive an email from you plus an email from Square requesting her to enter her debit card info. The money arrives in her bank account in a day or two.
PayPal has a service called PayPal Here, and it’s very similar to Square. But for the most part, PayPal is used to send money or pay for services online. When you buy through eBay or send money to someone, you just need to login to your PayPal account and add the details of the transaction.
PayPal is free if you will just send money to someone. However, you have to pay transaction fees if you are the recipient, although the sender can choose to pay for the surcharge if the recipient is not a registered seller. The surcharges can range from 1.9% to 2.9%, plus USD$0.30. The 2.9% surcharge applies if the amount is worth less than $3,000 while the 1.9% surcharge applies to transfers of more than $100,000.
With Square, sellers are required to pay 2.75% for transaction fees, and the fee becomes 3.5% plus $0.15 for key entered transactions. Businesses can also opt to pay a flat rate of $275 per month. With PayPal Here, the fee is 2.70% for each transaction.
Length of Time
With PayPal, your credit card or bank account is debited within a day or two. With Square, most payments are also deposited in one to two business days. But when you use PayPal Here, payment funds are immediately transferred to your PayPal account.
Square only responds to emails, but PayPal employs more than 6,000 people to answer phones and emails.
Square is still in a rather precarious stage, because the company has been losing money. Despite a projected revenue of $1 billion after processing $20 billion in payments in 2013, the company still reported a loss of $100 million. That’s a bigger margin of loss than their 2012 figures.
In contrast, PayPal is remarkably stable and very popular. It was acquired by eBay in 2002 for $1.5 billion, and in 2013 it processed $180 billion in payments ($27 billion from mobile platforms) and generated $6.6 billion in revenue.
The core businesses of each company are different, but with many services offered these companies are now competing against each other. If you need a payment platform for your business or you are just looking for a way to send money to someone through electronic means, you need to evaluate both options more carefully to see which one is most suitable for you.