Should you choose PAYPAL HERE or SQUARE?

» Posted by on Aug 17, 2016 in eCommerce | Comments Off on Should you choose PAYPAL HERE or SQUARE?

Should you choose PAYPAL HERE or SQUARE?

Overview:

Square has been a giant in the mobile payment processing since its inception in 2009. Claiming an estimated 3 million merchants, Square has made it possible for anyone to accept credit card payments and grow their business. And at the end of 2015, Square finally went public with an IPO that generated a hefty amount of buzz.

PayPal is a behemoth in online commerce. In 2012, it ventured into mobile payments with the PayPal Here app. PayPal claims more than 170 million active accounts, though obviously not all of them are PayPal Here users. And 2015 was a big year of changes for PayPal, too; namely, it severed ties with its longtime parent company, eBay.

Both Square and PayPal Here have a hefty share of the mobile payment market and instant recognizability for consumers, and they have many similar offerings. We’ve reviewed both services, and given them each a 4-star review. But let’s look more closely and see how they stack up against each other and which one might be the better option for you.

Products and Services:

Winner: Square

Square and PayPal Here are both mobile payment services, requiring just a cell phone or tablet to accept credit cards. They’re great for merchants at conventions, street vendors, repair businesses, professional services, restaurants and retail boutiques… Basically anywhere that you may not have an actual register, or don’t need a large, complicated POS system, either service will give you what you need.

When you look at both services as a whole — not just their mobile support — Square is the clear winner. Square’s app is nearly a full-fledged POS, and it offers several additional services free of charge — inventory management, for example. There are just two shortcomings: Integrating Square into an eCommerce store may be difficult, as it currently supports only two shopping cart products and its own marketplace. In addition, there’s no way to integrate Square’s payment processing into other POS software, a feature PayPal does offer. With PayPal you do get the ability to integrate with a variety of shopping carts, as well as inventory management.

But all of that is only if you’re looking for a more comprehensive setup. When you look at just the mobile service, Square does has one very clear advantage — its Offline Mode.

First, let’s take a look at the basic capabilities of each:

Features PayPal Here Square
Free App Yes Yes
Free Card Reader* Yes Yes
Authorize Multiple Users Yes Yes
Compatible with Receipt Printers Yes Yes
Offline Mode No Yes
Accept Cards via Photo Capture Yes No
Manual Entry for Payments Yes Yes
Invoicing Supported  Yes Yes

*The basic mag stripe reader is free for both. If you are worried about EMV support (in other words, being able to accept chip cards), you’ll need to pay to upgrade to another reader. We’ll come back to this.

Square’s Offline Mode is interesting, and frankly I wonder why no one else has introduced this capability yet. You can use the credit card reader to swipe a card even when you don’t have Internet signal. As long as you connect to the Internet within 72 hours, the payment will go through automatically.

The catch, obviously, is that you’re responsible for “for any expired, declined, or disputed payments accepted while offline” per Square’s website. And you can’t manually enter cards, either — if the swiper doesn’t work, you can’t take the payment.

It’s a risk you take on yourself, but if you’re selling in a location where cell signal is spotty or there’s no Internet (as I have done on occasion), this could be a crucial feature — and maybe the deciding factor.

Compatible Hardware:

Winner: Square

For a mobile setup, really, all you need is a compatible smartphone or tablet and a credit card reader. You can send your customers digital receipts from either PayPal Here or Square. But if you want a full-fledged register, you can have that, too — that means receipt printer, cash drawer, the whole shebang.

Now that the EMV liability shift has occurred, EMV-compliant hardware is important. Here’s one area where Square outshines PayPal Here: Square’s EMV readers are far less expensive: the basic model runs for $30; the model with NFC capabilities as well runs for $49.

By comparison, PayPal offers a single EMV reader with NFC built in…for $150. You can get a $100 rebate if you process $3,000 in 3 months, but it’s still quite telling that Square’s reader at full price is the same as PayPal’s reader if you qualify for the rebate. For a new merchant, this could easily be a dealbreaker.

Both PayPal Here and Square require either an Android or iOS device (a smartphone or tablet; for Square, some features will only work with an iPad). PayPal Here also supports Windows devices using the mag stripe reader only — not the NFC/EMV reader.

Fees and Rates:

Winner: Tie

While the cost of hardware is notably different, Square and PayPal Here do offer similar prices for credit card processing. Neither service charges any regular fees beyond those incurred per transaction, which is always good to see.

Price PayPal Here Square
Standard Swipe 2.7% 2.75%
Manual Key-In 3.5% + $0.15 3.5% + $0.15
International Cards Add 1% to fees Not Stated
Invoicing 2.9% + $0.30 2.75%

The main advantage to PayPal is how quickly your money is available: Any mobile payments you accept are available almost instantly in your PayPal account. That means if you have the PayPal debit card, you can spend your money right away.

Square sends its payments to your bank account within 1-2 business days, depending on when the payment was processed. Payments taken before 5 p.m. Pacific time are available the next business day; payments made after 5 p.m. Pacific time are available the second business day.

However, if you don’t have the PayPal debit card, or you prefer to route all your funds to your bank account, Square has the advantage. An ACH transfer from PayPal to your bank will take 3-4 days, which could be an issue for some merchants.

Square doesn’t assess any chargeback fees, which is nice. PayPal does — $20 per chargeback. However, to PayPal’s credit, it’s actually lowered that fee from $25, and started disclosing it (something that PayPal previously hadn’t done very well).

If your business is growing, PayPal Here offers special pricing for merchants whose volume exceeds $3,000 in transactions per month. Nonprofits also get a discounted rate with PayPal — 2.2%. Square does offer volume discounts, but they’re not well advertised and certainly not accessible to merchants just starting out.

Previously, both Square and PayPal Here had limits on the amount of keyed in transactions you could process before triggering a hold — $2,500 for PayPal Here, and $2,000 for Square. PayPal’s amended the wording in its contract to be a little more nebulous, and Square seems to have eliminated that information as well — but both companies have a reputation for holding funds if they suspect anything out of the ordinary.

Contract Length and Early Termination Fee:

Winner: Tie

One of the advantages to both Square and PayPal Here is that there’s no contract, no monthly fees, no termination fees. If you don’t like the service, just stop using it and find another one.

Sales and Advertising Transparency:

Winner: Tie

In general, both Square and PayPal Here deliver what they offer: an effective mobile payment solution with up-front pricing and no hidden fees.

That said, some of the policies for both services could be spelled out more clearly, a topic we touched on in our reviews of Square and PayPal Here. The holds are a point of contention for merchants, who understandably want their money as soon as possible.

Customer Service and Technical Support:

Winner: PayPal Here

Square’s customer support has earned a bad rap, but it’s taken steps to improve — namely actually adding customer support via phone — which is good. It still doesn’t quite match PayPal’s, but the latter certainly isn’t without its flaws either, particularly where phone service is concerned.

Square support options include:

  • Help Center: Very thorough and detailed, covering just about any topic you might need. If you’re having trouble setting up or using your Square account, start here and all your questions should be answered.
  • Social Media: Square’s support Twitter feed (@SqSupport) is active (though not as active as PayPal’s), and its YouTube channel is full of instructional videos. Square even allows you to post directly to its Facebook page, something it previously hadn’t allowed.
  • Contact Us Form: A mainstay of help desks everywhere.
  • Phone Support: The biggest flaw in Square’s phone support is that it’s only available if you have a code, which some people have reported having trouble getting. If your account is terminated, you lose all access to phone support.

PayPal Here support goes through the main PayPal system. Again, you’ve got several ways to seek your answer:

  • PayPal Hub Home: Start here to get all your questions answered. The help center is organized by topic, with FAQs you may have.
  • PayPal Community Forum: Get answers from other PayPal users.
  • Social Media: Facebook and Twitter. Specifically, tweet @AskPayPal Monday-Friday from 9 a.m. to 5 p.m. central time, and they’ll go find you an answer. For a frame of reference: PayPal’s general Twitter account (@PayPal) has just shy of 8,500 tweets at the time of writing. AskPayPal has about 144,000.You can also post directly to Facebook’s page.
  • Phone and Email: The online consensus about PayPal’s phone support seems to be that the service is inconsistent at best. Fortunately, most of the answers you need are available through the help desk, community forum, or social media.

Negative Reviews and Complaints:

Winner: PayPal

Complaints are never a good thing, but they happen. Sorting through the mess of complaints for Square and PayPal Here can be daunting. Normally we’d consult the BBB, but all complaints about PayPal Here are routed through PayPal’s main page (which has some 5,000+ complaints), which makes it a little bit difficult. Sites like RipOffReport are also full of people who have been scammed by merchants on Square or PayPal and want the companies to do something about it. (They won’t.)

That means it’s difficult to draw direct, apples-to-apples comparisons about complaint volume (not to mention the unknown size of each service’s user base.) But we can use these comments other ones around the web to get a picture of where the problems and pain points lie.

The biggest issue with both is simply that some merchants have trouble accessing their money. PayPal is, as we’ve said before, trigger-happy where it suspects fraud. But Square seems to have even bigger issues with withholding funds from merchants or terminating accounts with little to no justification. Simply put, that’s a side effect of both companies’ “Come as you are” approaches to business. It’s unfortunate, but the cost of accessibility is reliability.

Many of Square’s jilted users are understandably frustrated at the loss of phone support when your account is terminated. If you sift through the BBB complaints, you’ll learn that Square’s compliance department — which is the department that decides when to cut a merchant loose — deals only in email for the sake of accountability and record-keeping.

If you do encounter the dreaded hold or account termination, you can expect to get your money in no less than 90 days. While that wait can be a nightmare, it’s also industry standard. Both PayPal Here and Square will sometimes keep funds in a reserve and request additional verification for your business. That might be an invoice or proof of authorization of the payment, as well as bank statements and other records.

If you have high-risk transactions, you probably want to think twice about using either of these services. That includes selling auctions and antiques, and even some branches of professional services. Sudden high-value transactions will also cause both companies to get a little bit skittish.

Find out more about high-risk merchants in our article here.

Positive Reviews and Testimonials:

Winner: PayPal

You’re going to find some pretty solid supporters on both sides of the Square vs. PayPal Here debate. Both apps are well designed and easy to use, with good reviews for the most part. They both make mobile payments available to people who might otherwise not be able to manage them.

What freaks a lot of people out is the large number of complaints from people who seem to have done nothing wrong. But at the same time, there are plenty of people who use both Square and PayPal Here with no problem. They just tend to be a bit less vocal. We have some satisfied customers for both PayPal Here and Square who have posted on our reviews, and there’s good news scattered elsewhere, too.

PayPal has some video testimonials on its YouTube channel. Square has even more.

The sheer number of disgruntled customers can seem scary, but you have to bear in mind that’s actually the minority of users. If either company were losing more customers than it gained, it wouldn’t stay afloat very long.

Final Verdict:

Winner: Tie

Both Square and PayPal Here are 4-star services in our book. They’re not without their flaws — primarily the holds and freezes.that merchants encounter, but they both offer solid value for merchants who need mobile processing. We’re comfortable calling this one a draw. You should go with the mobile processor that has the features you need most.

PayPal Here is nice in that you get access to your money right away, and overall, it beats Square in terms of reliability…most of the time. If PayPal Here’s feature set is right for you, go for it.

Square’s Offline Mode is a serious asset to merchants who sell on the go and may not have reliable Internet access. The difference in prices for their EMV-compliant hardware could be the deciding factor: PayPal’s solution is far more expensive — a full $100 more, and not all merchants will even need NFC support. While you will possibly sacrifice some stability, it’s hard to deny the convenience and flexibility Square offers.