Accept Credit Cards – Anywhere – With Square

Just this week, a startup called Square launched its iPhone and Android applications. Square looks to make a big difference for small businesses, by enabling the acceptance of credit card payments directly on a cell phone.

How Does Square Work?

To get started, you download Square’s free application, for either your iPhone or Android-powered smartphone. Signup only takes a few minutes, although you will need to provide some personal information, such as your social security number, to get started (more on this later).

It’s possible to accept credit cards with just the app. Type in a credit card number, then turn over the phone so the buyer can sign directly on-screen. This lets you get started quickly, but the really fancy thing is Square’s hardware. The company provides you with a free credit card reader, which plugs into the headphone jack on your phone.

With the reader, you swipe a credit card through the small cube, and then take a signature. It’s quicker than typing in a number, and you will be charged a lower fee.

Square Signature Screen

What Does Square Cost?

As mentioned previously, both the Square app and reader are free. There are no monthly fees, and this is part of what makes the company unique – no setup or ongoing charges make it usable even for an individual or ultra-small business.

Square makes money by charging transaction fees. The fees are 3.5% + 15 cents for a keyed-in card, and 2.75% +15 cents for a swiped card. These are not the lowest rates you might find, but are attractive when combined with the absence of other fees.

What Else?

My impression of Square is very positive. For many ultra-small businesses, the ability to accept credit cards while on the go could enable sales that were previously missed. There are, however, a few negatives:

  • Tiny charging limits – Many Square users are reporting charge limits of $100/instance and $700/week. This does not meet the needs of most business users. The company says they are working to increase these minimums, but some will find the service useless until something happens.
  • Tied to individuals – Square requires a Social Security Number on signup, and is therefore tied to you, not your business. Again, the company says this will likely change in the future.
  • Slow distribution – There are reports of Square taking a long time to ship out the card readers to users. This might be expected of a brand new service, but is disappointing to those who downloaded the app and expected to get be up to full speed right away.

As you can see, the downsides appear to be mostly temporary, although it’s hard to say how long it will take Square to upgrade its underwriting procedures. In the meantime, it’s free to check out, and is an exciting development for those running small, mobile businesses.

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11 Responses to “Accept Credit Cards – Anywhere – With Square”

  1. List Broker March 10, 2011 at 3:10 pm #

    Yes, you can use Square with your iPhone or Android. Unfortunately, the card data is sent in a non-secured format making the credit card data totally vulnerable to hackers. Companies like VeriFone and PayByWeb are still leading the way in secure mobile credit card processing. Keeping cardholder data safe should be a top priority in the merchant account industry.

    • Chris March 10, 2011 at 7:59 pm #

      I’m no expert on credit card security, but I think this comment is just flat out wrong. Check out Square’s page on the subject to make your own call:

    • Assurance complémentaire santé December 12, 2012 at 7:12 am #

      c’est une très bonne avancée technologique. mais ma question se situe au niveau de la sécurité des données bancaires du propriétaire. peut-on préserver les informations personnelles des utilisateurs en cas de perte de son téléphone portable ?

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