If you’ve ever been to the US you would have seen Square’s somewhat ubiquitous white credit card readers and iPad terminals at a number of small businesses.
Square is a payment processor that accepts consumer credit cards and allows small businesses and independent sellers – and potentially those who wouldn’t have accepted a credit card before, to accept cards and easily facilitate cashless transactions – including American Express cards (so higher points earn), alongside Visa and MasterCard.
As consumers then it’s worth being aware so you know what you’re dealing with when you make credit card payments – or if you’re a small business owner you can also pick up some free payment processing.
Square just launched in Australia a few weeks ago, and their products will start being used by market stall-holders, small shops and other businesses – even small-scale sole trader sellers.
Square is by no means the first payment processor, but it’s one of the simplest
Square was set up in the US in 2009 by one of the Twitter founders and current Twitter CEO, Jack Dorsey, as a means of facilitating payments for small businesses. It has taken a while to come to Australia, and launches here along with Canada and Japan outside of the US.
Square’s main selling point is their relatively low (in comparison to similar services) payment processing fees of 1.9% across the board for all card types, along with the small (and optional) $19 one off cost for a physical card reader.
So, first tip – if you see a business using Square and choosing to add more than 1.9% in card payment surcharges, then you know they are probably profiting off the transaction.
You’ll know if they are using Square from the card reader (which is Square, of course, and white) plugs into the headphone jack of iPhone, iPad and Android devices and scans the card details into the Square app. The Square card reader costs $19 for businesses to acquire.
The Square Reader dongle plugged into an iPhone
It works with both chip and magnetic-only cards, and the customer lets the seller know an email address to have a receipt emailed to them (assuming they don’t want to hand you their device).
You might see iPads also set up with Square’s point of sale app running in dedicated stands, which allows customers to input the email themselves for an email receipt – these are not available in Australia yet, but you may see them when overseas.
Square’s payment processing fees are otherwise very simple – quoting their FAQ –
Square’s processing fee is just 1.9% per inserted, swiped or manually entered transaction and 2.5% for each paid Square Invoice. That’s it.
Sellers can manually enter card details into the app. They can also facilitate online, invoice-based transactions as well at the slightly higher rate of 2.5%.
There are also no other fees for merchants – again from their FAQ, their processing fee covers everything including bank interchange, chargebacks and withdrawals to the sellers bank account.
A win for consumers, and thus sellers, is the ability to allow American Express transactions at the same rate as Visa and MasterCard, evening out the complexity and overhead. As a seller, you’ll be able to accept the majority of credit cards on the market.
Square is useful, and simple, for any small trader or seller to allow card-based transactions in person or online, so if you’ve ever wished you could accept a credit card for your market stall, gumtree, garage sale or small invoiced-transactions, then it’s probably worth considering.
I’m not advocating Square over other services as I haven’t done heaps of research into others, but a quick comparison to Paypal shows their fees are currently set at 1.95% for card-present transactions using their card-reader (which costs $169).
Paypal also seems to be marginally more expensive for low volumes of online payments, but above a few thousand dollars comes in below Square’s 2.5% for local cards, but remains higher for international cards until you process over $150,000 AUD per year.
More traditional credit card processing agreements will often have a lower percentage fee, but also have much more variable costs – potentially varying fees by card type, volume of processing put through the account and applying a range of other fees for other account services.
Signing up for Square
You don’t need an ABN to sign up – individuals can register too, although the registration process, app and service that has launched in Australia is aimed at sellers.
Square also have ‘Square Cash’ in the US which is aimed at personal (friends and family) style payments but that hasn’t launched in Australia yet.
Using Square Referrals
Square are running a referral program which offers new users $1,000 in free processing until September 2016.
When your referral link is used to sign up by others (as I have done in this post, allowing you to pick up free processing as well and reduce some of my costs in taking payments) you can pick up more blocks of $1,000 free processing as well.
Summing up
Payment processors like Square are a key link in allowing merchants to accept credit cards, and charge an interchange fee (more on interchange fees here).
Square has an intentionally simple pricing model, and as a result, points-earning credit card users are likely to start seeing more Square card readers in the wild as different sellers start to try them out.
You can try Square out with $1,000 free processing using the Point Hacks referral here →
This content contains affiliate links from which Point Hacks may earn commissions from transactions generated from new customers, bookings and general enquiries. Find out more here.
Used Square over two years ago and for over 6 weeks they kept my money, did not reply to my many emails and I needed to get Fairtrade involved to get my money. The simple word “Thieves” comes into my mind.
Now I add Arrogance and Reckless behavior to the word describing this bunch of cunning pack.
There is absolute NO communication from their end so, I SUGGEST to steer clear of these money hijackers.
I’ve been using the square reader for almost a year & love it. I previously used the PayPal reader but found the display hard to read. It was easy to set up & I set up a few mock transactions of mine own first before using it with my customers. The fees are not too bad considering the fees the banks are charging for their eftpos facilities which isn’t viable for my business. My customers love it & always curious about what it is and appreciate the convenience of making a credit card payment. I really like that I can send them a receipt via SMS or email and Square send through the funds quite quickly. Unless they make negative changes to the business, I think I will be a Square customer for life.
Hi, purchased one for my cricket club. Went through the set up process, waited a week for the bank account verification only to be told same as others – this type of business is not yet accepted. I called and was told I can get set up but will take another 4 to 6 weeks!!! If I had known that, I would not have got it in the first place. We have our big season kick off tomorrow with hundreds of kids buying uniforms and food & drink and no way of taking cards! Very disappointed.
Purchased Square from Officeworks, had an ABN for our Club and got a message syaing they don’t support that kind of business. Perhaps Officeworks needs to be careful as to who they align business with because at the moment this is deceptive marketing. In other words the product is not fit for purpose. Wonder if Officeworks will refund money?
So far so good, I have been using it for about 7 months with no problems at all. I have just added the tap and go reader so am waiting to see how that works.
I wish I’d seen this before. I’ve been running a small mobile business. People like to pay by cc so I thought I’d be clever and cut out the monthly fees that banks charge for their portables so 3 weeks ago I bought Square up chip reader/tap.
I signed up and completed everything I was asked. Then received email saying I was good to go. Beauty! I thought. Had the best week ever! They let the first couple of transactions go through but after a few days of not seeing the rest hit my account, I contacted them. They made me provide very personal docs, i.e. scanned driver’s licence, bank statements, my qualifications. I even cried begging them to please give me my hard earned money. I’ve recently had surgery and needed to get back on my feet. They were HORRIBLE! I got an email saying I did not satisfy their request and just deactivated my account. I send them emails and get replies that I hadn’t been in touch for the last 2 weeks (But I had spoken and completed forms, emailed my personal docs within the first!) . They don’t call back with any reasonable reason as to why I don’t satisfy. The last reason was that a client has 90 days to dispute transactions…What the hell!! Noone has disputed and even if they did, Square Up can find me and debit my account…they have more than enough info on me.
They are ruthless! They have no compassion! Holding my money, my hard work, for 90 days.
I’m living on the edge of my seat as now worried that they will steal my ID and I also worry about them having my customers’ card details.
What’s worse is that I bought this through OFFICEWORKS. I thought they would’ve done their homework….never did I imagine they would sell dodgy products. WHAT A LESSON THIS HAS BEEN!!
I’m in the midst of lodging a complaint with consumer affairs and if anyone else would like to join me, I’ll happily go on TV.
I just tried to order one and it went even get past my valid abn. It keeps telling me its not valid. Guess I will be looking elsewhere.
In light of all the bad press here in the comments, I suppose all I can say is SQUARE has worked perfectly for me. Yes, you do need an ABN, but aside from that, it’s been the best thing to be able to take credit card payments. It’s quick and easy and the money comes through fast into your account. Wouldn’t use anything else!
Square is hold on to my funds. My first two transaction was fine. Now after my third sale, my funds is pending. I received a email stating my account is under review. And my funds will be on hold or suspended until my account is verified.
I would be happy to supply normal verification documents e.g. licence, abn numbers etc but they are also saying they need a bank statement showing transactions and a copy of my customers invoices, links to my social media and name and contact details of my customer and they are effectively holding my earnings as ransom until I comply.
I own and operate two companies and I’ve never heard of such request. I wouldn’t recommend using square for business. Especially after this huge inconvenience.
As Sc said you can’t set it up without an ABN so useless for small private sellers . I don’t know many garage sale operators etc that have an ABN.
This system is a fraud. We purchased the reader (and a shiny new tablet to run it), set up the account and started using the device. First few transactions went through OK then a demand came for more documentation to ‘verify’ the account. We complied completely with their demands. The account was then immediately deactivated with no right of reply, contact from the company or any form of good customer service. Their Bot system just referred us to the service agreement. You can’t contact them directly and need to go through all the dumb pre answered questions before you can lodge an inquiry. The chip reader/swipe card reader is flimsily made, fiddly to use and needs to be constantly charged to get any functionality. Ridiculously it needs to be disconnected from the device running it to enable charging resulting in delays and frustration when customers want to pay by card waiting for it to boot up. Luckily for us all our funds had been transferred to our bank before the account deactivation as they hold your money for 90 days, that’s right, NINETY days after they deactivate your account or you have to go through an costly and time consuming reversals process with anyone whose money they’re holding. It’s a scam DON’T USE THESE PEOPLE!
i’ve set up the app and verified my account ok. the square card reader appeared promptly in the mail. but the first trial go with the reader was met with a ‘damaged card reader’ alert and i am currently trying to exchange the product….
I purchased a Square device and have had trouble setting it up from the start. I haven’t been able to figure out how to set it up without an ABN, can’t verify my credit history nor my bank account details. I haven’t recieved responses to questions to them. I have twice tried setting up the app listing my products and failed. Overall, it has just been a pain in the butt and it is still not set up for use as far as I know.
It’s disguised as convenience, This is a tool to quicken the removal of Cash usage in our society which gives full control off ones finance’s to the banks and Governments and to rack up more debt.