Square
Square is the easiest payment processor to set up and the best choice for card-present businesses. Plug in a reader, start accepting cards in 15 minutes. But that simplicity comes with trade-offs in pricing and flexibility.
On this page
When to Use Square
You should use Square if:
- You're primarily card-present (retail, restaurants, services)
- You need to start accepting payments TODAY
- You don't have a developer on your team
- You want an all-in-one POS solution (inventory, employees, reporting)
- You're a solopreneur or small team (under 10 employees)
Skip Square if:
- You're primarily online/e-commerce (Stripe is better)
- You need custom integration or API control
- You're doing over $500K/month (pricing gets expensive)
- You want to negotiate rates (Square doesn't negotiate)
Pricing Breakdown
Standard Pricing (Non-Negotiable)
| Transaction Type | Rate | Notes |
|---|---|---|
| Card-present (swiped/dipped/tapped) | 2.6% + $0.10 | In-person transactions |
| Card-not-present (keyed-in) | 3.5% + $0.15 | Manually entered at POS |
| Online (e-commerce) | 2.9% + $0.30 | Square Online store |
| Invoices | 3.3% + $0.30 | Emailed invoices |
| Disputes | $15-25 | Depends on reason code |
Hardware Costs
| Device | Price | Best For |
|---|---|---|
| Square Reader (magstripe) | Free | Occasional mobile sales |
| Contactless + Chip Reader | $49 | Mobile or counter use |
| Square Terminal | $299 | Full POS with screen |
| Square Register | $799 | All-in-one POS system |
| Square Stand | $149 | iPad POS solution |
Reality: Hardware is reasonably priced compared to traditional POS systems ($2K-$10K+).
Software Costs (Square POS)
| Tier | Monthly Cost | Features |
|---|---|---|
| Free | $0 | Basic POS, payments, reporting |
| Plus | $29/location | Advanced inventory, loyalty |
| Premium | Custom | Multi-location, advanced reports |
Most small businesses stay on the free plan.
Hidden Costs
| Fee | Amount | When It Applies |
|---|---|---|
| Instant deposits | 1.5% | Same-day payout |
| Card on file | 3.5% + $0.15 | Recurring/saved cards |
| Chargeback fee | $15-25 | Win or lose |
| Paper receipt printer | $299 | If you need printed receipts |
| Cash drawer | $109 | If you handle cash |
Effective rate for most SMBs: 2.7-3.0% all-in for card-present, 3.5-3.8% for online.
What Square Does Well
1. Setup Speed
You can start accepting payments in under 15 minutes:
- Download Square POS app
- Enter business info
- Plug in reader
- Take your first payment
No underwriting delay for most businesses. Instant approval up to certain limits.
2. Hardware Ecosystem
Square's hardware just works:
- Plug-and-play (no configuration needed)
- Bluetooth connectivity
- Long battery life
- Reliable (chip/tap readers are solid)
Best in class for non-technical owners. No IT person needed.
3. All-in-One POS Features
Square POS includes (for free):
- Inventory management
- Employee management with permissions
- Tips and gratuity handling
- Customer directory
- Sales reports
- Receipt customization
Reality: This is $50-$200/month software with traditional POS providers. Square includes it free.
4. Customer-Facing Features
- Square Loyalty (built-in rewards program)
- Square Marketing (email campaigns)
- Square Online (free e-commerce site)
- Square Appointments (scheduling for services)
Best for: Businesses that want all their tools in one ecosystem.
What Square Does Poorly
1. No Rate Negotiation
Square's pricing is non-negotiable:
- 2.6% + $0.10 for everyone
- No volume discounts
- No custom pricing
At scale, this hurts:
- $500K/month = $13K+ in fees (vs $10K-11K with negotiated rates)
- $1M/month = $26K+ in fees (vs $20K-22K negotiated)
Alternative: Negotiate with traditional processors at $500K+/month.
2. Aggressive Account Holds
Square holds accounts frequently:
- Sudden volume spike = instant hold
- New account doing >$10K in first month = review
- High-ticket transactions (over $1K) = delays
The hold email comes without warning. Your money is frozen for 30-180 days while they "review."
Common triggers:
- Going from $5K/month to $50K/month
- Selling high-ticket items ($500+)
- Pre-selling or taking deposits
- High chargeback ratio (>0.5%)
Reality: Square's risk algorithms are conservative. They protect themselves aggressively.
3. Limited API Control
Square's API exists but is limited compared to Stripe:
- Fewer webhooks
- Less flexible subscription logic
- Harder to build custom integrations
Bottom line: If you need custom code, Stripe is better. If you're using Square POS as-is, this doesn't matter.
4. Customer Support
Square support is hit-or-miss:
- Phone support exists but wait times vary (5-45 minutes)
- Email support is slow (24-72 hours)
- Chat support is available but often scripted responses
Under $250K/month: You're in general support queue Over $250K/month: Dedicated support (maybe)
Pricing Comparison (Square vs Competitors)
| Processor | CP Rate | CNP/Online Rate | Keyed-In Rate | Hardware |
|---|---|---|---|---|
| Square | 2.6% + $0.10 | 2.9% + $0.30 | 3.5% + $0.15 | $0-$799 |
| Stripe | 2.7% + $0.05 | 2.9% + $0.30 | Same as CNP | $59-$249 (Terminal) |
| PayPal | 2.7% + $0 | 3.49% + $0.49 | 3.5% + $0.15 | $24.99+ |
| Clover | 2.3-2.6% + $0.10 | Varies | Varies | $499-$1,649 |
Verdict: Square's card-present rate is competitive. Online rate is standard. Keyed-in rate is expensive (use this sparingly).
Who Square Is Best For
Perfect Fit
| Business Type | Why Square Wins |
|---|---|
| Retail stores | Best POS, inventory, hardware ecosystem |
| Restaurants/cafés | Tips, kitchen printing, tableside ordering |
| Service businesses | Square Appointments, invoicing |
| Mobile sellers | Farmers markets, pop-ups, events |
| Non-technical owners | No developer needed |
| Quick setup needs | Start in 15 minutes |
Poor Fit
| Business Type | Better Alternative |
|---|---|
| High-volume online | Stripe (better API, lower online rates) |
| Enterprise | Adyen, traditional processors (negotiated rates) |
| Custom integrations | Stripe (better API) |
| Subscription SaaS | Stripe (better billing logic) |
| High-risk | Specialized processors (Square rejects easily) |
Common Gotchas
1. The Keyed-In Trap
Manually keying in cards costs 3.5% + $0.15 (vs 2.6% + $0.10 for swiped).
On a $100 transaction:
- Swiped: $2.70
- Keyed: $3.65
- Difference: $0.95 per transaction
At 100 keyed transactions/month: That's $95/month extra.
What to do: Train staff to use the card reader, not manual entry. Only key in when customer doesn't have physical card.
2. Instant Deposit Fees
1.5% for instant deposits adds up:
- $1K instant = $15 fee
- $10K instant = $150 fee
- $100K instant = $1,500 fee
Wait the 1-2 days for standard deposits. Only use instant for emergencies.
3. Card-on-File Rates
If you save customer cards for recurring billing, you pay 3.5% + $0.15 (not 2.6% + $0.10).
For subscription businesses: This makes Square expensive. Stripe charges 2.9% + $0.30 for recurring.
Example: $50/month subscription, 100 customers
- Square: $175/month in fees (3.5%)
- Stripe: $145/month in fees (2.9%)
- Difference: $30/month ($360/year)
4. High-Ticket Transaction Delays
Transactions over $500-$1,000 often trigger payment delays:
- Square holds the funds for 24-72 hours
- They're checking for fraud
- This is automatic, no way to avoid it
If you sell high-ticket items regularly, warn customers about potential delays.
Test to Run
Square fee audit (if you're already on Square):
Week 1:
- Pull your last 3 months of Square reports
- Calculate effective rate:
total fees / total volume - Break down by transaction type: CP vs keyed vs online
Week 2:
4. Count how many transactions were keyed-in vs swiped/dipped
5. Calculate cost of keyed transactions: (keyed volume * 3.5%) - (same volume * 2.6%)
6. This is money lost to convenience
Week 3: 7. Check your average deposit timing 8. Are you using instant deposits? Calculate 1.5% cost 9. Switch to standard deposits if not urgent
Success criteria: Keyed-in under 5% of transactions, instant deposits under 10% of volume, effective rate under 3.0%.
Scale Callouts
Under $100K/month:
- Square is competitive and easy
- Hardware is cheap, software is free
- Don't worry about negotiating rates yet
$100K-$500K/month:
- Square pricing starts to hurt
- Calculate if you'd save 0.3-0.5% with traditional processor
- At $300K/month, 0.4% savings = $1,200/month ($14K/year)
- Switching might be worth it
Over $500K/month:
- Square becomes expensive
- Traditional processors offer 2.0-2.3% + $0.10 for CP
- Savings: 0.3-0.6% ($$1,500-$3,000/month on $500K volume)
- Seriously evaluate switching
Over $1M/month:
- Leave Square for traditional processor or negotiate rates
- Square's lack of negotiation costs $3K-$6K/month
- Use Square only if the POS features justify the premium
Where This Breaks
-
Account holds without warning: Square freezes accounts aggressively. If your cash flow is tight, a 30-day hold can kill your business.
-
No negotiation at scale: At high volumes, you're overpaying. Square won't budge on rates no matter your volume.
-
Recurring billing costs: Card-on-file at 3.5% + $0.15 makes subscription businesses expensive. Switch to Stripe for recurring revenue.
-
High-risk rejection: If you sell anything in a gray area (supplements, adult, weapons), Square will reject or terminate you quickly.
-
Chargeback threshold: Square's tolerance is low. Over 1% chargeback ratio = warnings. Over 1.5% = termination risk.
Next Steps
Considering Square?
- Download Square POS and test it (it's free)
- Compare to Stripe if you're online-first
- Review Card-Present Terminal Decisions
Already on Square?
- Run the fee audit above
- Reduce keyed-in transactions (use the reader)
- If over $500K/month, calculate switching costs vs savings
Switching from Square?
- Read Processor Switch Checklist
- Consider Stripe for online or Clover for retail
- Factor in POS migration costs (Square POS data doesn't export easily)
See Also
- Stripe - Competitor comparison for online/developer-led
- PayPal - Competitor comparison for brand recognition
- Processor Comparison - Full comparison table
- Buying Payments - Choosing a processor framework
- Card-Present Terminal Decisions - Hardware selection
- Terminal Security - Securing your Square hardware
- Chargeback Prevention - Stay under Square's thresholds