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We’ve been following Square since they launched in 2009, back when the idea of a swipe-based smartphone processing system with no monthly fee and no equipment cost sounded more or less like a fairytale, too good to be true. Fast forward a few short years – and look around. There are dozens of mobile payment solutions offering exactly this. In fact, merchants have come to expect nothing less than this. Even the smallest businesses who have never processed a dollar before want the lowest rates possible with no monthly fees. Square – and a host of others – have obliged. But as we have learned, this freedom comes with a different kind of price.
Before we look at the potential pitfalls of Square, let’s look at the huge number of advantages. Square is, without a doubt, the most feature-rich and advanced mobile processing solution you can find without a monthly fee. To get anywhere near this kind of functionality, you would normally have to go with an advanced iPad POS and pay at the very least $60 per month, plus processing rates that would not necessarily be lower than Square’s.
This is Square’s biggest draw. A flat rate of 2.75% + $0.00 for all swiped and online transactions, big or small. No monthly fee. No monthly minimum. Even without the Square Register POS, this is an extraordinary deal for many merchants. So when you toss in a fairly capable iPad POS for free, the draw is almost irresistible. (Although let’s note that most merchants will have to purchase Square’s EMV chip card reader for $30 to process securely. We unboxed and reviewed this upgraded reader.)
And there’s more! Square also provides you with a sleek online store that syncs with your in-app inventory, including inventory counts. There’s an e-invoicing solution, online ordering option, basic customer management, advanced analytics, tons of app integrations, PLUS an API for custom solutions. All of this for no monthly fee and low rates, especially if you have a low volume and/or low average tickets. I mean, this company is processing American Express transaction at a potential loss! That’s right. Every time a customer pays with AmEx, Square might lose money. The downside is that you end up overpaying by quite a bit for debit transactions and for many standard credit card transactions. For instance, Flint Mobile only charged 1.95% for debit, while Square charges 2.75%. The actual interchange cost for many debit transactions is just 0.05% + $0.22.
So at this point you must be wondering, “If he loves Square so much, why doesn’t he, (a) marry it, and (b) give it a five-star rating?” It really boils down to two related and very serious Achilles heels. One: account instability/funding holds. And two: inconsistent customer support. If you’ve even glanced at our comments section, you know exactly what I mean.
Since the beginning of Square, customers have complained that they are having their accounts terminated without warning and/or having funds withheld for up to 180 days. This is a scary prospect for any business, and especially small businesses. While account holds are possible with any processor, Square’s failure rate is way, way above average. This is in part because they aggregate accounts instead of opening unique merchant accounts, but beyond that they seem to have bitten off a little more than they can chew risk-wise. This has led Square to take drastic measures to protect itself against fraud – oftentimes at the expense of inexperienced or unwitting business owners. And when businesses try to reach out to customer support for help, they are met with a brick wall.
The bad news here – this is still a problem with Square. The good news? Based on my observations, they are really improving. I’m still not ready to wholeheartedly and without reservation recommend Square to all business owners. (If you need a mobile solution that is closer to 100% reliable, check out Flint Mobile. Fewer features, but rock solid service.) I am, however, cautiously optimistic. Square Register has an amazing feature-set, especially if you use an iPad. Other devices will get less, but still a great value. I recommend that you check them out. But just remember the old adage: “Hope for the best, and prepare for the worst.” If you can’t risk having your funds withheld, then go with a more reliable solution.
One downside with Square is that even if you love the Square Register POS, you can’t use it without Square’s credit card processing. So if you are wary of processing with Square, check out ShopKeep POS. It’s a great alternative that works with many different payment processors.
Check out the full review for more detail, and please comment with your thoughts. Do you think Square has improved?
Square’s POS and backoffice features are unmatched by any other free mobile processing system. Of course it’s not quite up to snuff when compared to more advanced (and expensive) systems, but with no monthly fee it’s really tough to beat. Here are the major features worth noting.
- Inventory management: Square’s new inventory management system is the most advanced I’ve seen from any mobile processor with no monthly fee (if you need a more complete system, check out our inventory management reviews). Note that many inventory features can only be accessed in the iPad app or online, not in the basic smartphone app. Features include:
- Import inventory via CSV file
- Inventory count
- Barcode scanning
- Multiple tax rates
- Item categories/varieties
- Item add-ons/modifications
- Online and in-store inventory sync
- Item pictures/descriptions
- e-Commerce/Online ordering:
- Webstore hosting: Square will host your online store. Your URL semi-customizable (www.mkt.com/yourstorename), but layout – while attractive – is dictated by Square’s template. One really nice thing here is that, unlike more simplistic solutions, Square lets customers select a shipping option.
- Online menu ordering: This operates just like the webstore, and allows customers to place and pay for an order for pickup.
- e-Invoicing: Manage invoices in-app or online. Invoices can be saved or sent immediately. It’s a basic system, but functional.
- Receipt printing: iPad-only feature.
- Kitchen ticket printing: iPad-only feature.
- Kitchen display compatibility: iPad-only feature.
- Customer feedback management: Here’s a cool feature. Called Square Feedback, this system prompts customers to leave feedback about their experience not on social media, but directly to you. This allows you to manage your reputation, quickly identify problems, and prevent public complaints from surfacing on the web. For $10 per month you can upgrade to Square Feedback with Customer Insights. This upgrade gives you access to details like purchase history, previous feedback, and average spending.
- Customer overview: I consider this a light version of what Swipely is doing. It’s no where near as in-depth, but has some cool features regardless. This page displays various customer behaviors, including sales and visits by new versus returning customers and customer visit frequency. These charts display activity over the time period indicated. While you can’t identify specific customers or manage customer relationships here, it’s still an amazing feature given the the price point.
- Advanced reporting: Square offers some of the best online reporting you’ll see in a pay-as-you-go provider (and even many monthly fee-based providers). You can Generate real-time reports by the hour, day, week, month, or year from your online Square Dashboard, with many reports available in the iPad app. Reports can focus on specific item categories, mobile staff sales, sales by item, sales by payment method and more. Check out this page for a more complete list of reports offered. Many of the reports are exportable by CSV.
- Loyalty/rewards program: Square allows you to give your customers digital punchcards. You set how much must be spent in order to earn a punch, and how many punches to earn a reward. You set the reward in the form of either a dollars off coupon or a percentage off coupon. A nice thing about this is that it allows both cash and card transactions to count toward rewards as long as customers use the same email or phone number for each transaction.
Other App Features:
- Split tender (New for mid-2015)
- Offline mode card processing
- Shows change for cash
- Cash/check reporting
- Custom amount
- Tips by %
- Tips by $
- Discounts by %
- Discounts by $
- Full and partial refunds
- Signature and tip on paper receipt (iPad only)
- Signature off option on small tickets (under $25)
- Emailed receipts
- SMS receipts
- Customizable receipts
Pricing/Fees and Rates:
Square’s pricing is simple. While you won’t qualify for interchange-plus pricing, you also won’t have to deal with pricing tiers. Nor will you have to navigate hidden fees. In fact, you won’t have to navigate any fees whatsoever unless you opt for add-on services.
Basic Rates and Fees:
- Monthly fee: $0
- Headphone jack reader: $0 (Will be phased out by October 2015 in favor of the $30 EMV chip card reader.)
- Swiped transactions: 2.75%
- Online/invoice transactions: 2.75%
- Keyed-in transactions: 3.15% + $0.15
- Other fees: None
- Square Stand: $99
- Chip card reader for stand: $39
- Headphone jack chip card reader: $29 (We unboxed and review the Square EMV reader here.)
- Gift cards: $1.50 per card, 125 min order, no redemption fees
- Square Appointments: $30 for one person, $60 for 2-5 staff, $90 for unlimited staff.
- Square Feedback with Customer Insights: $10 per month
While Square does not disclose any limits for processing, don’t think that means you can run $900K in transactions one month and expect smooth sailing. The lack of limits is actually a negative in my book. I’d much rather see strict limits in place, because at least then you can know your limitations and apply for increases as needed. As it stands, you have no idea when you will cross the invisible threshold and trigger an account suspension or investigation by Square.
Contract Length and Early Termination Fee:
There is no early termination fee or locked in contracts with Square, which is true of almost all mobile-based processors.
Sales and Advertising Transparency:
For me, Square does very, very well in this category. Everything they say in their advertising checks out, and they don’t use any wacky sales gimmicks. Their “free” reader is actually free, and they really don’t charge any additional fees.
They could definitely state more information about account holds, why they happen and how to avoid them, though. This is the biggest complaint from merchants using Square, and surely the company is aware of this. Not disclosing this in plain sight as a possibility definitely equals a lack of transparency. I would also like processing limits established and made explicit in order to prevent these holds.
Aside from that, however, I couldn’t ask for more from Square. All fees, rates, and important information appears in their sales copy, and just about everything else you could ever want to know about processing with Square appears in detail within their extensive Help Center.
Ease of Use:
After creating a “demo” shop with a couple different categories and products, I tested how long it took me to get familiar with the Square interface. I had the whole thing down in under an hour and was impressed by its smooth, intuitive layout. There’s no doubt that Square is doing okay in the looks department.
One interesting thing about the interface is that you can manage the app in different ways. For my demo I downloaded the app onto my iPad and then added all of the categories and products by logging into my Square account on my laptop web browser. All of the inventory additions created on my laptop were quickly synced to the iPad. Square also allows you to add and manage inventory items directly on the iPad, which is not the case for a lot of other cloud POS software.
Because Square is compatible with so many devices, it interacts with them in different ways. For example, the iPad can display product categories, while the iPhone cannot. Several Android devices are only able to accept manual credit card entries while others have trouble displaying the app correctly. Square has a “devices with known issues” article to inform you of potential compatibility difficulties with your device.
The other hardware issue to be wary of is the plastic credit card swipe. I came across many reviews written by merchants who explained how they sometimes have to swipe a card multiple times to get it to work, which is a count against ease of use. Aside from being aware of device-specific issues, I found Square very easy to use. Creating categories, products, discounts, product modifiers, and tax brackets was simple. I was a fan of the “favorites” category that allows you to keep up to 125 popular products on a virtual “shelf” for quick checkout access. With the flip of a switch you can add your business profile to Square’s GPS Merchant Directory.
A final note on ease of use is regarding Square’s recent update to the checkout process for businesses with the tip option enabled. In the past, after swiping their credit card, customers were prompted to a page with a virtual signature pad and the option to leave a tip. Square has divided this process into three parts: first the credit card is swiped, then the customer is directed to the page with the option for a tip, and finally they are asked to sign for their purchase. iTunes is full of frustrated merchants who say they feel the new approach is confusing and makes customers feel like they’re obligated to leave a tip.
Overall, Square gets great marks for its aesthetic design and intuitive layout and a lower score on hardware and interactive features like the credit card swipe and the tip options.
Hardware and Software Requirements:
The Square Register app will run on most Apple iOS devices with 5.0 or higher and Google Android devices with 2.2 or higher. Square states that their apps may work on some Android tablets but it does not officially support them or guarantee compatibility. Also Square cannot take payments on laptops or computers, although a back end dashboard area can be accessed from any computer with a web browser and WiFi connection. Another thing to note is that merchants using smartphones to process payments will not be able to connect to a receipt printer, cash drawer, or barcode scanner. All peripheral hardware setups need to be paired with an iPad.
Again, users will be forced to upgrade to one of Square’s new EMV-compliant mobile chip card readers by October 2015. These reader support chip and signature transactions, not chip and PIN. This is perfectly acceptable given that most chip cards in the US will not be PIN-enabled anyway.
Integrations and Add-Ons:
Square has a long list of add-ons and integration compatibility:
- QuickBooks Online
- QuickBooks Desktop
- Stitch Labs
- Fresh KDS
- Intrakr Inventory
- Zoho Books
Plus an API for custom solutions.
Customer Service and Technical Support:
This is the category that has historically kept Square’s overall rating low. For it’s initial year, Square did not offer any phone support whatsoever. Their email support was basically 100% cookiecutter, and getting a personal, well-considered, account-specific reply was nearly impossible. In 2013, Square introduced a phone support system, which at first seemed difficult to use and was performing poorly. By late 2014, however, I noticed that their system to gaining access to phone support seemed improved and I saw a dramatic reduction in complaints coming in. That’s not to say that Square now has spectacular phone and email support, but they certainly have improved a lot in the last 12 months or so. Basically when you submit a request for support, they give you the option of phone or email. When you select phone, you are given a customer code specific to your issue. You will need to enter this code into the phone system to receive phone-based support.
With the number of active users Square services, customer support is incredibly difficult to execute in a cost-effective way. Plus the relative lack of processing experience these merchants tend to have along with a lack of proper explanation of the pitfalls of third-party processing doesn’t help. So I’m not surprised to see Square struggling, and am actually impressed by their progress. I believe that part of the complaint reduction I’ve seen has to do with better risk management on Square’s end (i.e., fewer account holds, suspensions and terminations). After all, the best cure for complaints is to prevent them in the first place.
Square’s shortcomings in account-specific customer support are countered by it’s industry-leading (literally, not just throwing that phrase around) knowledgebase for self-service customer support. The vast majority of your problems with or questions regarding the Square system will be answered in this online user manual. It is truly extensive, and contains useful screen captures and walkthrough for every single feature offered. This is, in my opinion, the gold standard for merchant services support pages.
Negative Reviews and Complaints:
There’s no lack of complaints against Square across the web. Basically every consumer advocacy outlet and review site you can name has multiple complaints or scam warnings regarding Square and Square Register. A quick Google search will produce way more feedback on Square then you could ever hope to read. With that said, they have an A+ rating with the BBB (improved from a B+ in early 2014) despite having 1150 complaints filed in the past three years as of this update. That is a truly enormous quantity of negative feedback, but it is on the downtrend. Fewer complaints have been filed in the past year than in previous years, which is a good sign. The most common complaints boil down to two closely related issues:
- Poor customer support – This is the number one complaint lodged against Square. Some Square merchants even go so far as to suggest that Square is a “scam” because of their appalling track record of processing funds that have been placed on hold. Square support indicates that they will respond to email inquiries within 24 hours. The time frame is sometimes closer to 2-3 days according to a slew of frustrated merchant reports. For simple issues, however, (i.e., not issues regarding funding holds or chargebacks) responses seem timely enough. Again, this has improved A LOT in the last year or so now that a functional phone support line is offered. Still, it’s worth noting.
- Account stability issues/funding holds – Difficulty with inaccessible funds is a close second in the complaints department, and considering many of the support complaints are in reference to funding holds – this is probably the most important issue. Square’s aggressive fraud prevention tactics have put many small businesses in a position where they can’t access their income because their transactions have raised a general red flag for any number of reasons. Part of the problem here is that Square does not properly disclose/explain the risks involved in third-party processing. The good news here is that I’m seeing far fewer reports of funding hold and account terminations in recent months. I’m not sure if this is a product of their improved customer service, or if there are actually less holds occurring. But either way, there is an improvement. Still, it’s no where near as safe as a mobile processing provider like Flint Mobile.
More Information on Funding Holds:
Thanks to the hundreds of complaints the BBB received from Square users, they were able to get a formal response from Square about why funding holds happen, and why communication seems to be lacking:
BBB’s business review for Square Inc was created in December 2010. A recent review of this company’s complaints was done in February 2014. Consumer complaints state that business owners complete a transaction using Square and receive an email to verify or provide additional information. The business owners do so yet their account is suspended and funds are not available for 90 days
In response to the above concerns, the company provided the following:
When an account is suspended, merchants are notified that they have either ‘(a) violated the terms of this Agreement, any other agreement you have with Square, or Square’s policies, (b) pose an unacceptable credit or fraud risk to us, or (c) provide any false, incomplete, inaccurate, or misleading information or otherwise engage in fraudulent or illegal conduct.’
Due to security purposes, merchants are not informed which of the conditions they have violated.
It’s kind of a cop-out excuse, saying that they can’t disclose any information to users for “security purposes.” It would go a long way toward satisfying merchants who are already in a crappy situation if Square could just tell them point-blank the reason for their account suspension and/or withheld funds. Instead, merchants are left frustrated and confused.
Positive Reviews and Testimonials:
Square has been a really good POS solution for some business owners. Here’s what happy merchants are saying:
- Features/Design – Square has, far and away, the most diverse and advanced feature set of any major mobile processing service without a monthly fee. This is why people choose Square, and it’s why they’ve managed to eke out four stars despite a pretty formidable load of complaints. See the Features section above for a complete list of all the cool things you can do with Square. People especially love the inventory, reporting, and offline processing options.
- Innovative – Square is one of the pack leaders in the point of sale industry and they don’t appear to be slowing down anytime soon. Their innovative approach continues to develop services that are transforming the way that merchants and customers engage at the checkout counter and beyond.
- Inexpensive – Since square does not charge a per-transaction fee on swiped transactions, low-ticket business stand to save a significant percentage. This is because a $0.10 transaction fee on a $5 ticket is actually 2% added on. By avoiding this, the 2.75% flat rate starts to look really good. Also many American Express transactions are actually processed below cost by Square, which might not be sustainable but is great for businesses that process a lot of AmEx. The downside is that debit transactions cost way more with Square than they had ought to. Even Flint, who also charges no monthly fee, process debit at 1.95%.
Square hit the ground running, but might have run too quickly for its own good in the first few years. By 2015, however, Square seems to have hit its stride and is now not only offering a huge number of cool features, but also passable customer service and account stability. While this isn’t my first choice for a cover-all mobile processing solution, I am at this point comfortable recommending it as a viable option for businesses that need this feature set but don’t have the volume to justify using a more advanced POS solution.
With features like inventory management, advanced reporting, offline processing, online sales and more – all executed very well – Square has more features than I’ve seen from any other no-monthly-fee provider. If you’re willing to pay a bit extra, there are even more great things in store for you. For instance, you’ll find a very reasonably priced gift card solution, a solid scheduling system, and an absolutely gorgeous iPad stand with a built-in card reader.
This doesn’t change the fact, however, that Square is a large-scale mobile third-party processing solution. This comes with inherent and unavoidable risks. While Square certainly does seem to have improved their risk management protocols, funding holds and account stability will always be issues with this service, especially during your first year of use. If you need a more reliable solution but don’t want to pay a monthly fee, check out Flint Mobile. If you are willing to take the risk in order to gain the reward of advanced features, Square might be a good bet for you. I’m not going to tell you that they are 100% safe, but to be honest if I had a low-volume low-ticket business in need of a moderate POS on a small budget, Square would probably be my number one choice.
And again, you can’t use the Square Register POS without Square’s payment processing. If you want a similar POS option that works with many different payment processors, check out ShopKeep. It’s a really solid system.
I hope to see account stability continue to improve this year. Take a look at our mobile processing comparison chart and weigh your options before committing to any solution. Please leave us a comment with your experience! Good or bad, your feedback helps us immensely.