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How Does Square’s Instant Deposit Work?

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Melissa Johnson

Melissa Johnson

Melissa Johnson has been writing about payment processing and mobile payments since 2014, and has been quoted in articles for Credit Karma and The Next Web, among others. She graduated from The University of Kansas in 2010 with bachelor's degrees in English and journalism.
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19 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    PG285

    Hi Melissa, thanks for the article!

    Credit card settlement takes 24-48 hours. How is Square able to transfer those funds instantly (even Square hasn’t received those funds from the issuing banks)?

    Also, what is the fee for same-day transfer? Is it cheaper than 1% of the amount (as it is for instant deposit)?

    Thanks.

      Emily Hale

      Hi and thanks for your message! Square covers the transfer that hasn’t been funded on the back-end because it’s large enough to, essentially. Not all merchant account providers offer the same convenience. While Square does take somewhat of a risk in doing so, the merchant is charged from a linked bank account should the transaction face a chargeback. So while it’s a risk, the financial liability of a chargeback is on the merchant, no matter what provider you have. As far as the fee for same-day transfers, the instant deposit and same-day transfer (despite the different terminology) cost the same with the same expectations of fund time transfer. However, if you have the Square Card (as mentioned in the post), you can use your funds immediately. You can apply for a business card right at your dashboard if you already use Square, and it costs nothing to do so. Hope this helps and best of luck!

        Sheldon G

        Do you know if Square allows apps to use their API for your own app to allow end-users (clients) to send payments directly to your sub-merchants (barbers/stylists/etc) rather than requiring you to be a middle-person and delay the receipt of their payment?

          Jessica Dinsmore

          Hi Sheldon!

          As far as we are aware, Square doesn’t currently support onboarding of users as sub-merchants or any other marketplace-like setups, and there’s nothing mentioned in the documentation. You would be best reaching out to Square directly to confirm. If you’re looking for alternatives, Braintree and Stripe might be up your alley.

            Ashley R Williams

            Hello
            My name is Ashley, I took my first payment before my debit card was linked. It says my card is li le now, but does that mean I can use it to spend my square balance?

              Jessica Dinsmore

              Hi Ashley!

              Once your bank account is linked, Square will start transferring funds to the account automatically (by default Square takes 1-2 business days to deposit funds depending on when the transaction is processed). If you order the Square Card (which is not the same as linking your bank account/debit card to Square), Square will start accumulating your Square Balance and once the card arrives you can spend it anywhere that accepts MasterCard. I hope that answers your question!

                Gerrit Lettinga

                I just bought a square reader for $49 in nanaimo bc Canada at best buy. How do I know when someone pays me on the app on my mobile phone, that the person actually has the funds in his or her bank account, just to make sure the person didn’t write me a rubber cheque. The box says all debit cards only charge $.10 if it less than $100. I don’t want to get scammed by dishonest people. If it takes 2 business days to appear in my bank account, could this person have the money in his account at the point of sale and then shortly thereafter take the money out of his account, so that I wouldn’t receive the money? I have 90 days to return this to the store. Can I get ripped off?

                  This comment refers to an earlier version of this post and may be outdated.

                  Jessica Dinsmore

                  Hi Gerrit,

                  Square should be able to tell you right away if a transaction has been approved or declined. You may want to check out our in-depth Payment Processing Guide to learn a bit more about how processing works. I hope that helps!

                    This comment refers to an earlier version of this post and may be outdated.

                    Mark Damon

                    I made a sale and now it just says sending and i just changed my bank account. How long will it take to recieve my money. It has been saying sending for 2 days. Plus they stll are reviewing my my instant deposit. Why?

                      This comment refers to an earlier version of this post and may be outdated.

                      Jessica Dinsmore

                      Hi Mark,

                      Hopefully your issue has been resolved by now, but if not, I can say that the first deposit usually takes the longest. I’d definitely suggest reaching out to Square directly for any future delays. Thanks for your question and best of luck!

                        This comment refers to an earlier version of this post and may be outdated.

                        Kevin

                        but… HOW do they do it? pre-funded funds??? running a RETURN credit card/debit card transaction still pends on the merchant to cardholder business transaction. if Square is only utilizing your DEBIT card information.. (i can see if there were WIRING information .. but I never gave my account information for incoming WIRE…. how do they get special faster treatment to access an increase in my available funds in my bank so quick?

                          This comment refers to an earlier version of this post and may be outdated.

                          Jessica Dinsmore

                          Hi Kevin!

                          Square uses your debit card number and same-day ACH transfers to provide its Instant Deposit service (your debit card is linked to your bank). It’s not a wire transfer. Standard ACH transactions take anywhere between 3-5 days to pay out, normally, but the infrastructure for instant transfers does exist. It’s just not the default option yet. I hope that helps clear things up for you! Best of luck!

                            This comment refers to an earlier version of this post and may be outdated.

                            John

                            Can people “bounce” cash app payments for insufficient funds? Can people close their bank account or take out thier money before it arrives in your bank account?

                              This comment refers to an earlier version of this post and may be outdated.

                              Jessica Dinsmore

                              Hi John,

                              To be honest, this isn’t something we’ve ever encountered before, so it may be a bit outside of our expertise. I’d rather not give you an answer that I’m not too certain about, so I’d suggest reaching out to Square directly; they should be able to answer both questions quickly and easily.

                                This comment refers to an earlier version of this post and may be outdated.

                                Will

                                Hey Melissa I recently opened my account with square and set up scheduled deposit for close of day at 2pm. So say if i got 2 or 3 deposits for 2,500 at 1:55 pm will they be available to me 15 minutes after the close of day time still?

                                  This comment refers to an earlier version of this post and may be outdated.

                                  Melissa Johnson

                                  Hi, William!

                                  Unfortunately, there’s a lot of information I don’t have about your account, nor am I a Square employee. So I can’t tell you anything definitively. I can, however, say this with confidence: if you accept multiple payments at 1:55 p.m. that total $2,500, yes, you should be able to move them to your bank account 15 minutes after close of day (so 2:15 p.m.). You’re going to pay 1% of the sum transferred — so $25 on a $2500 transfer. Also, if any single payment exceeds $2,500, you can’t send it via Instant or Scheduled deposit at all, and if your total daily amount exceeds $2,500, it’ll be sent in multiple deposits.

                                  I also need to caution you that any suspicious looking activity — a bunch of last-minute, high-volume transactions right before close of day, for example — could trigger a red flag with Square and lead them to freeze those funds while they investigate your account (which, in turn, could lead to an account termination and those funds being locked up for up to 180 days). Square also puts limits on new sellers using Instant Deposit. It doesn’t mention the same limitation on new sellers using Scheduled Deposit, but since it’s the same technology powering both deposit options, it’s worth taking note of.

                                  If you have questions about deposits and when funds are available, you should go directly to Square. They’re best equipped to help you, since they’ll have you account information!

                                  Hope that helps!

                                    This comment refers to an earlier version of this post and may be outdated.

                                    Jim Shanahan

                                    Good article Melissa! Do you happen to know how the Square Cash service works behind the scenes?
                                    For example, does Square receive the senders payment on the ether debit card through the MasterCard/Visa network as if they are a retailer? If so, do they need to pay an interchange fee of about 2% to the senders bank since it is a card not-present transaction?
                                    And on the receiving end, is it process via ACH or perhaps a credit to the receivers debit card account even tight its not refund.
                                    Thanks!
                                    Jim Shanahan

                                      This comment refers to an earlier version of this post and may be outdated.

                                      CAROLYN LEAR

                                      What if I closed my account and open up a new account with a different account number and debit card how do I register my new account

                                        This comment refers to an earlier version of this post and may be outdated.

                                        Melissa Johnson

                                        Hi, Carolyn!

                                        Information can be found here for changing your bank account in Square.

                                        https://squareup.com/help/us/en/article/3896-link-and-edit-your-bank-account#editing-your-bank-account-information

                                          This comment refers to an earlier version of this post and may be outdated.

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