If you’re a small business person then you know that accepting card payments is critical in this day-and-age, cash is no longer king despite any advantages it might have.  Paypal and Square go head to head in offering payment solutions to businesses but just how do they stack up against each other.

Rather than just taking both devices and comparing the technology and fees, we asked small business operator Thomasin Lockwood how things went using the two systems.

Thomasin operates Sydney Harbour Cruise company Spirit Fleet with her partner Brad, and as a new business getting started with payment options like these has been critical.

Here’s what Thomasin had to say about her experience buying, setting up and using Paypal Here and Square.


Keeping my running costs to a minimum is very important, especially being a start-up company.

Initially I contacted the major banks, including the one I bank with for their merchant services. Quotes back were through the roof, $150 per month running costs plus per transaction fee and a percentage of the sale. This was too expensive.

The major problem I encountered is my business is very seasonal. Summer months are the busiest with over 50% of revenue in December alone. July for example I might not use the card reader at all. Therefore I needed a service that is flexible and without a month service fee.

I run our accounting through MYOB so approached them but as a new business was rejected, being too high risk. Another downside is they didn’t offer an option for over the phone payments.

For the first six months I used Paypal Here. The set up process is you buy the card reader (I purchased the tap and go card reader $149), to activate you have to provide your business details, then re confirm your details and wait to be approved. From start to finish this process took over 6 weeks, only when threatening to return the card reader did I get approved. I’ve heard this is common practice.

When using the card reader it was easy to take over the phone payments via the app, however you are paying a 2.9% commission on sales and transaction fee. The most annoying thing was once you’ve made over $1000 of sales in one week, they hold any monies over that amount for 21 days for “security reasons” in our Paypal account. This was very inconvenient. For example; with some sales I need to buy catering upfront, but didn’t receive the funds until 3 weeks later, meaning I had to come up with the cash myself.


Another flaw the chip and pin often didn’t work, meaning I had to type in the customers details and pay the higher rate of 2.9% rather than 1.95%, doesn’t sound like much but on a sale of $1000 thats $10 and added up very quickly. It also wasn’t professional to have faulty card reader in front of clients, it often took several attempts and a long time to take payments.

Customer service with Paypal Here is terrible. Average call time before speaking to a rep is 5-10 mins. I have contacted them multiple times and nothing has been resolved. I asked for a replacement card reader and they sent me the wrong model (the cheaper version). The downside is Paypal Here is it is small in the whole scheme of Paypal. Only being a small area means the focus and man power is else where. None of the reps I spoke to know what they were talking about and 4 of my emails still got unanswered.

Recently I purchased Square, sceptical at first due to all my previous experiences, but drawn in with the lower fees and that funds are deposited straight into our chosen bank account. The card reader only being $19 it was a low risk for me if it didn’t work out!

After purchasing the card reader from Bunnings, setting up an account took 5 minutes. Confirming back account took 5 days, (they deposit an amount under $1 into your account and take it back again). I made the first sale within a week of buying the card reader.


One thing that I wasn’t aware of from reading their website was after the first sale, they too confirm your details, requesting proof of ABN, business details, website etc promising to be completed with 1-2 business days. This process actually took 4 days and a chase up telephone call before I received the funds from the first sale. An inconvenience but nothing like what I have experienced with Paypal Here. Note; my call to Square was answered on the second ring!

Both Paypal Here and Square’s app on a phone is simple and easy to use. Technically you don’t need a card reader for square, the rate being the same for having the card present or not. The advantage with Paypal Here is the lower commission rate if you use the reader.


Paypal has options to receive payments on your website, they charge 3.8% for this service. Square has the option to send out invoices (2.5%). For us this isn’t something I will use, preferring to take over the phone payments to save money.

Thus far Square has trumped everything Paypal does. The major draw card for me is having all the funds deposited straight into my account 1-2 business days after the sale. It also makes accounting easier (not having to use a PayPal account to receive and then transfer) as well as managing cash flow.

One final thing to mention, Square doesn’t charge a transaction fee. Paypal charges $0.30 on top of the commission per sale. Not much, but every penny counts!


Thanks Thomasin for the insight, and of course – if you’re looking for a Sydney Harbour Cruise or to go Whale Watching in Tonga – talk to the team at Spirit Fleet! –  http://www.spiritfleet.com/