PayPal vs Square: PCI Comparison

Introduction

When accepting credit card payments through payment processors like PayPal and Square, understanding your PCI compliance obligations is crucial for protecting customer data and avoiding costly penalties. While both platforms significantly reduce the PCI compliance burden for merchants, they don’t eliminate it entirely—and the requirements differ depending on how you integrate and use each service.

This comparison matters because choosing the wrong payment integration method can dramatically increase your compliance workload and costs. Some integration methods require completing a lengthy SAQ D with over 300 requirements, while others need only a simple SAQ A with 22 requirements. The difference can mean thousands of dollars in compliance costs and hundreds of hours of work.

Quick answer: Both PayPal and Square can qualify you for SAQ A (the simplest form) if properly implemented using redirect or hosted checkout methods. However, if you use direct API integrations or store card data, you’ll face more complex requirements—potentially up to SAQ D.

Overview of Each Option

PayPal Overview

PayPal offers multiple payment acceptance methods, from simple checkout buttons to sophisticated API integrations. As one of the world’s largest payment processors, PayPal handles billions of transactions annually and maintains PCI DSS Level 1 compliance—the highest level of certification.

PayPal’s payment solutions include:

PayPal Checkout (redirect method)
PayPal Payments Pro (direct API)
Braintree (PayPal’s developer-focused platform)
PayPal Here (mobile card reader)
Virtual Terminal (web-based manual entry)

Square Overview

Square started as a mobile payment solution but has evolved into a comprehensive payment ecosystem. Like PayPal, Square maintains PCI DSS Level 1 compliance and offers various integration methods to suit different business needs.

Square’s payment solutions include:

Square Checkout (hosted payment page)
Square Payment Form (embedded form)
Square APIs (direct integration)
Square Terminal (hardware solutions)
Virtual Terminal (web-based manual entry)

Key Differences at a Glance

Detailed Comparison

Requirements Comparison

PayPal Redirect Methods (SAQ A eligible):

22 PCI DSS requirements
No handling of cardholder data
Annual self-assessment
No network scanning required
Minimal security controls needed

Square Hosted Checkout (SAQ A eligible):

22 PCI DSS requirements
No handling of cardholder data
Annual self-assessment
No network scanning required
Minimal security controls needed

PayPal Direct APIs (SAQ D potential):

Up to 329 PCI DSS requirements
Quarterly network scans required
Potential for on-site assessments
Comprehensive security program needed
Significantly higher compliance costs

Square Direct APIs (SAQ A-EP to SAQ D):

139-329 PCI DSS requirements depending on implementation
Quarterly network scans typically required
More extensive security controls
Higher compliance maintenance burden

Scope Comparison

The scope of PCI compliance depends heavily on how cardholder data flows through your systems:

PayPal Scope Scenarios:

Minimal scope: Using PayPal Checkout where customers are redirected to PayPal’s servers
Medium scope: Using Braintree’s Drop-in UI or Hosted Fields (SAQ A-EP)
Maximum scope: Using PayPal Payments Pro with direct API calls handling raw card data

Square Scope Scenarios:

Minimal scope: Using Square Checkout or Square Online
Medium scope: Using Square Payment Form with proper tokenization (SAQ A-EP)
Maximum scope: Using Square APIs with server-side card data handling

Effort/Cost Comparison

Low Effort/Cost (SAQ A scenarios):

Both PayPal and Square: $50-200 annually
1-2 hours to complete assessment
No technical security implementations required
Simple attestation process

Medium Effort/Cost (SAQ A-EP scenarios):

Both platforms: $500-2,000 annually
10-20 hours for initial compliance
Some technical controls required
Quarterly scanning may be needed

High Effort/Cost (SAQ D scenarios):

Both platforms: $5,000-50,000+ annually
100+ hours for initial compliance
Extensive technical and procedural controls
Possible need for QSA assessment

Use Case Fit

PayPal works best for:

International businesses (broader country support)
Businesses with existing PayPal customer base
Simple redirect implementations
Marketplace and platform businesses

Square works best for:

Retail and restaurant businesses
Businesses needing integrated hardware solutions
US-based operations
Omnichannel retail operations

When to Choose Each

Scenarios Favoring PayPal

Choose PayPal when:

Operating internationally beyond Square’s supported countries
Customers expect PayPal as a payment option
Building a marketplace or platform requiring split payments
Needing sophisticated fraud tools (via Braintree)
Wanting the simplest possible integration (PayPal Checkout buttons)

Example scenario: An online consulting firm serving global clients would benefit from PayPal’s international reach and simple checkout integration, achieving SAQ A compliance with minimal effort.

Scenarios Favoring Square

Choose Square when:

Running a physical retail location
Needing integrated point-of-sale systems
Operating primarily in the US market
Requiring unified online and offline payment processing
Building custom checkout experiences with modern APIs

Example scenario: A restaurant with both dine-in and online ordering would benefit from Square’s integrated ecosystem, using Square Terminal for in-person payments and Square APIs for online orders.

Hybrid Approaches

Some businesses benefit from using both platforms:

Square for in-person transactions
PayPal for online international sales
Different platforms for different business divisions
A/B testing payment methods for conversion optimization

Note: Using multiple payment processors typically increases PCI compliance scope unless each is properly segregated.

Decision Framework

Questions to Ask Yourself

1. Where are your customers located?
– Primarily domestic → Either option works
– International → PayPal has an advantage

2. How do customers prefer to pay?
– PayPal account holders → PayPal
– Direct card entry → Either option
– In-person payments → Square advantage

3. What’s your technical capability?
– Limited technical resources → Choose redirect/hosted methods
– Strong development team → API options become viable

4. What’s your risk tolerance?
– Low risk tolerance → SAQ A methods only
– Higher risk tolerance → Consider SAQ A-EP or D options

Evaluation Criteria

| Criteria | Weight | PayPal Score | Square Score |
|———-|———|————–|————–|
| Ease of SAQ A compliance | High | 5/5 | 5/5 |
| International support | Medium | 5/5 | 2/5 |
| Hardware options | Low-High* | 2/5 | 5/5 |
| API flexibility | Medium | 4/5 | 5/5 |
| Cost effectiveness | High | 4/5 | 4/5 |

*Depends on business type

Decision Tree

“`
Start → Do you need hardware terminals?
├─ Yes → Square (better hardware ecosystem)
└─ No → Continue
└─ International customers?
├─ Yes → PayPal (broader support)
└─ No → Continue
└─ Technical resources available?
├─ Yes → Either (choose based on features)
└─ No → Either (use hosted/redirect options)
“`

Common Misconceptions

Myth 1: “Using PayPal or Square makes me automatically PCI compliant”

Reality: While these services reduce your compliance burden, you still must complete the appropriate SAQ and maintain compliance with applicable requirements. Even SAQ A requires annual validation.

Myth 2: “SAQ A means no security requirements”

Reality: SAQ A still has 22 requirements, including maintaining security policies, restricting physical access to cardholder data, and implementing security awareness programs.

Myth 3: “API integrations always mean SAQ D”

Reality: Modern tokenization and hosted field solutions can keep you at SAQ A-EP (139 requirements) rather than full SAQ D (329 requirements).

Myth 4: “PCI compliance is just a checkbox exercise”

Reality: PCI compliance requires ongoing maintenance, annual revalidation, and immediate action if your integration method changes.

Myth 5: “Small businesses don’t need PCI compliance”

Reality: Any business accepting credit cards must comply with PCI DSS, regardless of size. The requirements scale with transaction volume, but compliance is mandatory.

FAQ

Q: Can I qualify for SAQ A using PayPal’s Braintree?

A: Yes, if you use Braintree’s Hosted Fields or Drop-in UI correctly, you can qualify for SAQ A or SAQ A-EP. However, using direct API integration with raw card data would require SAQ D.

Q: Does Square’s Reader qualify for SAQ A?

A: Square’s hardware readers typically qualify merchants for SAQ B-IP, which has 82 requirements. This is more than SAQ A but significantly less than SAQ D.

Q: How often must I recertify PCI compliance?

A: PCI compliance must be revalidated annually. Additionally, you must reassess if your payment integration methods change or if you experience a security incident.

Q: Can I use both PayPal and Square while maintaining SAQ A?

A: Yes, if both are implemented using redirect/hosted methods that keep cardholder data entirely off your systems. Each integration must individually qualify for SAQ A.

Q: What happens if I’m not PCI compliant?

A: Non-compliance can result in fines from $5,000 to $100,000 per month, increased transaction fees, loss of card acceptance privileges, and liability for fraud losses.

Conclusion

Both PayPal and Square offer paths to simplified PCI compliance through their hosted and redirect payment methods. The key to maintaining the lowest compliance burden (SAQ A) is choosing the right integration method rather than the payment processor itself.

For most businesses, the choice between PayPal and Square should be driven by business needs rather than PCI considerations, as both can achieve the same compliance levels when properly implemented. International businesses and those with established PayPal user bases may prefer PayPal, while businesses needing integrated point-of-sale systems often choose Square.

The critical factor is not which processor you choose, but how you integrate it. A poorly implemented integration with either processor can balloon your compliance requirements from 22 to over 300 requirements, increasing costs exponentially.

Ready to determine your exact PCI compliance requirements? Try our free PCI SAQ Wizard tool at PCICompliance.com to identify which SAQ applies to your specific payment setup and start your compliance journey. PCICompliance.com helps thousands of businesses achieve and maintain PCI DSS compliance with affordable tools, expert guidance, and ongoing support. Don’t wait—identify your requirements today and protect your business from costly penalties and security breaches.