- Highs: No fixed fees. Superb free POS features. Wide range of add-ons. Payouts in 1-2 days.
- Lows: Unjustified account holds. Basic customer support. Not all terminals have swipe function.
- Buy if: You need an economical payment solution with predictable fees.
Square was the first company to introduce a solution for cell phones to accept card payments. Card processing is still the core offering, but Square also sells their own equipment to use with the Point of Sale app and card readers. They also offer capital and other services to help start-ups and small businesses.
Unlike banks and merchant service providers, Square is contract-free so you can start taking payments for a simple transaction fee.
With Square, you can accept Visa, Mastercard, Discover and American Express through any of their terminals.
|Point of Sale app||Free|
|Chip, contactless & magstripe payments||2.6% + 10¢|
|Keyed entry payments||3.5% + 15¢|
|Online payments||2.9% + 30¢|
Swipe, EMV (chip dip) and contactless tap cards incur the same transaction fee through all of Square’s card terminals. The card fee is the same for Visa, Mastercard, Discover and American Express cards.
Then you have:
- 3.5% + 15¢ for transactions where the card number is typed in manually (the higher fee reflects the higher risk of such transactions being fraudulent)
- 2.9% + 30¢ for online transactions
Square does not charge additional fees for payments made with international cards, which is great if you regularly serve international customers.
Unlike most competitors, Square also does not apply chargeback fees, and even offers free chargeback dispute support. It is still expected you are compliant with Square’s Best Practices (certain goods considered high-risk are not covered).
The card readers and other equipment cost the following:
|Magstripe reader||First one free, $10 per extra one|
|Square Reader (EMV, contactless)||$49|
|Square Stand (swipe)||$199 or $18/mo for 12 months|
|Square Terminal (swipe, EMV, contactless)||$299 or $27/mo for 12 months|
|Square Register (swipe, EMV, contactless)||$799 or $39/mo for 24 months|
Any hardware costing $49-$5,000 are eligible for monthly payments over 3, 6, 12 or 24 months, if you pass Square’s credit checks.
The competitive, predictable pricing is one of the main reasons for Square’s popularity. Some merchants consider the card fees on the steep side, but you would be hard put to find better value for money anywhere else, especially if you also take full advantage of the free Square Point of Sale app.
Card terminals and payments
When you sign up with Square, you get the tiny Square Reader for magnetic stripe cards – either one with an audio jack for Android or one with a Lightning connector for iPhone – by post. In combination with the Square Point of Sale app, the magstripe reader can accept credit card payments via merchants’ own phone or tablet.
However, using swipe-only carries risks: merchants are liable for fraudulent purchases made by swiping the magnetic stripe if the card was equipped with a chip (EMV card). In other words, if you use the Magstripe Reader to take payment with a chip card and the card turns out to be false, you won’t be able to recover your losses.
Square magstripe reader with Lightning jack and headphone jack.
Unless you only process card payments very sporadically and for small amounts, we recommend purchasing Square Reader for Contactless and Chip.
This sleek little device is EMV-compliant and can accept both chip cards and contactless payments with NFC cards, Apple Pay, Google Pay and Samsung Pay. It’s chunkier than the magstripe reader, but still pocket-sized and easy to carry everywhere.
Square Reader reader does not have a slot for swiping magnetic cards, so you will need to carry both with you to provide all options.
Square Reader with Square Stand. Photo: Square
The Square Stand for iPad has an inbuilt magstripe reader, ideal for brick and mortar businesses at a fixed checkout.
Mobile merchants without Square Stand have the following options if a client wants to pay with a magstripe-only card:
- Type in the card number manually and pay a higher processing fee (see Pricing section)
- Use the basic Square magstripe reader
Square Reader with a Magstripe Reader in the box, but it may not be very convenient having two different card readers for different types of cards.
Some merchants have complained that the magstripe reader is easily lost, and that it wears out rather quickly. Given that it sells for only $10 in retail stores, it might be a good idea to keep a couple of spares, especially for important events where you expect to make many transactions.
As for Square Reader, some users find the battery life shorter than expected. For brick and mortar businesses, this can be solved by purchasing a countertop dock for the reader. The dock can be plugged into the Square Stand, or connected to a power outlet with a wall adapter.
Square Terminal accepts magstripe, EMV and NFC cards and has an inbuilt receipt printer. Photo: Square
In recent years, Square has introduced Square Terminal as a handy solution for swipe, EMV and contactless cards – and it has an inbuilt receipt printer. The terminal can even connect with other POS systems than Square’s own.
More ambitious merchants can opt for Square Register, which is a complete POS tablet and terminal setup of Square’s own design. This is pricier, but looks classier in dark surroundings, as it is a dark grey colour.
Square Register consists of stand with inbuilt tablet and detachable card terminal with screen. Photo: Square
Quick transfers are one of Square’s competitive advantages. When you sign up, your account will be set to the default option Next Business Day transfer, which means that funds will arrive in your bank account one or two business days after each card sale.
If you need your money immediately, an Instant Transfer option enables you to instantly deposit funds from Square to your bank account for an additional fee of 1.5% of the transaction total. To use this option, your Square account must be linked to a supported US-issued Visa or Mastercard debit card.
Point of Sale features
Square does a lot more than just payment processing. The mobile app, called Square Point of Sale (formerly Square Register), includes most if not all the tools you need to run your business.
In our opinion, Square Point of Sale is unparalleled by any other free POS system out there. The interface is extremely intuitive and easy to use, and the features are on par with many fee-based POS systems.
The app runs on both iOS and Android smartphones and tablets, but it’s best optimized for the iPad. For example, certain inventory management functions are only available on iPad.
Apart from payment processing features, you can use the Square Point of Sale app to:
- Create a product library with photos, product names and prices
- Connect barcode scanners, cash drawers and printers
- Send and track invoices
- Send receipts via email or text message
- Apply discounts
- Track inventory
Restaurant owners will appreciate the tipping options, the ability to keep tabs open until clients are ready to leave, and splitting bills between different cards or even multiple payment options.
Invoices can be sent from the Point of Sale app. Photo: Square
A single Square account can be used to manage multiple locations. Products, prices and discounts can be edited in an integrated library, but also applied to specific locations.
Furthermore, you can use Square to create a sleek online store. Inventory counts are synced between the POS app and online store, a feature few – if any – other free POS systems offer.
Analytics and accounting
The Square Dashboard, which comes free with your Square account, is a handy piece of business intelligence software. You can access your dashboard via PC, Mac or phone browser. On iPhone, there’s an app specifically for the dashboard.
Via the Dashboard, you can view all transactions and deposits at a glance and track the progress of invoices. You can manage you product library, set employee permissions and customize your online store.
The dashboard also includes a set of analytical reports on best-selling products, average customer spend, new versus returning customers, among more.
The dashboard is also where you manage various add-ons for the Point of Sale system, both free services like digital receipts with the built-in customer feedback function (Square Feedback) and paid functions.
Finally, Square can be integrated with many third-party tools, including accounting and tax compliance software such as QuickBooks, Xero and Snitch Labs, ecommerce solutions (Weebly, WooCommerce), employee management systems (TSheets, WheniWork), and more.
Square Analytics provide various insightful data about your sales, for instance bestselling product categories. Photo: Square
Beyond the free app
In addition to the free POS features, Square provides a selection of fee-based add-on services. Where most other software-as-a-service (SaaS) providers offer a limited number of standardized service packages, Square has opted for an à la carte menu where you choose – and only pay for – the services you actually need and will use. Here are some of the add-on services available:
Square Appointments (free for solo entrepreneurs, from $50 for teams) enables your clients to see your availability and book appointments online. Your schedule is synced across all your devices, and the software can send automated reminders to minimize no-shows.
Square Marketing (starting at $15 per month) is an email marketing tool you can use to set and automate email marketing campaigns and post promotions on a Facebook page.
Square Loyalty (from $45 per location each month) is a customer loyalty tool. Customers join the program simply by entering their phone number. You customize loyalty stars, rewards and other settings from your Square Dashboard, and stars and rewards will be issued automatically when your loyalty program members make a purchase.
The Team Management service ($35 per month per location) includes a time-tracking service enabling employees to clock in and out at the point of sale. Different employees or roles can also be given different levels of access to your Square account, and you can run employee performance reports. The Point of Sale app does include free Mobile Staff accounts, but these have very limited settings compared to the paid staff accounts.
Square Payroll ($29 base fee plus $5 per employee or contractor each month) enables you to import employee timecards, calculate overtime and manage taxes. Sick leave and paid time off calculations are included too.
Retail businesses with a large number of SKUs and more complex inventory requirements can subscribe to Square for Retail ($60 per register per month), an enhanced version of Square Point of Sale.
Features include alerts when stock is running low, the ability to quickly and easily create and send purchase orders to your vendors, and multi-location inventory tracking and transfer.
Square for Restaurants has advanced floor plans and order functions. Photo: Square
Square for Retail also generates more sophisticated reports than the free version, with functions such as automated cost of goods sold and margin calculation.
For the same price, Square for Restaurants (get a free trial here) gives advanced POS features for food-and-drink establishments. For instance, it allows you to create floor plans and food menus in details, and also advanced reports related to the restaurant performance.
With such amazing services at a very competitive price, what’s holding us back from giving Square a five-star review?
Unfortunately, Square’s ultra-simple signup and acceptance process has a downside. The risk Square is taking by not vetting your credit history before approving your account is mitigated by strict, but undisclosed measures in order to limit fraud—including placing automated holds on transactions which their algorithm considers suspicious.
As a result, a large number of merchants have reported that their funds have been placed on hold suddenly and without notification, usually for more than 30 days. Some even had their accounts deactivate with no recourse. At the time of writing, Square’s profile at the Better Business Bureau shows more than 1,900 formal complaints, a majority from business owners complaining about withheld funds or account deactivation.
These policies mean that Square can be a little risky especially for high-ticket merchants. In order to minimize risk, make sure your processing patterns are accurately described in the application, and avoid processing unusually large transactions if at all possible.
Adding to the frustration for many of these merchants, Square’s customer service can be difficult to reach and not always effective. Of course, this is the logical consequence of their business model — a great product at very low cost — but if thousands of dollars are being withheld from you for no obvious reason, you might not be very sympathetic to this argument.
That said, Square has clearly made efforts to step up their game in this area. From email-only support in the early days, Square now offers support via email, phone and Twitter from Monday through Friday, 6am to 6pm Pacific Time.
Square Reader stuck to an iPhone, accepting contactless card. Photo: Square