Square vs PayPal: Which Is Better for UK Businesses?

Note that the information about the payment providers found in this article was taken from their respective websites on 29 October 2024. This information is subject to change.

Running an online business in the UK means you need a third-party payment processor that can handle transactions efficiently and securely in your region. It’s about giving your customers a smooth experience and ensuring your operations run without a hitch.

If you’re considering Square or PayPal, both are solid options. They each offer strong features, but the right choice depends on your merchant needs.

In this review, we compare PayPal and Square, break down the key differences, from ease of use to pricing, so you can choose the platform that suits your business best. Whether you’re prioritising simplicity, flexibility, or cost, this comparison will help guide your decision.

Square vs PayPal for Online Payments

PayPal for Online Payments

PayPal’s payment gateway gives UK merchants the flexibility to create custom checkout experiences using its REST APIs and JavaScript SDKs. This allows e-commerce businesses to build scalable and personalised payment solutions.

For UK-based businesses using established e-commerce platforms like Shopify, WooCommerce, or BigCommerce, PayPal is already integrated, making the setup process straightforward and quick.

It also offers no-code checkout options such as payment links and QR codes, ideal for small UK businesses that want simple payment solutions without needing developers.

On the security side, PayPal includes seller protection, machine learning-based fraud prevention, and a chargeback protection tool to cover disputes over fraud or undelivered items (subject to conditions).

With nine core payment methods and 13 additional global alternatives, PayPal offers a total of 22 payment options, including Buy Now, Pay Later (BNPL), credit/debit cards, and digital wallets.  Plus, PayPal’s "Pay in 3" is a BNPL option available in the UK.

Square for Online Payments

Square provides a wide range of tools for online payment processing. With Square Payments, UK merchants can accept online payments by setting up a free online store, selling through social media, or integrating their existing site with Square’s payment options. Developers can take advantage of pre-built Square Checkout APIs or customise their setup using Square’s Web Payment SDKs.

Square also enables merchants to create and send digital invoices, manage recurring payments, and send payment links via text or email. Payments can be accepted over the phone by entering card details directly into the Square app or browser.

For in-person payments, Square PoS App allows businesses to accept contactless, mobile, or chip and PIN payments, whether at a counter or on the move. The app is compatible with a variety of hardware. Additionally, Square provides a virtual terminal, turning a computer into a payment card terminal, ideal for remote billing or phone payments.

UK merchants should note that Square doesn’t support charging in multiple currencies. Businesses operating in different countries will need to set up separate Square accounts for each market.

In terms of its payment methods, Square provides UK merchants with a variety from debit and credit cards, including Visa, Mastercard, and American Express, to digital wallets like Apple Pay and Google Pay. Square also supports Clearpay (its BNLP option).

Square vs PayPal: Extra Features for Merchants

PayPal provides a variety of business services beyond payment processing for UK merchants. This includes issuing a PayPal business debit card and offering business funding through PayPal Working Capital. Additionally, it provides tools for managing risk, generating financial reports, shipping support, and handling disputes.

Square also offers several business solutions under one platform. With Square Contracts, UK merchants can create and manage agreements, invoices, and policies directly from the Square Dashboard. Square also provides a range of Point of Sale (PoS) systems tailored to different industries, including retail, restaurants, and appointment-based businesses.

PayPal vs Square Fees

PayPal charges fixed fees that depend on the transaction’s currency. Dispute fees can increase based on the frequency of disputes a merchant experiences. For the latest details on fees, it’s best to check PayPal’s website for a complete pricing breakdown.

PayPal fees in GBP, as of 18 October 2024. For more information go to PayPal website.

Square’s PoS software is free. The provider will charge 1.75% for each in-person transaction. For online payments, it’s 1.4% + 25p for UK card transactions or 2.5% + 25p for non-UK card transactions.

The price is 2.5% for manually keyed-in transactions, recurring payments via online checkout links, square invoices and virtual terminals. Square’s hardware pricing varies from £19+VAT for Square Reader to £599+VAT for Square Register.

PayPal vs Square for Small Businesses: Key Difference

For UK merchants, the choice between Square and PayPal depends on the specific needs of your business.

PayPal is ideal for businesses that need a global reach, as it supports a wide range of payment methods and currencies, making it suitable for e-commerce businesses with international customers.

Its integration with platforms like Shopify and WooCommerce is seamless, and its no-code options like QR codes and payment links are great for small businesses that want simple payment solutions without technical expertise.

Square, on the other hand, is perfect for UK merchants focused on in-person payments and running businesses with more specific point-of-sale needs. It offers tailored PoS systems for industries like retail and restaurants, making it the better choice for brick-and-mortar stores or mobile businesses that need flexibility.

Additionally, Square's pricing structure is more straightforward for UK-based businesses with lower fees for domestic transactions. Its virtual terminal, free online store setup, and a wide range of options are also appealing for merchants with a strong local presence.

Ultimately, the key difference between PayPal and Square is that PayPal works best for businesses with a global reach or complex e-commerce needs, while Square shines for UK-based merchants looking for versatile PoS systems and affordable transaction fees.

Alternatives to Square and PayPal for UK Merchants

Need a smarter, simpler payment solution? Noda is the perfect alternative to Square or PayPal for small and medium-sized businesses. We provide fast, secure payments with seamless integration, so you can focus on growing your business.

Why Noda?

Noda does more than just payment processing and customisable checkout. Our Open Banking API lets you offer direct bank payments with a better customer experience, fewer fees, and zero chargebacks. It’s a smoother payment process for your customers, and more savings for you.

Easy Integration

With e-commerce plugins for platforms like OpenCart, WooCommerce, Magento, and PrestaShop, Noda is easy to set up. Whether you’re just starting or expanding, we have flexible plans to suit your needs, including no-code payments.

Expand Globally

We partner with over 2,000 banks in 28 countries, offering flexible fees and instant payments. Noda helps you save on fees by cutting out middlemen, while your customers pay through their trusted local banks.

Fuel Your Growth

From offering user data insights via Know Your Whales (KYW) to improving user experience, Noda’s tools are designed to support your business growth. We streamline payments and help you forecast long-term success.