Square, PayPal Here, or Dwolla for Your Business?

PayPal Here A few weeks ago I wrote about a new payment service I came across called Dwolla. I was pretty impressed with the service, and have since created an account with them as they seem to be good for individuals as well as business. But then I got to thinking, with all of these new payment services, how do they stack up against each other?

Payment Services

With every business – especially small businesses – there are differences in the way things are done, so some choices are better than others. I thought I’d take a look at what I consider three of the most well known payment options available to businesses and individuals right now: Dwolla, PayPal Here, and Square.


I wrote a fairly extensive overview of Dwolla a few weeks ago. If you want a more extensive look, be sure to check out the post. Otherwise, here are some of the basic benefits and perks of using Dwolla for businesses.

Dwolla’s transaction costs are excellent. Any transactions over $10 are free. As in $0. Anything less than $10 and you are charged $0.25 for the transaction. Dwolla links directly to your business bank account for speedy transactions and improved security. Their software runs on Android and iOS as well as any computer. It seems pretty simple and straightforward, and that’s definitely a selling point for Dwolla.

What isn’t a selling point for Dwolla however, is the fact that it doesn’t get nearly the attention as Square or PayPal does. That means it doesn’t have the user base that PayPal Here or Square has. The benefit of being directly linked to bank accounts could also be a negative aspect in disguise. A lot of people are used to using debit and credit cards to make payments and want to stick with it. Dwolla has to convince consumers their service is better and worth using over the competition.


Square is widely seen as the leader in mobile payments and alternative card processing for businesses. In November of 2012 they announced they were processing $10 billion in payments a year and that they had expanded into Canada. That’s an impressive number and a good sign for the company.

Square prides itself on being easy to use. Essentially you sign up, link your company to their service, and use the free card reader they mail to you on your iOS or Android device, install the app, and you’re good to go. Deposits are made next-day and Square also offers free analytics. Square offers competitive rates, at 2.75% (3.5% plus $.15 each transaction if entered manually) coupled with no monthly payment, or a flat rate price of $275 per month.

Square is certainly doing well, but Ben Dwyer at Cardfellow notes that Square is “oversimplifying the way it’s marketing the $275 flat rate.” Apparently there are restrictions and small print that “will cause many businesses to pay more than the $275 flat rate.” Going with Square means you should look into which payment method truly makes sense for you and check out the small print! Additionally, unlike Dwolla and PayPal, the only service Square provides is card processing. No checks, individual bank transfers, or anything else of the sort. Just cards.

PayPal Here

PayPal launched PayPal Here last year to much media attention. Square had been receiving much of the attention in the payment processing world for a while and PayPal definitely wanted in on the action, and they came to the scene ready to do business.

PayPal Here offers three different levels of service: Standard, Advanced, and Pro for monthly fees of $0, $5, and $30 respectively. There is a long list of features you can read here but the major ones are: free card swiper, check processing (via camera on phone), integration with eBay, PayPal, and Etsy, and the ability to receive payments in multiple currencies and 190 countries. Another bonus to PayPal Here compared to Square, is that like Dwolla, payments arrive very quickly, a matter of minutes in some cases. The fee per transaction barely beats Square’s at 2.7%.

PayPal definitely has lots of advantages to its service. The company has run into problems with accounts and security, which it is trying to improve. Forcing users into a percentage fee per transaction versus Square’s options and Dwolla’s exceptionally low fees is not a selling point for me for PayPal Here.

PayPal has a significant advantage over Square and Dwolla in that it has a customer base, already familiar with its services, of over 100 million people. It also has a much stronger brand presence and reputation compared to the other options. This is important to consider when making a decision if you’re looking for another payment processor.


If you’re looking for a card/payment processor for your business right now, I think the safest bet is going with PayPal. Its brand presence, flexibility, and user base are quite a bonus compared to Square and (especially) Dwolla. Square definitely comes in a close second, depending on the payment plan which might suit your business more than PayPal’s plan.

As much as I like Dwolla – and I do think they offer a cheaper, more innovative service than either Square or PayPal – they have to fight an uphill battle to get more recognition, brand awareness, and users. It might be worth waiting to see how the market levels out in a year or two if your business has that capability. Otherwise, all three choices are certainly capable of providing the services you want. It’s a matter of what fits your business best.

What do you think about Dwolla, Square, and PayPal Here?


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Patrick currently lives in Somerville, Massachusetts, where he is studying for a Master's Degree in Intercultural Relations. Upon graduation from Penn State in 2008, he spent two years overseas in Kyrgyzstan with the U.S. Peace Corps. While writing is currently his chosen way to put food on the table, he loves fitness and exercise, which he believes makes up for his avid computer gaming habit.

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