Square Credit Card Processing Review: Is It a Good Option?

Written by Jordan BlansitUpdated: 29th Sep 2021
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Square is one of the original mobile and online payment processors and Point-of-Sale providers.

This simple, yet comprehensive, service has cropped up in many a small business’ arsenal as the go-to tool for quickly, securely, and (relatively) cheaply processing payments, paying employees, and even managing your payroll taxes.

And of course, it was cofounded by none other than Twitter’s head man himself, Jack Dorsey.

Square Pros and Cons


  • Comprehensive tool for small businesses in need of simple solutions
  • Offers intuitive, scalable POS suited to a variety of industries
  • Predictable, upfront pricing models
  • Affordable hardware


  • Square hardware is required to make the most of your experience
  • Not suitable for high-risk businesses and industries
  • Account stability concerns due to third-party business model
  • Some software packages are comparatively expensive for typical clientele

What is Square?

Square was founded in 2009 as one of the original mobile payment processors.

Its small, square plug-in card reader quickly became a staple solution for small businesses that needed affordable, easy-to-use mobile payment processing.

Since its conception, the company has branched out into a full-service payments and team management ecosystem, complete with a half-dozen developer-friendly APIs.

Square Credit Card Processor

While small businesses are the company’s bread-and-butter clientele, they can scale into mid-size territory with ease.

And with transaction processing costs in line with or below those of its peers, Square remains a competitive option in a cutthroat pay-as-you-go market.

To sweeten the pot, Square offers its basic software and first magstripe card reader for free until you’re ready for their full-service subscriptions and tabletop hardware.

And for those customers in the Retail or Restaurant businesses, Square provides paid POS accounts tailored to your needs.

How Does Square Work?

Square’s POS system is free to download when you sign up for its payment processing services.

Unless you need advanced or specialized capabilities, the only costs you’ll incur are the flat-rate card processing fees outlined in their pricing structure.

To get going with its hardware – which is not necessary, but definitely recommended – you’ll have to order your free magstripe reader.

Or you can buy one at one of Square’s retail processors, such as Office Depot or CVS. And if you need more advanced hardware from the get-go, you can browse their online hardware store to give your small business the competitive advantage it deserves.

What Does Square Offer Business Owners?

Square’s full-service POS and business software ecosystem brings small businesses and tailored management solutions under one roof.

In addition to its affordable, no-contract transaction processing software, business owners can explore options like:

  • POS systems tailored by industry
  • An all-in-one calendar and booking portal
  • Mobile and tabletop hardware devices
  • Banking services
  • Payroll, employee benefit, and tax programs

Square also manages important legalities for you, such as Payment Card Industry (PCI) compliance and data encryption.

But if you run into a problem, customer support is just a phone call away. Plus, you can troubleshoot via social media, email, and chat, or use Square’s comprehensive knowledgebase to find solutions on your own.

Square Payments Features and Benefits

Because Square offers so many software and hardware products, we’re going to break them down one at a time, starting with their payment systems.

Square Point of Sale

The Square POS system is designed to help small businesses sell online, in person, and on the go.

Users have a variety of hardware options to select from, as well as customizations and features like:

  • Pickup and delivery
  • Invoice and payment receipts
  • Customer metric and employee performance tracking
  • Employee payroll and timecard management
  • Email and text message marketing

But keep in mind, not everything on this list is included in the basic package.

Square Terminal

Square Online Store

The Square Online store is a free website builder and ecommerce platform that makes pushing product a cinch.

You can manage your inventory, offer pickup and delivery, integrate with Square’s software ecosystem, and of course, process payments.

And if you need more customization, Square provides individual domains starting at just $12.

Website Templates

With Square Online’s free website builder, you can build a successful ecommerce platform from (almost) scratch.

Highlight your brand, showcase your products, and build engagement with a unique layout and catchy branding on your first try – no design or coding experience necessary.

Square will do all the heavy backend lifting for you – including optimizing your website for mobile and desktop devices.

Square Online Checkout Links let you offer products without creating an ecommerce website.

Just generate a link in your Square App or Square Dashboard and:

  • Send it out via email
  • Embed it in your marketing campaign
  • Upload it into your blog or social media account
  • Paste it into your messaging app

Then, wait for the sales to roll in.

Bolster Social Media Presence

Question: What’s an online (or any) store without a social media account?

Answer: Not as profitable as it could be!

That’s why Square provides SEO tools to make raising your SEO rank a breeze.

From building your email list to promoting your brand to selling products on Facebook, Instagram, Pinterest, and more, you can spread the word and make your small business a social media success.


Square Appointments is a paid add-on to the Square ecosystem that, as they say, “puts time in your hands.”

This all-in-one calendar portal helps you manage your schedule, offer online booking, and send client reminders from the same system that processes your payments.

No Surprise Fees

Unlike some payment processors (looking at you, PayPal), Square isn’t one to spring surprise fees on unwitting customers at checkout.

While their fee schedule can get a bit crowded due to their numerous packages and add-ons, everything is spelled out clearly upfront.

Square Banking Features and Benefits

Lately, Square has also dabbled its toes in the world of finance and capital investments. Welcome to small business banking that truly works for you.


Square Checking is a bank account that syncs directly to your business’ POS. Any funds you earn from any sale instantly deposit into your account.

Square Checking

You can spend your hard-earned money with your Square Debit Card same-day – none of that two-day processing nonsense – or shunt it off into your savings.

Best of all, Square Checking comes with no application, credit check, or monthly fees to get started. Plus, your account is backed by $250,000 in FDIC insurance.


Once funds hit your Checking account, you can automatically shuffle a percentage into “folders,” or sub-savings accounts.

Square Savings offers 0.50% APY, free and instant transfers to and from your Checking account, and of course, FDIC insurance.

So go ahead and divvy up your funds for tax season, hardware replacements, and an employee spa day.

You deserve it.

No Overdraft, Opening Deposit, Monthly Account, and Minimum Balance Fees or Requirements

Just like the headline says! Square’s business banking options charge no fees or requirements to open or maintain your account.


Based on your Square profile, you may also be eligible for a Square Loan of up to $250,000. Their lending services come with perks such as:

  • A flat fee, rather than interest payments
  • No late fees
  • And no dings to your credit score

Moreover, Square automatically pulls a small, set percentage out of your daily sales to repay your obligation, so you only pay what you can afford.

Square Customer Solutions

On top of Square’s payment, hardware, and banking products, they offer a number of customer-oriented solutions to complement and expand their service.

Virtual Terminal

The Square Virtual Terminal is designed for users who want to use their existing computer as a payment terminal.

You can bill remotely, charge cards over the phone, issue receipts, and scheduling recurring payments, all from your current Windows or Mac OS.


Square also provides invoicing tools so small businesses can:

  • Send digital estimates and invoices
  • Track paid, unpaid, and delinquent invoices
  • Send reminders
  • Accept payments
  • Save billing information

Plus, Square has everything you need to build custom contracts, as well.

Email Marketing

If you’re in need of a marketing boost, Square has you covered there, too. Their email marketing system makes it easy to design, send, and track your marketing efforts; automate campaigns; and analyze your performance – all from the Square Dashboard.


Text messaging is an underappreciated marketing tactic that produces real results – and Square makes it possible right from your POS.

Whether you opt for preset campaigns or fly by the seat of your pants, you can customize your outreach to improve outcomes. Best of all, you only pay for the texts you send.

Loyalty Programs

Loyalty programs are all the rage, and Square has everything you need to start your own (including a few handy how-to blog posts).

This service starts at $45 per month and scales as you grow.

Gift Cards

Square’s gift card program is a cost-effective method to bolstering sales. Offer eGift cards online at no cost, or purchase packs of plastic cards starting at just 80 cents per card.

Once you’re ready to go, you can track when customers buy, redeem, and reload in your Dashboard.

Product Photography

The Square Photo Studio exists to give small businesses a leg up in professional product photography.

Just send in your products with your specifications and receive your touched-up images within 15 days.

Square Staff Solutions

What’s a modern payments processor without basic payroll functionality? And you thought we were through.

Timecards and Permissions

Square Team Management also lets you manage your employees’ comings and goings. The basic version is free, yet comprehensive, with:

  • Timecard and POS clock-in and clock-out
  • POS and Dashboard restrictions
  • Employee scheduling

The Plus version expands functionality further with unlimited permissions, business performance analysis, and even timecard locking.

Payroll Services

Square Team Management also provides everything you need to conduct payroll operations. Welcome to the total package, complete with:

  • Automated federal, state, and local payroll tax withholdings
  • Seamless time tracking
  • Instant pay to all employees

And if you get stuck, Square’s live payroll support specialists are there to help you navigate the software.

Employee Benefits

Even small businesses should be able to afford employee benefits. Square partners with providers so you can offer your employees health insurance, 401(k) plans and contributions, and workers’ compensation.

Square Developer Solutions

Okay, okay, last features section. We promise.

App Marketplace

The Square App Marketplace is your one-stop shop for Square integrations and partners.

Whether you need free apps, cheap apps, or full-service apps, they have a little bit of everything for all sizes of business.

Find an Agency

If self-service apps and integrations don’t do it for you, Find an Agency is Square’s alternative.

Here, you can partner with companies that:

  • Migrate, design, or build your web-based business from the ground up
  • Accept mobile and in-person payments
  • Design custom integration solutions

Developer APIs

Square Developer isn’t the most comprehensive API out there – but there’s still plenty to recommend it.

Using prebuilt code, plug-in templates, or end-to-end customizations, you can set up:

  • Online, mobile, and in-person payments
  • Single, recurring, and multiparty transactions
  • Digital wallet support
  • Online payment workflow with PCI-compliant processing and top-notch security

And all of this comes free with every Square account, complete with documentation, technical references, and sample apps.

Square Pricing and Fees

There are ways to use Square’s hardware and software for free – but you’ll still be on the hook for transaction costs.

If you take the minimal route, you’ll pay:

  • 2.6% plus 10 cents per transaction for tapped, dipped, and swiped payments
  • 2.9% plus 10 cents per online payment
  • 3.5% plus 15 cents per keyed or card-on-file payment

Transaction costs aside, you can also buy into an advanced POS software, such as Retail or

Restaurant, as well as add-on capabilities such as Appointments and Team Management. You’ll also pay for any hardware more advanced than the basic magstripe.

For a comprehensive look at Square’s pricing, check out the table below:

Square Point of Sale (Mobile Card Reader)2.6% + $0.10
Square Point of Sale (for Retail)2.6% + $0.10
Square Point of Sale (Restaurants)2.6% + $0.10
Square Terminal2.6% + $0.10
Square Appointments (Individual)2.6% + $0.10
Square Appointments (Teams)2.6% + $0.10
Keyed-In Transactions3.5% + $0.15
Card-On-File Transactions3.5% + $0.15
eCommerce Transactions2.9% + $0.30
Invoices2.9% + $0.30
Square Online Checkout 2.9% + $0.30

Is Square Worth it for Business Owners?

As with any product, the answer must be: it depends. Square is often worth the price for small, scaling businesses, freelancers, and independent contractors with simple needs.

But if you plan to forgo the hardware, you may find Square’s functionality sorely lacking for the price.

Moreover, larger businesses may prefer the comprehensive service and lower costs that come with contract-based payment processors.

5 Reasons to Use Square for Your Small Business

#1. World-class Security

Square’s payment platform is packed with industry-leading security such as:

  • Hardware manufactured with out-of-the-box encryption
  • Tokenized payment data on all transactions
  • PCI compliance, assessments, SAQ requirements, and audits handled by Square

Not to mention, Square stress-tests its systems regularly to keep ahead of fraudsters.

#2. Scalable Solutions

Square’s flat-rate processing fees means that the more business you do, the more you pay; but when you have a slow day, you’re not penalized for your lack of business.

Many of their software products function similarly: only pay for what you use, with no long-term contracts or commitments.

Use the tools you need on your schedule – and shun the functions you don’t.

#3. Real-time Reporting and Clear Data

Square provides some of the best online reporting tools in any pay-as-you-go system, period. From their sleek, comprehensive Dashboard, you can:

  • Generate real-time reports anytime, anywhere
  • Enjoy specialized reporting targeted to your industry with Square for Retail and Square for Restaurants
  • Break down data by item categories, sales method, payment method, and more
  • Get a clear picture of your financial situation with billing, invoicing, and daily performance metrics

Plus, you can track your loyalty program, gift cards, and employee benefits, too!

#4. API and Partner Integrations

If you have access to programming and coding knowledge, Square’s API makes customizing your software a breeze, with APIs for:

  • Point of sale
  • Online, in-person, and in-app payments
  • Inventory
  • Reporting
  • eCommerce
  • Employee and team management

But if you don’t, there’s always Square’s extensive integration list.

Admittedly, Square doesn’t offer as many integrations as its competitor Stripe – but with over 180 partnerships and growing, you’ll still have everything you need to get your business going.

Square partners with all manner of apps in categories such as accounting, delivery, healthcare, inventory, marketing, and more.

#5. Used by Millions of Businesses

If all your friends jumped off a cliff, you’d probably be stupid to jump with them (barring forest fires and angry dragons, of course).

But when it comes to Square boasting millions of business accounts around the globe, that’s a hefty endorsement of a small business product – and for some entrepreneurs, we’d question why you wouldn’t join them.

4 Downsides of Using Square

However, no payment processor is perfect. As such, we’d be remiss if we didn’t run through the downsides of Square, too.

#1. Account Terminations

As a third-party payment processor, Square doesn’t handle merchant accounts. Rather, all customers are conglomerated into one, giant aggregate account.

As a result, serving one fraudulent business leads to negative repercussions for the whole lot.

Unfortunately, that means that Square, like peers Stripe and PayPal, is prone to terminating or issuing fund freezes against at-risk accounts.

While the majority of users won’t encounter this problem, it’s worth knowing that one high-volume month can put you under increased scrutiny.

#2. The No-Fly List

To minimize account terminations, Square keeps a list of prohibited goods, services, and business.

Don’t expect service if you sell, are, or do business with:

  • Illegal activities or items
  • Most financial and identity-related services
  • Mail-order pharmacies
  • High-risk products and services, including telemarketing, firearm sales, adult entertainment, and drug paraphernalia

#3. Some Advanced Features Aren’t that Advanced

Some merchants find issue with Square’s pared-down reporting, store credit, and enterprise-sized capabilities.

But as a business built for small businesses, high-level features just aren’t in Square’s wheelhouse.

That said, the company has worked hard to elevate its offerings in recent years, with tools such as inventory tracking, time management, and payroll.

#4. High Subscription Costs and Discount Thresholds

Small businesses demand smaller costs, and the same is true of Square’s customers. While the company’s processing fees are in line with its peers – and sometimes better, based on its toolkit – some monthly add-ons prove costly.

And to be eligible for a volume discount, you have to process more than $250,000 in sales per year, with an average ticket size of $15 or higher. For a small business just starting out, that’s a lofty goal.

How Does Square Compare to Other Credit Card Processors?

#1. Square vs. Stripe

Stripe is another well-known payment processor that offers no monthly fees for its basic service. Instead, Stripe charges a slightly higher processing fee of 2.9% plus 30 cents.

That said, its API is renowned for its broad customizability. Additionally, Stripe is available in dozens of languages and currencies, offers 24/7 customer support on all packages, and offers hefty high-volume discounts.

>> More: Stripe vs. Square Payments

#2. Clover vs. Square

Clover POS is a cheaper alternative to Square – albeit with less functionality. You can get started with a countertop register for just $600 and POS software for $14 per month.

And if you upgrade to its $29 per month plan, you’ll enjoy lower card processing fees, improved functionality, and comparable inventory and reporting features to Square.

#3. Square vs. Stax

Stax is another payment processor that charges lower fees than Square – as little as eight cents per swipe.

That said, their Stax Pay subscriptions start at $99 per month, with software packages coming in at $49 per month for basic functions.

And to access a similar level of ecommerce, integration, and funding capabilities, you’ll have to select a half-dozen add-ons at checkout.

That said, their subscription model may work well for businesses with more volume who need cheaper per-transaction rates.

#4. Payment Depot vs. Square

Payment Depot also offers a membership-based pricing model that works well for high-volume businesses.

With no-contract processing, easy integrations, and rates that go down as business goes up, businesses can get started for just $49 per month and 15 cent swipe fees.

That said, Payment Depot does impose processing limits on subscriptions, meaning that if your dollar amount increases, you’ll be bumped into the next-highest payment bracket. The exception is their $199 (plus five cents per transaction) monthly unlimited package.

#5. Square vs. PayPal for Business

PayPal is one of the most well-known payment processors, but the service is rife with hidden and opaque fees compared to Square.

And while PayPal is popular with online shoppers, you’ll have to pay $30 per month for a virtual terminal if the free version doesn’t cut it – on top of 2.7% plus five cent processing fees.

On the other hand, using PayPal comes with the benefit of brand name recognition among customers, and its online help center and integration library pack a powerful punch.

For larger, online-based companies who don’t do a lot of international business – or those that can absorb the myriad transaction fees if they do – PayPal is a robust competitor.

Square Reviews FAQs

Is Square Safe to Use?

Square is at least as safe as any other PCI-compliant third-party payment processor. Neither their hardware nor their software retains card data, and all sensitive information is encrypted prior to transmission. Moreover, their system is stress-tested regularly for weaknesses.

Is Square Trustworthy?

Square is a rare credit card processor that outlines all fees upfront, so you’re never surprised at checkout.

That said, they’re not 100% reliable, per se, as their aggregation model means your business is subject to increased scrutiny and potential holds and terminations.

Can You Get Scammed Using Square?

It’s definitely possible to get scammed with Square, just as it is any other payment processor.

To protect yourself, Square recommends keeping your personal and account information under lock and key, ignoring suspicious phone calls and emails, and reporting any unauthorized activity immediately.

They also provide plenty of resources to learn about spotting and avoiding scams.

Does Square Offer Consulting Services for Businesses?

Square doesn’t offer direct business consulting services. That said, their “Town Square” is packed with over 1,660 blog articles on everything from how to start a small business to setting up worker benefits to filling out tax forms.

Plus, their blog is packed with tons of tips, tricks, and ideas to jumpstart your creativity and business sense.

Bottom Line: Square Review

Square is a well-deserved leader in the payment processing space – and it’s easy to see why.

Their popular pay-as-you-go model and optional add-ons make it easy to cherry-pick and scale their tools with your small business.

And with features such as virtual and hardware terminals, inventory and employee management, and customer-oriented services, their business ecosystem is richly imbued with everything you need to become a raging success.

Jordan Blansit
Jordan Blansit

Jordan Blansit is a Senior Writer, Researcher, & Product Analyst for SimpleMoneyLyfe with an inexplicable predilection for mortgages, investing, and personal finance. When she’s not click-clacketing from the comfort of her living room, you can find her in the California Redwoods or Oregon Siskiyous. Jordan’s areas of expertise are mortgages, personal loans, credit cards, and investing.