Square Payments Review: Fees, Pros, Cons & Alternatives
Meaghan has provided content and guidance for indie retailers as the editor for a number of retail publications and a speaker at trade shows. She is Fit Small Business’s authority on retail and ecommerce.
Anna’s experience in business and finance led her to work for a US risk mitigation company in Singapore. She has contributed to POS and payments topics in the Retail section across Fit Small Business.
This article is part of a larger series on Payments.
Square Payments is Square’s built-in payment solution that provides mobile payment processing and aggregated merchant services. Its features include instant setup with no application or approval process, free invoicing software and mobile payment app, next-day deposits, and chargeback management.
In our review of merchant service providers, Square earned an overall score of 4.43 out of 5, consistently taking the top spot for its free payment processing, point of sale (POS), and competitive transaction fees. We find Square best for new and occasional sellers processing under $10,000 monthly.
Square Payments
Overall Score: 4.43
OUT OF 5
What We Like
- Easy to set up
- Seamless omnichannel selling
- Flexible POS system that grows with your business
- Straightforward pricing
What's Missing
- Account stability issues; reports of frozen funds
- Incompatible with most high-risk businesses
- Exclusive to Square POS users
When to Use Square
- Mobile payment processing: Square is our top pick for best mobile card readers.
- Multichannel payment processing: Square is one of the leading multichannel payment processors for small businesses.
- For low-volume sellers: Square offers affordable credit card processing rates for businesses processing less than $10,000/month.
When to Use an Alternative
- For B2Bs: Square has limited ACH and digital check features. Consider our alternative B2B payment solutions.
- For high-risk businesses: While Square offers a CBD program, alternative high-risk merchant services providers offer better options.
- For customized payment processing: Compared to Square, Stripe and PayPal are more customizable.
In the years I have spent writing about merchant accounts and reviewing payment providers, I can say that Square Payments offers the most convenient way for new and small businesses to start accepting payments. It has no monthly, cancellation, or chargeback fees and does not require application or approval to sign up. To top it off, the free POS app and online payment solution offer excellent value, and the entire system is incredibly easy to use.
Square also offers the best POS software for small businesses, which comes free with every Square Payments account. To learn more about that, read our Square POS review.
On the other hand, Square Payments’ flat fee of 2.6% + 10 cents per transaction may not be the ideal solution for growing businesses. These merchants can save more by switching to a cheaper credit card processing company with an interchange-plus model. Square also charges for instant deposits and has limited ACH and digital check payments processing features that can be better served by alternatives such as Stripe or QuickBooks.
Overall, Square Payments is an outstanding choice for small merchants and startups looking for simple online payment processing. And while it is only available for merchants using Square’s POS software, the free POS features for in-store, online, and mobile creates a powerful platform to launch any type of small business in minutes.
Square Payments Deciding Factors
Supported Business Types | Flexible Retail, restaurants, and professional services |
Standout Features |
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Monthly Software Fees | Very Competitive $0–$60 |
Setup and Installation Fees | $0 |
Contract Length | Month-to-month |
Point of Sale Options | Exclusive to Square POS |
Payment Processing Fees | Very competitive for small businesses
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Customer Support |
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Square Fee Calculator
Square Fee Calculator
Enter your current in-store and/or online sales volumes and average order values for an estimate on the monthly fees you would pay using Square.
Top Square Payments Alternatives
 |  |  |  | |
|---|---|---|---|---|
Best for | Tech-savvy and B2B businesses | Low-cost payment processing with free POS | High-volume merchants with large transaction amounts | Payment processing for seasonal and occasional sales |
Monthly fee | Starts at $0 | $0 | Starts at $59 | Starts at $0 |
Card-present transaction fee | 2.7% + 5 cents | Interchange plus 0.1%–0.3% + 5–8 cents | Interchange + 8 cents | 2.29% + 9 cents |
Keyed transaction fee | 2.9% + 30 cents | Interchange plus 0.2%–0.5% + 10–25 cents | Interchange + 15 cents | 3.49% + 9 cents |
Ecommerce transaction fee | 2.9% + 30 cents | Interchange plus 0.2%–0.5% + 10–25 cents | Interchange + 15 cents | Starts at 2.59% + 49 cents |
- Shopify: Shopify is the industry-leading software solution for online and multichannel sales. If you have a native online business, see how Shopify compares to Square.
- PayPal: Not only does it stand out as one of the most trusted online payment solutions, PayPal also allows you to accept in-person payments with its POS app, Zettle. To know how Square stacks up against PayPal, read our Square vs PayPal review.
- Payanywhere: Payanywhere is another alternative with affordable rates similar to Square. See how Payanywhere stacks up against Square.
Looking for the lowest rates?
The payment processing rates you will pay can vary based on your business’s size, type, and average order value. To find the most affordable option and compare multiple processing rates, read our guide to the cheapest credit card processing.
Square Payments comes built into every Square POS software so there are no monthly fees and no lengthy application process. It also comes with a free magstripe card reader and virtual terminal so new businesses can start accepting payments in minutes and without upfront cost.
Square Card Readers
Square Reader for Magstripe | Square Reader for Contactless and Chip |
|---|---|
 |  |
First free, additional $10 | $49 |
Accepts payments via magstripe (swiped), available in jack or lightning connector | Bluetooth reader that accepts EMV (chip), and NFC (Apple Pay, Google Pay) payments |
Square POS Systems
Square Stand for Contactless and Chip | Square Terminal | Square Register | Square Stand |
|---|---|---|---|
 |  |  |  |
$169 or $16 per month for 12 months | $299 or $27 per month for 12 months | $799 or $39 per month for 24 months | $149 or $14 per month for 12 months |
All-in-one credit card machine with POS, card reader, and receipt printer | Stand-alone mobile POS that can take orders, accept card payments and issue receipts. | Full POS with touch-screen monitor, detachable customer-facing display, and credit card machine | All-in-one credit card machine with POS, and built-in card reader |
Square does not require any long-term contract. It offers a month-to-month contract for both its free and paid versions. Square is also an aggregator, which means it does not provide individual merchant accounts—instead it aggregates multiple similar clients and signs up for a single merchant account with a direct processor or acquiring bank.
While this is ideal for small businesses, note that the TOS specifies a limit of allowed volume of card sales per month, and any Square account that exceeds that limit will be required to sign up directly for a merchant account with the acquiring bank.
Other stipulations within Square’s Payment TOS are:
- List of businesses not supported by Square under Section 3.
- Note that there is a separate fee schedule for Afterpay, Pay with ACH, and Cash App Pay transactions, which you can find on your Square Dashboard.
- Payments taken in offline mode that are not validated online expire after 24 hours. Square is also not liable for the additional risk when accepting payments offline.
- A reserve account may be required for businesses with a certain degree of risk—the value of which can be adjusted at any time.
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Square lists additional agreements to detail its other products such as ACH, POS, Square Checking and Savings, and hardware terms, among others. You can find Square’s other Terms of Service here.
Square Payments offers an easy sign-up process and does not require any approval process to start accepting payments. When you sign up for your free Square account, it automatically gives you access to Square Payments. You get a setup guide that will take you through the necessary steps, which only take minutes to complete. Once done, you can start setting up your store and accept payments right away.
Click on any “Get Started” button on the Square website and provide your name, email address and a secure password. (Source: Square)
Ready to get started? Visit our complete step-by-step guide to setting up your Square account.
Square supports almost every payment type and with minimal service fees compared to other popular competitors. Instead of e-check payments, Square allows merchants to process ACH transactions. And while it does not have level 2 and 3 processing, Square can offer volume discounts for businesses that process sales above $500,000 per month.
Since Our Last Update:
Since Square’s acquisition of Afterpay, it has launched several integrations. In January 2022, Square began offering its buy now, pay later (BNPL) feature for online purchases and later in the year extended BNPL to in-person sales. In addition, Square also recently held its sixth annual partner and developer conference where it announced its new omnichannel APIs, which include Cash App Pay, Bookings API, and Checkout API.
Mobile Payment
Square Payments’ mobile app is compatible with Android and iOS devices and comes with a free magstripe reader that can be mailed immediately to the user after successfully signing up for an account. It also allows you to manually enter the transaction amount or select items from your Library if you’ve set up your inventory.
Square’s Mobile App provides a wide range of payment tools including the ability to process invoice transactions in-person. (Source: Square)
Invoicing
Square’s invoicing feature allows you to request payment through invoices and accept payments through different payment methods such as card and ACH transactions. You can create, send, and track invoices online or via Square Payments’ iOS and Android apps. You can also utilize automatic payment reminders, advanced reporting, and recurring billing. Advanced invoicing features are also available for those wanting a more customized look, plus additional tools like multi-package estimates and milestone-based payment schedules.
Square Payments offer simple and advanced invoicing tools to match businesses that require functions such as recurring payment, estimates, and custom payment schedules. (Source: Square)
Learn how to use Square Invoices with our ultimate guide.
Card-on-File Transactions
Square Payments allows you to process transactions automatically with its card-on-file feature. This is ideal for recurring payments, open tickets, and customers for subscription-based businesses. Aside from their card details, you can also use your customer’s email address to send digital receipts for both online and in-person transactions. Square is also PCI-compliant so there is no need to worry about handling your customer’s sensitive information.
ACH Payments
Square allows merchants to accept ACH payments as an option for completing invoice transactions. It requires a $1 minimum and charges a low 1% fee for each transaction. However, while this payment method is significantly cheaper, note that it takes three to five business days to process an ACH bank transfer. It also does not support partial payments.
You can add ACH bank transfer as a payment method on your invoice transactions from both the mobile app and on your desktop. (Source: Square)
Buy Now, Pay Later (BNPL)
Square users are able to offer BNPL payment options to their customers. This means your customer can choose to pay for their items in four interest-free installments over six weeks, while you immediately get the full value of your sales. It’s available through Square Online, Web Payments, and Afterpay. Recently, Square has made Afterpay BNPL available for in-person transactions as well. Signing up for Afterpay is free and does not require additional monthly payments, but the transaction fees are slightly higher.
- Square Online Checkout: Introductory pricing at 2.9% + 30 cents through July 29, 2022. Afterward, it’s 6% + 30 cents per transaction.
- Afterpay Online: 6% + 30 cents through Square Online and Square Web Payments SDK
- Afterpay In Person: Introductory pricing rate of 2.6% + 30 cents through Sept. 10, 2022. Afterward, 6% + 30 cents per transaction
Ecommerce
Square Payments enables you to sell your products online (on social media and ecommerce stores), manage shipping and delivery, offer curbside pickup, and set up discounts and gift cards. If you’re an online merchant, then you can build and publish an online store—even without coding knowledge—by accessing Square Payments’ drag-and-drop site builder. It also integrates with popular web builders such as WordPress and Wix.
Square’s website builder is an easy drag-and-drop function that comes free with every Square account. (Source: Square)
Square is easy to use, but doesn’t offer a ton of customization options. If you want a more flexible ecommerce payment solution, or one that integrates with more software, consider Stripe. See how Square compares to Stripe.
Square offers a wide range of business management and software tools and integrations—most of them free. The system even offers proprietary, industry-grade hardware in affordable installments and we find this accessibility a huge plus for small businesses and startups working on a budget. However, you’ll need to pay an additional fee if you want same-day transfer of funds. Square’s customer service is also limited to extended business hours
Since Our Last Update:
Square launched Square Banking in 2021, which offers checking, savings, and loans for small businesses. Merchants with a Square Business Checking account get a debit card and instant access to their funds. which also comes with a debit card. This means like Chase, Square can now serve as both the processor and acquiring bank. Visit Square Banking to learn more.
Square POS Software
Square Payments is exclusive to merchants using the Square POS software. Plan starts at zero and with option to upgrade to industry-specific paid plans priced at $60 per month. There are also optional add-ons and advanced tools for building out your POS as your business grows.
Square Software Pricing
Square POS | Square for Retail | Square for Restaurants | Square Appointments | |
|---|---|---|---|---|
Basic Plan | $0 | $0 | $0 | $0 |
Plus Plan | N/A | $60 /location | $60 /location | $29 /location |
Premium Plan | N/A | Custom | Custom | $69 /location |
CBD Program
Businesses that sell CBD products, including oil, flower, seeds, lotions, topicals, and wax can sign up for a Square account through its CBD Program. It allows users to accept payments for hemp and hemp-derived CBD products that have less than, or equal to, 0.3% THC in most states within the US. However, expect sign-up requirements and transaction fees to be slightly different, with higher payment processing due to the risk involved.
Payment Method | Fees |
|---|---|
Card-present (tap, dip, swipe) | 3.5% + 10 cents |
Card-not-present | 4.4% + 15 cents |
Card-on-file | 4.4% + 15 cents |
Square invoices | 3.8% + 30 cents |
Square online | 3.8% + 30 cents |
ACH payments | 1% |
Customer Relationship Management (CRM)
Square comes with built-in CRM management tools while other software offer CRM as an add-on. You are given access to the customer directory, where you’ll find all customer information for use in marketing, analytics, and more. This is where you store email addresses used for sending digital receipts and marketing campaign materials, and credit card details for customers who opt to sign up for automatic payments. Customers also have a platform for leaving feedback whenever needed.
Square makes it easy to manage your customer data including the ability to bulk upload your customer list from a CSV file. (Source: Square)
Fund Deposits
Money is credited to your bank account as soon as the next business day while ACH payments are processed in three to five business days. For an extra fee, you may opt for same-day or instant transfers to your bank account similar to PayPal.
Chargeback & Dispute Management
You can easily manage chargebacks and disputes from the Square Dashboard. Instead of having to write a chargeback rebuttal letter, Square sends an Information Request Form to fill up and handle the chargeback process for you.
Square Dashboard
This all-in-one management platform lets you manage your invoices, finances, inventory, and multichannel sales all in one place. Square Payments users can manage all their business processes, sync inventory, and track sales through Square Dashboard. It also enables you to track your team and view detailed reports among others.
Square’s dashboard is adaptable, allowing you to customize shortcuts so you always see what’s most important to your business once you log on. (Source: Square)
Customer Support
Customer support is one of the few downsides to using Square Payments. Only active accounts are given access to phone support, and even then, you will require a customer code when calling. You will need to log in to your account to get a “Call Support” option, including your own customer code.
However, if your account is active, you can also access support through chat in the Square POS app—a handy feature. Square’s phone customer support is available from 6 a.m. to 6 p.m. Pacific time, Monday through Friday.
Square has always done well in our evaluations because it was built in such a way that allows new merchants to start their business with the least (even zero) upfront cost. It offers very competitive pricing as an all-in-one solution for flexible POS software, extensive business management tools, affordable, industry-grade hardware, and versatile payment processing. To top it off, the system is stable and reliable, making it a popular choice for small businesses.
If there’s anything Square can improve upon, it’s to expand its features to meet the needs of larger businesses. Unfortunately, Square Payments is only available exclusively within Square’s ecosystem. This means merchants won’t be able to use it without subscribing to a Square POS account—and while Square’s POS works great, higher-volume businesses might find its management tools somewhat limited. One basic, but prime example is the ability to upload inventory images, which Square currently does not support.
Other than that, we find Square Payments an outstanding payment processing solution.
What Users Think of Square Payments
Square Payments users have mostly positive things to say about the platform. Overall, they agree that it is convenient and easy-to-use since they can take payments, create invoices, and manage their business operations all in one place.
- Capterra: More than 2,00 users rated Square Payments an average of 4.7 out of 5 stars.
- G2: Over 130 users rated Square Payments an average of 4.6 out of 5 stars.
On the other hand, there is a handful of negative feedback about the platform. The most common downsides mentioned by users are the need for better customer service and additional customizations and that transaction fees can be quite expensive. If your business requires more customized features (beyond what’s available in Square’s retail, restaurant, and appointment software) and processes high-volume transactions, Square is likely not a good fit for you.
| PROS | CONS |
|---|---|
| Easy-to-use platform | Lacks ideal customization in the free plan |
| All-in-one Square Dashboard | Can be expensive for businesses with high transaction volumes |
| Good value, reasonable fees | Invoicing issues on the mobile app |
| Convenient mobile payment processing | Hard-to-reach customer phone support |
Methodology—How We Evaluated Square Payments
We test each merchant account service provider ourselves to ensure an extensive review of the products. We compare pricing methods, identifying providers that offer zero monthly fees, pay-as-you-go terms, and low transaction rates. We then further evaluate according to a range of payment processing features, scalability, and ease of use.
The result is our list of the best overall merchant services. However, we adjust the criteria when looking at specific use cases such as for different business types and merchant categories. This is why every merchant services provider has multiple scores across our site depending on the use case you are looking for.
Click through the tabs below for our overall merchant services evaluation criteria:
25%
Pricing
30%
Payment Types
25%
Account Features
20%
Expert Score
25% of Overall Score
We awarded points to merchant account providers that don’t require contracts and offer month-to-month or pay-as-you-go billing. Additionally, we prioritized providers that don’t charge hefty monthly fees, cancellation fees, or chargeback fees and only included providers that offer competitive and predictable flat-rate or interchange-plus pricing. We also awarded points to processors that offer volume discounts, and extra points if those discounts are transparent or automated.
Square Payments received a near perfect score in this section, only missing the mark for automated volume discounts.
30% of Overall Score
The best merchant accounts can accept various payment types—including POS and card-present transactions, mobile payments, contactless payments, ecommerce transactions, and ACH and e-check payments—and offer free virtual terminal and invoicing solutions for phone orders, recurring billing, and card-on-file payments.
Again, near perfect score for Square Payments in this sub-criteria. However, we were also looking for Level 2 and 3 payment processing, which Square does not support.
25% of Overall Score
We prioritized merchant accounts with free 24/7 phone and email support. Small businesses also need fast deposits, so payment processors offering free same- or next-day funding earned bonus points. Finally, we considered whether each system has affordable and flexible hardware options and offers any business management tools, like dispute and chargeback management, reporting, or customer management.
Above average score for Square Payments for this section. Limited customer support hours and add-on fees for same-day deposits prevented it from earning a perfect score.
20% of Overall Score
We judged each system based on its overall pricing and advertising transparency, ease of use (including account stability), popularity, and reputation among business owners and sites like Better Business Bureau. Finally, we considered how well each system works with other popular small business software, like accounting, point-of-sale, and ecommerce solutions.
Square Payments did well in this category, only missing partial points for ease of use and integrations.
*Percentages of overall score
Square Payments Frequently Asked Questions (FAQs)
Is Square Payments good for small businesses?
Yes, aside from being an all-in-one POS and payment solution, Square Payments is a great option for small businesses because it does not require a long application process and setup is so easy that you can complete your application and start accepting payments in minutes. Follow our step-by-step guide to signing up with Square.
Is Square reliable?
Square is a household name in POS software and payment processing for small businesses. It’s easy to use and offers flexible POS and payment features. User reviews from different sites give Square an above average overall score. Maximize Square’s features and make sure it works for you with our tips on using Square.
How long do Square payments take to process?
Payments accepted through Square are processed instantly, and even works without internet connection. Funds are deposited into your bank account on the next business day, or same-day with additional fee.
What are the disadvantages of Square?
Larger businesses may find Square’s POS and payment features limited. For one, it does not have level 2 and 3 processing available for B2Bs. It also does not work with other POS systems and does not support high-risk merchants. If these are deal breakers for you, check out our list of top alternatives for Square.
What are the top competitors for Square Payments?
Square Payments is often compared to Stripe and PayPal because it supports similar business sizes and offers similar payment services. Learn more about how Square stacks up against Stripe and PayPal.
Bottom Line
Square Payments is a free, membership-based payment platform perfect for small businesses selling online, in-store, and on-the-go. It doesn’t require an approval process, so users can simply start accepting payments after setting up their merchant accounts.
Aside from zero monthly fees, Square Payments also come bundled with key features you’ll find in most paid payment processing alternatives. This makes Square Payments one of our highly recommended providers for merchants looking for a quick and no-fuss solution to get their business up and running in no time. Visit Square to create a free account to test it out.
