How Does Square Work? The Beginner’s Guide To Square For Small Business

Square’s business model is to be many things to many different types of businesses, but at its core, it is a solution to help businesses manage how they process payments from transactions both online and in-person. It is one of the best credit card processing companies for small businesses available.

In this post, we’ll answer all of your most basic questions about Square for small businesses, including how Square works.

What Is Square?

Square is a company that provides payment processing, point of sale software, and a variety of other services to small businesses. It prides itself on its ease of use and affordability as an all-in-one system for retail shops and restaurant owners.

Think of Square as a credit card processing service that makes it easy for businesses to start accepting card and mobile payments. Merchants can use Square to take mobile credit card payments from their customers and create a seamless selling process from anywhere. Square’s services also include point of sale, inventory, and employee management.

How Does Square Work?

When businesses use traditional merchant accounts, card payments for goods and services temporarily go into a private merchant account for deposit. Square, on the other hand, pools all of its subscribing users’ accounts into one big merchant account, which makes it a third-party payment processor. With Square, businesses don’t need to wait for banks to process fees on deposited funds while the merchant account provider holds onto them.

Square is not just about payment processing, though. Square’s free POS app helps with day-to-day business management, and there are loyalty and payroll apps as well. Cash App was designed to compete with similar services like Venmo. Cash App is a peer-to-peer payment service allowing customers to easily pay for products and services from their mobile devices while taking a small fee.

How Much Does Square Cost?

Square’s rates at a glance vary by the type of transactions businesses are processing. Without breaking out a calculator and crunching numbers, here’s a look at how much Square charges:

• Standard Card-Present Fee: 2.4% - 2.6% + $0.15 (lower fees on paid plans)
• Online & Invoiced Transactions: 2.9% - 3.3% + $0.30 (lower fees on paid plans)
• Manually Keyed-In Transactions: 3.5% + $0.15

Per-transaction rates and fees aren’t exactly attractive all on their own to small businesses. Square promises no monthly fees, statement fees, or minimums to help growing businesses remain flexible.

In addition, Square has excellent hardware options. There is a free strip reader for basic payments and a chip reader for $59. Square Terminal, Square’s mobile payment processor, costs $299, and Square Register, an all-in-one POS and processing system, starts at $799. Square’s latest hardware addition, the mobile Square Handheld, goes for $399.

What Does Square Do? A Quick Guide To Square Products & Services

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Square has become much more than just a swipe-based smartphone processing system. The Square business model has evolved, and features like a robust mobile POS app, payroll, inventory and employee management, online store, and email marketing have all come together under Square’s umbrella of business-centric services.

There’s a lot to cover when it comes to Square services. In general, though, the list below introduces the product’s core features:

Is Square Good For Small Businesses?

Square offers an all-in-one system for small businesses, including payment processing, point of sale, software, hardware options, and a unique app store, all for upfront, affordable pricing.

For newer small business owners or ones who are looking to simplify their day-to-day operations, Square is a simple option that is highly scalable with no long-term contracts to worry about. It comes with strong customer service and is extremely well-reviewed.

Advantages Of Using Square

Disadvantages Of Using Square

How To Open A Square Account

Small business owners who are ready to use Square to process payments can get started by providing a minimal amount of personal info and zero bank statements or proof of revenue. The free POS app and mag stripe mobile credit card reader come ready for use after a business creates a new account.

The entire process takes 10 minutes to get started at the most, and there is no credit check or upfront fees to get started. After your account is up, you are ready to start accepting payments immediately. And if you’re still on the fence, Square offers a 30-day free trial to test its software.

Here is the quick process for setting up your free account:

1. Go to squareup.com and select Get Started
2. Select your business type
3. Enter your name, social security number, US-based bank account, date of birth, and mailing address. You also have the option to enter your employee identification number and your business bank account
4. Enter your phone number or email address to receive a link
5. Tap the link to download the app to your mobile device

Read more about how to set up a Square account.

Is Square The Best Choice For Small Businesses?

Square offers merchants a value that’s hard to beat, especially since it’s a third-party processor that lets businesses start using it for free. With Square for small businesses, a wide range of services allows for flexibility when accepting online and in-person transactions.

When it comes to ease of use, affordable pricing, and a feature set that makes it simpler to create an eCommerce presence, Square is pretty tough to beat. Square may not be the right solution for businesses of all types and sizes, and there are great alternatives to Square, but it provides enough support to make it stand head and shoulders above the competition.