I am a Papers user since 2011 and I am very happy with it. Nowadays, I have been using macOS Catalina 10.15.14 with papers 3 3.4.23 and MS Word for Mac 16.16.15
I am having an important limiting problem that might make me stop using the program. I just cannot insert citations on word docs anymore. That a major tool of Papers. When I try, I just get the message: “cannot insert a citation. You need to save document on your local drive first”
That doesn't change doesn't matter what I do or how many times I save the file in local HD.
I hope that is a settings problem and not some sort of incompatibility.