Is Square The Right Payment Solution For Your Business?

In this piece we wanted to go over the popular payment option known as Square, and evaluate whether it’s a good fit for your business. Square has been around since 2009, and is a profitable and popular company in the payment industry. But along with all the positives they do have have some features that don’t make them a great option for every business.

So let’s take a deep dive into Square, and see what they can offer a business as a payment processing solution.

About Square

Square is a little bit tricky, while they do offer credit card processing services for businesses, they do not provide a true credit card processing account.  What I mean by that is unlike other credit card and processing companies, Square does not require a merchant to pass a credit check to be approved for a merchant account.

How they do this is by creating one big merchant account and then splitting up all their merchants individually in a large group merchant account.

This is called an Aggregate account, and Square isn’t the only platform that handles processing this way. There are a few reasons why they do this, and one of them is because it allows them to approve most merchants by skipping the credit check.  Most payment processors will give a merchant their own account and require them to pass a background check.

The good parts about Square

Now, as we mentioned it is pretty easy to get approved for a Square account, even if you’re in a line of business that is considered high-risk, like selling alcohol, tobacco, etc.

Granted, they still may refuse a business for a few reasons. If you have any tax liens, or no money to cover the first few months of business and any processing fees. Still, the big appeal of Square is how simple it is to get a merchant account, especially for a new business.

They do provide both mobile, tablet, and even a point-of-sale system solution for customers who process with them. Their equipment is actually very well made for a low cost processing option.

One of the other main draws to Square is it’s flat fee. Square charges 2.75% per transaction. So if you’re a merchant who processes under $5000 a month in volume, and your average ticket is under $10 it’s a pretty cheap option.

Now Square will often lose money on this deal, but it’s a good price for you.

Square also uses EMV technology along with mobile solutions so you can either use a tablet or a phone to take payments.

That’s some of the main highlights of Square, but what about it’s negatives?

The bad and ugly parts about Square

Now as one of the positives listed that it’s fairly easy to get a merchant account because they don’t do a credit check. However, Square is incredibly picky and takes no risks in regards to suspicious account activity.

For instance, if you normally process around $100 a day, and suddenly process $5000, they will hold your funds until you can prove it was a legitimate transaction.

Now this can be frustrating, chances are you won’t even realize your money is being held until you look at your account a few days later and are a little short.

Also, if you do end up getting approved by Square and they find out you have bad credit later, then they might suspend your account and you may struggle to get your money.

As we mentioned in the good section, Square also lets you buy their point-of-sale system from them or from national retailers like Best Buy, however, it can be a bit pricey if you’re just starting out.

Another issue Square has is you have to use their support line, which is fairly mediocre.  You might get lucky and get a quick response, otherwise it could be several phone calls to resolve a support request.

This isn’t a straight up negative, but Square is also not the cheapest option, other similar products on the market such as PayAnywhere are slightly cheaper than Square while offering equal services.

Final thoughts

Overall, Square is a good solution for some merchants. If you’re running low volume and small ticket item transactions you’ll do really well on Square.

Be warned you are going to have a difficult time finding someone to help you at Square if your Mobile reader or point-of-sale system from them fails. You might also find your funds are held if you run a higher number transaction then intended.

If you’re interested in learning more about what payment processing solutions we support, check out our store!