Square Payments Review 2023: Fees, Pros, Cons & Alternatives
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.
- Easy to set up
- Seamless omnichannel selling
- Flexible POS system that grows with your business
- Straightforward pricing
- 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 on the market.
- Multichannel payment processing: Square is one of the leading small business multichannel payment processors.
- 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 Payments offers limited ACH and digital check payments processing features. Consider better B2B payment solutions.
- For high-risk businesses: Alternative high-risk merchant services providers offer better options.
- For customized payment processing: Compared to Square, Stripe and PayPal are more customizable.
Among different merchant accounts and payment providers, Square Payments offers the most convenient way for new and small businesses to start accepting payments. It has no monthly, cancelation, 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.
However, Square Payments’ flat fee of 2.6% + 10 cents per transaction may not be the ideal solution for large-volume businesses. Merchants with over $250,000 in annual revenue may apply for custom pricing, while other cheaper credit card processing companies with an interchange-plus model may be a better option. Square also charges for instant deposits and has limited ACH and digital check payment 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 payment processing. And while it is only available for merchants using the Square payment app, the free POS features for in-store, online, and mobile create a powerful platform to launch any type of small business in minutes.
Square Payments Deciding Factors
Supported Business Types
Retail, restaurants, and professional services
Monthly Software Fees
Setup and Installation Fees
Point of Sale Options
Exclusive to Square POS
Payment Processing Fees
Very competitive for small businesses
Square Fee Calculator
Top Square Payments Alternatives
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
Starts at $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
3.4% + 30 cents
Interchange plus 0.2%–0.5% + 10–25 cents
Interchange + 18 cents
3.49% + 9 cents
Ecommerce transaction fee
2.9% + 30 cents
Interchange plus 0.2%–0.5% + 10–25 cents
Interchange + 18 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.
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 any upfront cost.
Square Payments’ pricing guide shows transaction fees that start at 2.6% + 10 cents, and actual rates depend on your customers’ payment type: card-present or card-not-present (your free account enables you to accept both). The main difference between the two is the need for additional hardware. There are no monthly fees, processing requirements, or payment card industry (PCI) fees.
- Flat-rate transaction fee: 2.6% + 10 cents per transaction, 2.5% + 10 cents when signed into a Square for Retail Plus account on the Retail POS
- Invoices: 2.9% + 30 cents per transaction
- Ecommerce sales: 2.9% + 30 cents per transaction
- Recurring billing and card-on-file transactions: 3.5% + 15 cents per transaction
- Keyed-in payments and card-not-present: 3.5% + 15 cents per transaction
- Volume discounts: Square will create custom pricing packages for any business processing over $250,000 in credit card sales.
For a breakdown of Square’s software pricing, see our Square pricing guide.
Since Our Last Update:
Square recently announced changes to its refund policy. Starting April 11, 2023, processing fees will no longer be returned when a full or partial refund is issued to a customer.
Square Card Readers
Square Reader for Magstripe
Square Reader for Contactless and Chip
First free, additional $10
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
$299 or $27 per month for 12 months
$799 or $39 per month for 24 months
$149 or $14 per month for 12 months
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
Contract & Terms of Service (TOS)
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.
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.
Setup & Application
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.
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 $250,000 per month.
The Square payment app for mobile 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.
Since Our Last Update:
The Square POS app now has the Tap to Pay on iPhone feature. If you are using iPhone XS or above running iOS 15.5 or later, you can now accept contactless payments using your iPhone.
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. Additionally, you can use 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.
Learn more in our ultimate Square Invoice guide.
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.
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 3–5 business days to process an ACH bank transfer. It also does not support partial payments.
Buy Now, Pay Later (BNPL)
Square users are able to offer BNPL payment options to their customers with Afterpay. 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.
There are no monthly or setup fees to enable Afterpay with Square. The transaction fee is slightly higher than regular transactions at 6% + 30 cents. Afterpay is available with Square for both online and in-person payments—a feature that is not often available with other processors.
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, 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 is easy to use but doesn’t offer many 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. It 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.
Square POS Software
Square Payments is exclusive to merchants using the Square POS software. The basic plan starts at zero and with the 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 for Retail
Square for Restaurants
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.
Card-present (tap, dip, swipe)
3.5% + 10 cents
4.4% + 15 cents
4.4% + 15 cents
3.8% + 30 cents
Square online payments
3.8% + 30 cents
Customer Relationship Management (CRM)
Unlike other software that offer CRM as an add-on, the Square customer management tools come built in. 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.
Money is credited to your bank account as soon as the next business day, while ACH payments are processed in 3–5 business days. For an extra fee, you may opt for same-day or instant transfers to your bank account, similar to PayPal.
Since Our Last Update:
Starting April 11, 2023, Square has increased its instant and same-day transfer fee from 1.5% to 1.75% per transfer.
Another way to get instant access to your funds is with a Square Checking account. 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 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.
Need free inventory management tools? Square’s inventory management feature is also easily accessible from the Square dashboard or through the Square POS app. Among its capabilities are downloadable reports, stock alerts, and multilocation inventory management. Learn more about Square inventory management in our guide.
Square Payment Security
Square monitors transactions with the use of machine learning and human experts to catch anything that might be suspicious and fraudulent. You get notified about any unusual transactions.
Chargeback & Dispute Management
You can easily manage chargebacks and disputes from the Square Dashboard. When a dispute comes up, Square sends a notification to inform you. You get to decide whether to accept the dispute as valid or to challenge it. If you choose to challenge the dispute, you will need to provide Square with the documentation related to the transaction. The bank will then make a decision on whether the transaction was fraudulent or legitimate. Best of all, Square does not charge any fees for disputes filed by customers.
Data & Hardware Security
Square Payments keeps your customers’ data safe and secure, and it is PCI-compliant. Aside from this, all data that goes through Square’s hardware and software are encrypted from end to end.
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 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 needing management tools or businesses seeking more customization options beyond what’s available in Square’s retail, restaurant, and appointment software might find its features somewhat limited. One example is the ability to bulk upload images of items, 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 2,000 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.
|Users Like||Users Don’t Like|
|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||No integrations with other POS|
|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% 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, a near-perfect score for this Square Payments review 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.
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 work without an internet connection. Funds are deposited into your bank account on the next business day, same-day with an additional fee, or instantly to your Square Checking account, if you have one.
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.
Square Payments is a free, membership-based payment platform that works with the Square POS system. It is perfect for small businesses selling online, in-store, and on the go because it doesn’t require an approval process, allowing users to start accepting payments immediately 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.