Square: Mobile Credit Card Processing & Payment Solutions

Square: A Modern Approach to Mobile Credit Card Processing

Square has emerged as a rapidly expanding mobile credit card processing solution, simplifying the acceptance of credit card payments wherever you have a smartphone – either an iPhone or an Android device – and an active internet connection.

Who could benefit from a service like Square? It’s ideal for anyone needing to accept payments for goods or services, such as artisans selling crafts at fairs, individuals hosting garage sales, or professionals offering services where credit card acceptance would be advantageous.

Eligibility and Account Setup

Currently, Square’s services are limited to the United States. To establish an account, applicants must possess a U.S. bank account, a social security number (or a tax ID for businesses), and a valid U.S. address.

Individuals, even those not operating a formal business, are eligible to apply. Upon approval, no specialized hardware is initially required to begin processing card payments.

If the Square reader isn't used, card details must be manually entered into the application. However, this incurs a higher transaction fee, as these are classified as 'card not present' transactions due to the lack of magnetic stripe verification.

Addressing the Shortcomings of Traditional Systems

Traditional wireless credit card machines often present several disadvantages:

• They tend to be large and cumbersome.
• Acquisition costs can be substantial, often reaching several hundred dollars.
• Ongoing monthly wireless maintenance fees are typically required.

Square aims to overcome these drawbacks while simultaneously providing a streamlined and intuitive user interface. Let's examine a typical transaction processed through the Square system.

The Square reader connects to the headphone port of compatible iPhones, iPads, or Android devices. These are currently the only supported platforms.

Transaction Options

Three payment options are available. A cash transaction can be recorded, with Square functioning as a digital receipt, logging the transaction in your control panel and optionally emailing a copy to the customer. This service is provided at no charge.

The remaining two options involve credit card payments. The distinction lies in whether the card is swiped using the Square reader or the information is manually entered.

By connecting the Square reader, simply swipe the card, input the transaction amount and an optional description, and then select 'Charge.' The system will then either approve or decline the transaction, proceeding to a screen where the customer can provide their signature.

On the final screen, you have the option to email a receipt to the customer. This email contains the transaction details and your merchant address.

In comparison to conventional mobile credit card processing, the experience for both merchants and customers represents a significant improvement. Square simplifies the process and offers complete transparency regarding its fees, a departure from many traditional merchant account experiences.

Fee Structure

As illustrated on the online receipt, Square provides a detailed breakdown of each transaction, clearly indicating the amount deposited into your account and the fees deducted. As of the publication date of this article, fees are 2.75% + 15¢ for swiped transactions and 3.5% + 15¢ for manually entered transactions. (Refer to their features page for the most current rates).

Who Benefits from Using Square?

My initial experiences with Square have been very positive. The service effectively extends credit card acceptance to individuals, not just businesses, though established businesses can also benefit from its competitive rates and minimal requirements.

Individuals can now offer credit card payment options to customers who previously would have only been able to pay with cash or check. While a transaction percentage is charged, the convenience of immediate payment can outweigh the cost.

For businesses, Square provides a portable and user-friendly solution for accepting credit cards. However, it currently lacks some features common in traditional merchant systems, such as an API for website integration. Furthermore, the long-term durability of the reader and headphone jack connection may be a concern for high-volume processors.

Despite these considerations, Square has the potential to fundamentally change the credit card processing landscape. Its ease of use and transparent fee structure are a welcome change.

We invite you to share your experiences with Square. While my testing has been positive, we value the insights of our readers.