What Is Square? How It Works & Why Small Businesses Love It

Square is a mobile payment company that also offers a suite of business software, point-of-sale (POS) systems, payment hardware products, and small business services. Unlike most payment processors, Square is available to businesses of all sizes and offers the most comprehensive free point-of-sale (POS) system on the market. As a result, millions of businesses use Square as part of their day-to-day operations.

Square was founded in 2009 by Jack Dorsey (a co-founder and CEO of Twitter) and Jim McKelvey. After several rounds of private funding, Square went public in 2015. In 2018, Square acquired Weebly, a web-builder and hosting service, which allowed Square to dive into ecommerce products to compete with other platforms like Shopify and PayPal.

Today, Square is a publicly-traded company under the ticker symbol SQ. The Square payment and point-of-sale app has been downloaded more than 33 million times and has more than 2 million active sellers.

Should You Use Square?

We’ll get into more details on Square’s specific products below. But, generally, for any small business processing less than $10,000 per month, Square is the best POS and payment processing solution because it comes with no fixed monthly costs and offers an incredible value with the free POS system. Visit Square to create your free account.

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Square’s Services: Why Small Businesses Love It

Square is the original mobile payment processing app and card reader. When first launched, it had high adoption rates because Square allowed businesses to accept card payments anywhere, instead of having to rely on cash or peer-to-peer payment apps.

Unlike most credit card processing companies, Square does not require an application or approval process and has no monthly fees or minimum requirements. Every free Square account comes with three main functions: payments, point-of sale-software, and online ordering.

Square offers an array of products within its ecosystem that all work together to form a complete small business management solution.

Easy, Flat-Rate Payment Processing

You can use Square to complete credit card transactions in your brick-and-mortar store, as well as online and on the go via your mobile device.

Square charges a flat rate price per credit card transaction. This means that the credit card company fee, customer’s bank fee, and merchant account processor fee are all wrapped up into one flat-rate fee. This is regardless of the type of card you are processing.

The advantage of this pricing model is its simplicity. You don’t have to worry about figuring out how much you are paying in credit card processing fees because you know in advance exactly how much you’re going to pay. It’s the same flat rate no matter what type of card your customer uses.

See a full breakdown of Square’s pricing and fees

Top-Rated Merchant Services

Square’s affordable and user-friendly payment processing is one of the best merchant services available for small businesses. In addition to mobile and in-store payments, every free Square account also comes with invoicing, virtual terminal, online payments, and tools to monitor and dispute chargebacks.

Read our full Square Payments review to see if it’s right for you. Or, if you’re ready to start using Square, read our step-by-step guide on how to use Square to process payments.

Free and Low-Cost POS Software

In addition to excellent merchant services, Square also offers free POS apps that can be downloaded onto iOS and Android smartphones and tablets or used with one of Square’s proprietary hardware products. The free user-friendly app has an offline mode, making it suitable for both mobile and in-store sales.

On top of the standard free Square POS app, Square also offers free and paid POS software subscriptions for retail, restaurant, and appointment-based businesses. Each POS software product includes features for payment processing, inventory management, basic employee management, customer relationship management (CRM), reporting, and analytics, plus industry-specific functions.

Square POS is a free, general-purpose POS system that allows you to process sales, track inventory, manage customers, and view reports. It works on any iPad, iPhone, Android device, or Square hardware. It’s best for individuals and small businesses on a budget. Read our full Square POS review to learn more.

Square for Retail has a barcode-based user interface that lets retailers easily ring transactions, manage orders, and track inventory. It also syncs seamlessly with Square Online for ecommerce and pickup orders. It has a forever-free plan, and a Plus plan with advanced inventory tracking, analytics, and team management. Read our Square for Retail review to learn more.

Square for Restaurants POS on top of a table

Square for Restaurants allows businesses to manage front-of-house and back-of-house operations, including menus, floor plans, in-house customer orders, online orders, and kitchen displays. There is a forever free plan, and a Plus plan that offers better front-of-house tools and team management. Read our Square for Restaurants review to learn more.

Square Appointments POS on top of a table

Square Appointments is similar to Square POS, but with the added functionality of a full-fledged appointment management tool. Manage client booking for you or your employees, allow customers to book online, and automatically send email or text confirmations. Integrated payment processing means you can require a card on file for every client. Read our Square Appointments review to learn more.

To get started, read our step-by-step guide to using Square POS. Once you’re set up, start adding products and tracking sales with our guide to inventory management using Square.

Free Online Ordering Website Builder

Square Online is the third free solution that comes with every Square account. It’s a user-friendly site builder that can be used for creating a business website, basic ecommerce site, or adding online ordering or order-ahead functionality to your business. You can also use Square Online for online appointment booking.

It includes a range of templates for retail, restaurant, event, appointment, and other business types. It automatically syncs orders, inventory, and customers with your POS and can be used to process curbside pickup, shipping, or local delivery orders.

Read our step-by-step guide to create a free Square Online store in just a few minutes.

Business Management Solutions

In addition to Square’s three free business tools: payments, POS, and online store, Square also offers an array of business management solutions that can be used as a standalone tool, or in conjunction with any of Square’s other products. One of the advantages of using Square is that businesses can mix and match which solutions they need to create the best setup for their needs.

Some of the most popular solutions include:

Square Payroll: Track time, pay employees, manage benefits, and automatically file tax forms. Read our Square Payroll review to learn more.
Square Capital: Square offers small business loans of up to $100,000. This is only available for Square sellers, but has fast approval and fast funding without a hard credit check. See how Square Capital compares to other top working capital solutions for small businesses.

Square also has paid add-ons for email and SMS marketing, team management, customer loyalty programs, and advanced online sales.

Bottom Line

Square has become the go-to solution for pay-as-you-go flat-rate payment processing. Every year, Square continues to enhance the features of its free POS software, including solutions specifically designed for retail, restaurants, and appointment-based businesses like salons, in addition to its generic small business POS. Overall, Square is one of our favorite solutions for small businesses. Visit Square to create a free account.