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PayPal Here vs Square for “swipes” and “chips”

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Lots of options these days for Credit Card processing—you can see their pricing is virtually identical. PayPal used to have per-item fixed fees and that adds alot for small transactions but now they both offer percentage-only fees.

paypal EMV reader

2016 PayPal Here

2.7% Per swipe (or “dip” of an EMV chip card)
3.5% + $0.15 to key in cards
square swipe chip and dip
square appl epay EMV

2016 Square

2.75% Per swipe  (or “dip” of an EMV chip card)
3.5% + 15¢ Per manually entered transaction
Reader Options
  • Both services offer a free or cheap “swipe only” little card reader
  • Stripe has a new (inexpensive) small  reader for “swipes” and “chips”
  • Both services offer a more expensive reader that takes Apple pay
PayPal offers a small “swipe” only reader
and a bigger unit that does all 3: “swipes” “chips” and apple pay
Square has a new small reader for “swipes” and “chips” (their old reader was for swipe only)
and a bigger reader for apple pay only
and also a new “RED” one that raises money for charity
square reader red
So for compactness, price and versatility, Square wins out with their super compact new reader. It doesn’t need batteries either.
Note that using swipe-only is fine for the next few years at least – but at some point new cards won’t have magnetic stripes.
Note also that setting up a Square account might take a while – they might run a credit check or something since it’s a new account and maybe there would be other delays since it is a business account. More people already have a PayPal account so it can be simpler to use that.

Accounting for Taxes

For either service, if you make $20,000 in payments AND at least 200 transactions then you will receive a 1099K form. This is a fairly new kind of 1099 and it means these services are reporting your income to the IRS.  For many this will be a convenient way to track and confirm their yearly income but for others it will cause issues since some small businesses will get the 1099k and also a 1099 “misc” from clients who are not clear that they should no longer issue 1099 “misc” since they are paying via a third party service. Also, if you use PayPal for non-income transactions – like someone paying you back for a purchase – then you need to be aware the IRS will think all you incoming money is taxable income.

Other kinds of fees

for sending invoices:
2016 PayPal Here: 2.9% + $0.30 to invoice
1% for cross-border transfers
you can enter checks into the mobile app also

2016 Square: 2.75% Per swipe (or paid Square Invoice)

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