Quick Take

  • Square is attractive for micro-business, but any one doing more than $3,000 a month in sales should look for a better solution.
  • Avoid the trap of a shiny POS system with minimal features and high processing costs.

Read the full details below

So you’re thinking of going POS and looking around at the “free” Square system. It’s tragically hip, looks slick and all the cool kids love it. There is no doubt that Square has changed the game, but is square a serious business tool or a new age toy? After all, you could probably run a pizza shop with an Easy Bake Oven, but why would you?

Easy Bake Oven A little background. Jack Dorsey was flush with cash from his success as co-founder of Twitter when he launched Square in early 2009, and quickly enjoyed all the cachet of being a bona fide, new age destructor. Now processing over $20 billion in annual payments from its 3,000,000 users and network of about 250,000 merchants, there is no denying that Square has become a major factor in the point of sale and credit card processing world. In little over five years, Square has changed the industry by allowing almost anyone to accept credit card payments using just their smartphone, and is now being chased by companies like Intuit, PayPal, North American Bancard, Integrity Payment Systems and many others.

The Good, the Bad, the Ugly

The Square setup process is famously easy. Accounts are created by providing basic contact information, downloading the app, connecting a bank account, and then waiting for the free credit card swiper to come in the mail. Once the little card reader arrives, you just plug it into the headphone jack of your smartphone or iPad and you’re ready to accept credit card payments. Best of all for its users, there are absolutely no startup costs.

There are also plenty of drawbacks. The initial attraction wears off quickly for anyone trying to operate a serious business. Because of the model that allows just about anyone to get approved without credit checks or careful, traditional merchant underwriting, Square is exposed to much higher levels of risk than traditional payment processors. To offset this weakness, Square has developed a nasty reputation for placing excessive holds on funds and accounts that may be flagged as suspicious. Because this can be highly subjective, “suspicious” can mean anything from fraudulent customer chargebacks to an unusually high monthly average or high average sales. Both the Better Business Bureau and the infamous Ripoff Report are replete with sad stories of Square merchants who have suffered delays getting paid, sometimes waiting months to receive thousands of dollars without recourse. Because they are infamous for providing no live customer support, when things go wrong, inquiries can only be submitted by using either email or Twitter. Not ideal.

Add to this the fact that company is hemorrhaging money with ever mounting losses, and it might be better to resist the temptation to be the first on your block with the cool little swiper that often doesn’t work.

The Square POS

Still think Square is a great idea for your business? Well, if you’re selling feather earrings at the farmer’s market Saturday mornings, you’ll probably be fine, but if you’e in the serious work-a-day world, you should probably look elsewhere. However, if you’re determined to take the risks, here’s what Square offers in the way of POS solutions.

An Ideal Business for Square POS

An Ideal Business for Square POS

Square does have a Register App that will run on most Apple iOS devices with 5.0 ios or higher and Google Android devices with 2.2 or better. Square claims that their apps may work on some Android tablets but it will not officially support them or guarantee compatibility. Square can also not take payments on laptops or computers, although there is a dashboard that can be accessed from any computer with a web browser and a WiFi connection. Also, note that if you’re using a smartphone to process payments you will not be able to connect to a receipt printer, cash drawer, or barcode scanner as all peripherals must be paired with an iPad.

For some reason, there is a widely held misconception that Square will provide a free POS system, but that is not true. However, Square does offer two different “Business in a Box”  bundles that do include the basic hardware needed to get started.

  • Bundles – One Square offering is the “Paperless” Business in a Box bundle which assumes you’ll only be sending customers digital receipts, thus eliminating the need for a printers. The Paperless package includes Square card readers, an APG Vasario 1616 cash drawer, and a Heckler design iPad stand, and sells for $249. The “Printing” Business in a Box bundle is offered for $499 and includes everything you need to print receipts, kitchen orders, and sales reports directly from your iPad. It comes with Square card readers, the same an APG Vasario 1616 cash drawer and Heckler design iPad stand, and a Star Micronics TSP143L Receipt Printer.
  • Receipt Printers – If you want to switch things around, Square is compatible with the Star TSP 143 LAN printer available for $220 and the Star TSP 650 with Ethernet interface printer offered at $285.
  • Kitchen Ticket Printers – Want to print directly to a kitchen printer? You can team up with the Star SP742 ML printer, which runs around $250.
  • Cash Drawers – As long as we’re deconstructing the bundles, Square will work with either the Vasario models 1416 or 1616. Either is available for about $100.
  • Barcode Scanners – If you feel the need to pair a scanner with your system, you can use the Bluetooth Socket Mobile 7Ci which is available for about $250.
  • iPad Stand – Finally, if you want to buy a stand alone iPad stand to protecting your devices and allow easy customer access with swivels and rotating frames, expect to pay about $150 to$200 for a good one.

Free, Free, Free

To get started with Square costs nothing: The Square Register app is free and so is the credit card reader. In theory the company makes a profit from the credit card processing fees they charge, and they are actually quite high. The model is a fixed-price processing rate with no monthly or annual fees, so that is attractive. At one time, they offered an option for unlimited processing for $275 a month with no transaction fees, but this offer was taken down in November 2013. Currently, the only pricing Square offers is:

  • Swiped card – 2.75%
  • Square Market – 2.75%
  • Gift cards – 2.75%
  • Keyed-in cards – 3.5% + 15 cents per transaction

Note that Square has no ability to process pin debit cards or EMV cards at this time, both of which deficiencies can cost merchants dearly. On the other hand, Square can be commended for having no fees for Early Termination, Chargebacks, Refunds, Inactivity, PCI compliance or activation.

You’ve been warned. If you’re playing with a hobby business, Square can be fine, although since you can now get the same features from a traditional processor with lower, competitive rates, fast and guaranteed access to your money and live customer support, you really have to decide just how much its worth to be cool.

Real Merchant Solutions features SwipeSimple, which combines all the benefits of mobile process with a true, low cost Merchant Account and Interchange Plus pricing.

Click Here Now to Get a quote on Processing, or to get a quote on the Right POS Sytem for you!


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Russell Halley

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