Posted by Uni Bul.

PayPal Here vs. Square: What’s the Difference?

PayPal Here vs. Square: What's the Difference?

Following weeks of rumors, PayPal has finally released its Square-like credit card acceptance service. PayPal Here, as it is called, is really almost identical with Jack Dorsey’s pioneering solution that a couple of years ago enabled everyone, not just businesses, to take credit cards for payment through their mobile phones. Of course PayPal’s version does come with a few new features, but for all practical reasons it is a Square clone.

So what are we to make of PayPal Here? Did we really need another Square? Now that we have one anyway, which one should we go with? Well, as users, we are interested in getting good services at the lowest possible costs. From that perspective, we did need another Square and in fact we need just as many Squares as we can get, so that they can compete with one another and, hopefully, get better and cheaper in the process. And my first impression of PayPal’s version is that it stacks up pretty well against its opponent.

PayPal Here

So PayPal Here enables consumers to accept credit and debit cards by swiping them through a reader that plugs into their smart phones or by key-entering the payment information into the phone. In addition to cards, and in contrast to Square, the service allows users to accept PayPal and checks for payment (by taking a picture of the check), as well as to record cash payments and to issue invoices.

The pricing models of the two companies are almost identical. PayPal Here charges 2.7% for swiped transactions and 3.5% + $0.15 for key-entered ones. Square’s respective rates are 2.75% and 3.5 + $0.15. PayPal charges no fees for check acceptance and invoice issuance.

Apart from that, the two services are practically the same. In fact, reading the PayPal Here Agreement, one gets the feeling that the processor has used Square’s as a template, only replacing “Square” with “PayPal” where necessary. The only substantive difference is that PayPal’s agreement is considerably shorter. And yet, I do like PayPal Here better than Square.

Why I Like PayPal Here

PayPal Here is the first mobile card acceptance service that I like better than Square. Of course, we will need to see if it works as advertised, but I have no reason to doubt that it will.

There are a couple of major reasons I like PayPal Here better than Square. Firstly, there is the issue of funding. Here is Square’s funding policy:

Funds for any given transaction will not be deposited until the transaction is deemed complete. Transactions will be deemed complete when we have received or sent the funds and when we or the designated financial institutions have accepted the transaction or funds.

A transaction may take a couple of days to be “complete.” And now here is PayPal Here’s:

Payment funds are immediately available in your PayPal account today.

PayPal’s advantage is obvious.

The second major reason I like PayPal Here better than Square is that the former service comes with live customer support, which has been conspicuous with its absence at Square. I’m still amazed with the unwillingness of Square’s executives to make available a customer support phone number on the company’s website, even as many, many users have voiced their displeasure with the inability to speak with someone when they have an issue with the service.

The Takeaway

Ever since it went live, Square has been the undisputed champion of phone-based credit card payment acceptance, easily beating out GoPayment, its toughest opponent until now. Jack Dorsey’s company created a new niche in the payment card industry and was the first one to allow non-businesses to accept credit cards directly, without the need of a merchant account and to do so with their phones. Moreover, Square offered its service at a very reasonable price and kept everything out in the open. And, not surprisingly, consumers liked what they were offered and flocked to Square in their millions.

However, Square now has a worthy challenger. PayPal Here has just made a very strong bid for the top spot and that is great for consumers who now have a choice between two very good phone-based card acceptance services. I expect that Square will respond to the challenge and at the very least make its customer support procedures more user-friendly. So competition is, once again, working to the benefit of the consumer.

Image source: PayPal.

Tags: mobile payments
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  1. Kristen

    Can you comment of the security of Square vs Paypal Here? Is the card reader PCI Compliant on both products guaranteeing a secure transaction?

    • Kristen,

      Both PayPal Here and Square are PCI-compliant and I don’t expect any major security issues. Remember that a year ago GoPayment’s CEO accused Square of providing a “window for criminals to turn the device into a skimming machine,” but his accusations didn’t hold any water. I don’t have any reason to expect PayPal to prove any less secure.

      • Lucas

        I think your blog offers an invaluable service.

        There is a disconnect going on that has not been explained away (to my satisfaction). The lack of PCI fees for the merchant in these environments does not make any sense whatsoever. Are we to believe that Visa Mastercard is accepting some third party assurance for all merchants using square (as an example) that they are all compliant? and are Visa Mastercard therefor forgoing the pci requirements testing that all other merchants face (questionnaire, scan, etc) for which they are charged a quarterly or yearly fee by their MSP?

        Im not going to even touch on the lack of available testing available to truly determine if an audio jack reader is truly compliant (thats a whole other ball of wax).

        Any light you can shed on this would be indeed appreciated

  2. Gene

    Im kind of lost with understanding how paypal is going to do this with existing clients…..i have a 30.00 per month fee for using it….are they going to stop charging me this fee?

  3. I would be interested in knowing how much support pay pal has for new customers who are maybe not so tech savy. How is their customer service?

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