Extremely easy to set up and use, Square offers a simple and convenient way to accept card payments with almost no upfront investment.
For small and growing businesses, Square is also an efficient and affordable way to manage payment processing, invoicing, inventory, employees and more in a single service. Account holds continue to be the biggest complaint, and a deal-breaker for some.
No fixed fees.
1-2 days funds deposits.
Excellent free point of sale application
Expand with a range of add ons
Unjustified account holds
Basic customer support.
Requires two different card readers
Square was the first company to introduce a solution for using smartphones to accept card payments, and payment processing remains at the core of its offering.
When you sign up for Square you receive the tiny Square Magstripe Reader, which plugs into the audio jack on your mobile device, at no cost. (You can also purchase one for $10 from a retail store.) In combination with the free Square Point of Sale app, the magstripe reader enables merchants of all sizes and even individuals to easily accept credit card payments via their smartphone or tablet.
Using the Magstrip Reader 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 loss.
Unless you only process card payments very sporadically and for small amounts, we recommend that you purchase the Square Contactless + Chip reader ($49).
This sleek little device is EMV compliant and can accept both chip cards and contactless payments with contactless cards, Apple Pay, Android Pay and similar solutions. It’s chunkier than the Magstripe Reader, but still pocket-sized and easy to carry everywhere.
Unfortunately, the Square Contactless + Chip reader does not have a slot for swiping magnetic cards.
This isn’t an issue if you’re also using the Square Stand ($169). The clever design of this sleek iPad countertop stand incorporates a magstripe reader, enabling you to accept payments with any type of card, and for brick and mortar businesses we highly recommend the Square Stand.
However, if you’re a mobile merchant or if you don’t want to purchase the Square Stand, you only have the following options if a client wants to pay with a magstripe-only card:
- Type in the card number manually, and pay the corresponding higher processing fee (see the Pricing section below).
- Use the basic Square Magstripe Reader.
When you order the Contactless + Chip reader, a Magstripe Reader is included in the box, but it just isn’t very convenient that you need to use two different card readers for different types of cards.
Some merchants have complained that the small 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 the Contactless + Chip readers, some users find that the battery life is shorter than expected. For brick and mortar businesses, this can be solved by purchasing a countertop dock ($29) for the reader. The dock can be plugged into the Square Stand, or connected to a power outlet with a wall adapter.
Finally, it’s important to note that the Square card readers aren’t compatible with all mobile devices:
- The Contactless + Chip Reader requires Bluetooth Low Energy (BLE) in order to pair with the mobile device.
- The small Magstripe swipe reader must be plugged into the audio jack on your device, and new iPhones (iPhone 7) no longer have that port.
Before ordering, check that the device you intend to use for taking payments is compatible with your chosen card reader.
Like most other mobile payment processing vendors, Square operates with a very simple and transparent fee structure. There are no setup fees, no fixed monthly fees, and no early termination fees: you only pay when you make a sale.
The fee structure is the same for all users:
- 2.75% for swiped, tapped or contactless payments with Visa, Mastercard, Discover, or American Express, including international cards
- 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 an excellent deal if you regularly serve international customers (Square’s main competitor, PayPal Here, charges an additional 1.5% for international card processing).
Unlike most competitors, Square also does not apply any chargeback fees, and even offers a free service called Square Chargeback Protection. According to the terms of service, merchants are not held responsible for up to $250 in chargeback per month, as long as the transactions are compliant with Square’s Best Practices. (Certain goods considered high-risk are not covered by this protection.)
The competitive, predictable pricing is certainly one of the main reasons for Square’s popularity. Some merchants consider the 2.75% fee on the steep side; however, you would be hard put to find better value for money anywhere else, especially if you also take full advantage of the excellent free Square Point of Sale app.
Very quick deposits is another of Square’s competitive advantages. When you sign up, your account will be set to the default option Next Business Day deposit, which means that your funds will arrive in your bank account within one or two business days after you’ve made the sale.
If you need your money immediately, an Instant Deposit option enables you to instantly transfer funds from Square to your bank account for a fee of 1% of the deposit total. In order to be able to use this option, your Square account must be linked to a supported U.S.-issued Visa or MasterCard debit card.
Square POS 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. Certain inventory management functions, in particular, are only available for iPad.
In addition to the payment processing features we’ve already covered, you can use the Square Point of Sale app to
- create a product library with photos, product names and prices
- connect bar code 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 the ability to split tabs between different cards or even multiple payment options.
A single Square account can be used to manage multiple (up to 75) locations. Products, prices, and discounts can be edited in an integrated library, but can also be differentiated for specific locations.
Furthermore, you can use Square to create a sleek online store for free. Inventory counts are synced between the POS app and the 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 nice piece of business intelligent software. You can access your dashboard via desktop or an iPhone app — at the time of writing, the Android app is not yet available, but you can sign up to receive a notification when it gets out.
Via the Square Dashboard, you can view all your transactions and deposits at a glance and track the progress of your invoices. You can manage you product library, set employee permissions, and customize your online store.
The dashboard also includes a set of analytics reports: Which products sell best, how much does your average customer spend, and how many of your customers are new versus returning, among others.
The dashboard is also where you can manage the various add-ons to the Square Point of Sale system, both free services like digital receipts with a built-in customer feedback function (Square Feedback) and paid functions (see below for details).
Finally, Square can be integrated with a very large range of third-party software, including accounting and tax compliance software such as QuickBooks, Xero, and Snitch Labs, e-commerce solutions (Weebly, WooCommerce), employee management systems (TSheets, WheniWork) and more.
Beyond the free app
In addition to the features included in the free POS system, Square provides a selection of additional fee-based services. Where most other software-as-a-service 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.
Square Appointments (starting at $30 per month for solo entrepreneurs) enables your clients to see your availability and book their 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 up and automate email marketing campaigns, and to post your promotions to your Facebook page.
Square Loyalty ($25 per location per month) is a basic loyalty program management 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 Employee Management service ($5 per employee account per month) 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 Square Payroll service ($25 base fee, plus $5 per employee or contractor, per month) enables you to import employee timecards, calculate overtime, and manage taxes. Sick leave and paid time off calculations are included, too.
For retail businesses with a large number of SKUs and more complex inventory management requirements, Square for Retail ($60 per register per month) is 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 Retail also generates more sophisticated reports than the free version, with functions such as automated cost of goods sold and margin calculation.
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, sometimes for more than 30 days. Some even had their accounts deactivated, with no recourse. At the time of writing, Square’s profile at the Better Business Bureau shows more than 1,400 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 the 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 very 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.