How Does Square Work

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How Does Square Work? A Merchant’s Perspective

With over a billion payments processed to date, Square has become the leader of an emerging mobile POS movement aimed at simplifying credit card processing and mobilizing the point-of-sale. If you’re thinking about joining the revolution or already a loyal Square vendor, our guide has everything you need to understand Square’s innerworkings.

How its prices work Square is a mobile payment company that allows merchants to accept credit card payments via any Apple or Android device. It offers a select range of products and integration tools, including its popular plastic mobile card reader that fits into a headphone jack.

What makes the company attractive to micro-merchants, however, is its bundled pricing system with no monthly or hidden fees. Instead of various rates for different card or transaction types, Square generates charges fees using a bundledtransaction rate: 2.75% per swiped transaction and 3.75% + 0.15 for keyed-in transactions.

This convenience, along with its free mobile card reader, makes it an attractive option for small businesses looking for an easy way to start accepting credit cards fast. But not too fast—while Square’s rates are easy to understand, they may not be the most competitive, as not all small businesses may benefit from this pricing system. If you’re a small business where your bottom line is important to you, other providers are now offering similar offerings with lower rates.

How its products work 01 How Does Square Work? A Merchant’s Perspective

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Square offers three different card readers: a free mobile card reader for swiping credit cards and two other card readers for sale. One can be used for both swiping and dipping EMV credit cards and costs $29. For both EMV and NFC-enabled capabilities, its contactless and chip card reader goes for $49. Both EMV chip cards and NFC technology are big movements in payments today.

To start using Square, the first step is to download the Square Register app on your desired devices. After you setup your account, Square will mail you a free (or paid for) reader to begin processing transactions. Square’s strengths lie in its fast and easy setup, but its app also offers easy to use features that makes it a much more affordable option compared to larger POS terminals. Here’s a breakdown of all the services and products Square actually offers.

02 How Does Square Work? A Merchant’s Perspective

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Square’s products do have a couple drawbacks: its customer support and lack of integration.

Although Square has adopted a phone line for customer inquiries, its preferred method is still its email support, which can be unreliable and take longer than the claimed 24 hour response time.

Square also lacks scalability: it doesn’t offer a huge range of integration capabilities with thirdparty services, and once you purchase a square reader, you’re unable to switch processors that may have better rates.

Square Alternatives Yet it has become clear that Square and other providers who use bundled pricing or mobile applications are a payment force to be reckoned with. Square’s main competitors include other eCommerce platform giants like PayPal, and also mobile readers from traditional credit card processors like Intuit GoPayment and Clover Go. We compared a couple mobile options in an infographic.

Square can be a good option for some small businesses, but if your monthly volume fluctuates considerably or is larger than $3,000, you should probably choose a provider with an interchangeplus pricing system to save some hard earned money. You can quickly compare different processors with HeroPay, and find the best Square alternative for your business

03 How Does Square Work? A Merchant’s Perspective