What Square Does and Who Uses It

Square is a payment processor that lets you accept credit cards, debit cards, and digital wallets in person or online. You connect a card reader to your phone or tablet, or embed payment forms into a website, and Square handles the transaction — taking a percentage of each sale and depositing the rest into your bank account.

Square serves solo operators, small retail shops, restaurants, salons, service businesses, and online sellers. You do not need a business license or a separate merchant account to start; Square handles the banking relationship itself. The company makes money by charging you a fee on each transaction, not by selling you software or requiring monthly subscriptions for basic features.

Square competes directly with other payment processors like PayPal, Stripe, Toast, and Clover. The choice between them usually comes down to which fees fit your business model, which hardware you prefer, and which features matter most to your operation.

Key Takeaways

  • Square charges a percentage of each transaction (the exact rate depends on how you accept payment and your location), plus a per-transaction fee for some methods.
  • In-person card payments through Square's reader cost 2.6% plus 10 cents per transaction; online payments cost 2.9% plus 30 cents.
  • Square deposits money into your bank account daily or weekly depending on your account type, minus the fees Square keeps.
  • You can use Square's free point-of-sale app on any phone or tablet, or pay for upgraded versions that add inventory tracking, staff management, and detailed reporting.
  • Square also offers invoicing, online store creation, and appointment booking through separate products, some free and some paid.

How Square's Fees Work

Square charges different rates depending on how the customer pays. In-person card payments — when you use Square's card reader or tap-to-pay feature — cost 2.6% of the sale plus 10 cents. Online payments through a Square invoice, online store, or embedded checkout cost 2.9% plus 30 cents. ACH bank transfers (when a customer pays directly from their checking account) cost 1% with a minimum of 1 dollar and a maximum of 5 dollars per transaction.

These are the standard rates in the United States. Rates may differ in Canada and the United Kingdom, where Square also operates. If you process a very high volume of transactions, you may be able to negotiate custom rates, but Square does not publish a process for this — you would need to contact their sales team directly.

Square does not charge monthly fees for the basic point-of-sale app, and there are no setup fees or early termination penalties. You pay only when you process a transaction. If you want advanced features like staff accounts, detailed inventory management, or customer loyalty programs, those come in paid tiers — Square Plus costs 60 dollars per month, and Square Premium costs 99 dollars per month.

Hardware You Need and What It Costs

To accept in-person payments, you need a card reader. Square sells several options: the Square Reader for contactless and chip (the small white square) costs 29 dollars and works with any phone or tablet via Bluetooth. The Square Terminal is a standalone device that does not need a phone — it costs 399 dollars upfront. There is also a Square Stand, which holds an iPad and includes a built-in card reader, starting at 299 dollars.

You can buy these readers directly from Square's website, or through some third-party retailers. If you already own a phone or tablet, the basic Square Reader is the cheapest entry point. The Terminal and Stand are better if you want a dedicated device that does not depend on your personal phone's battery or internet connection.

Online payments do not require any hardware — you just send an invoice link or embed a payment form on your website.

How Money Gets Into Your Bank Account

When a customer pays through Square, the money does not go directly to your bank. Square holds it first, deducts its fees, and then deposits the remainder into the bank account you connected during setup. The timing depends on your account type and the payment method.

Most deposits happen within one to two business days of the transaction. Some accounts receive daily deposits; others receive deposits once or twice a week. If you process a payment on a Friday evening, the deposit may not arrive until Tuesday or Wednesday because banks do not process transfers on weekends.

You can see pending and completed transactions in the Square Dashboard — the online control panel where you manage your account. The Dashboard shows you exactly how much Square deducted in fees and how much you received.

Square's Point-of-Sale App and Paid Add-Ons

The free Square Point of Sale app runs on any iPhone, iPad, or Android device. It lets you ring up sales, accept payments, print receipts, and see a basic sales report. You can add items to a catalog, but the free version does not track inventory across multiple locations or let you set up staff accounts with different permissions.

Square Plus (60 dollars per month) adds staff management, advanced inventory tracking, customer loyalty programs, and detailed reporting. Square Premium (99 dollars per month) includes everything in Plus, plus API access for custom integrations and priority support.

These are separate from transaction fees — you pay the monthly subscription regardless of whether you process any sales that month. If you only process a few transactions a week, the free app may be all you need. If you run a retail shop with multiple staff members and need to track stock across locations, one of the paid tiers makes sense.

Other Square Products Beyond Payment Processing

Square also offers Square Invoices (free), which lets you send payment requests to customers by email or text. The customer clicks a link, enters their card details, and pays — Square charges the same 2.9% plus 30 cents fee as online payments.

Square Online is a website builder that includes a shopping cart and checkout. Pricing starts at 12 dollars per month for a basic store and goes up to 99 dollars per month for advanced features. Payments through a Square Online store use the same 2.9% plus 30 cents rate.

Square Appointments (free) lets customers book time slots and pay upfront through your Square account. Square Payroll handles employee paychecks and tax filings — pricing varies based on the number of employees.

You do not have to use these products together. Many businesses use only the payment processor and the point-of-sale app, and handle invoicing or scheduling through other tools.

How Square Compares to Other Payment Processors

Square's 2.6% plus 10 cents rate for in-person payments is competitive but not the lowest available. Stripe charges 2.7% plus 5 cents for in-person payments (though you need to use their hardware). PayPal Here charges 2.7% plus 5 cents. Toast, which focuses on restaurants, charges 2.59% plus 9 cents but requires a longer contract.

The difference between 2.6% and 2.7% is small on individual transactions, but adds up over time if you process thousands of dollars per month. Square's strength is ease of setup — you can start accepting payments within minutes — and the breadth of add-on products. If you want invoicing, scheduling, and payroll all in one ecosystem, Square offers that. If you only need payment processing and want the absolute lowest rate, another processor might save you money.

Square also has a longer history of supporting very small businesses and solo operators, which is reflected in their marketing and product design. Stripe and Toast are often chosen by businesses that need more customization or higher transaction volumes.

Frequently Asked Questions

Do I need a business license to use Square?

No. Square does not require a business license, business bank account, or any specific legal structure. You can use Square as a sole proprietor, and you can use your personal bank account for deposits. That said, if you are running a business, you may want a separate business account for tax and accounting purposes — that is a choice you make, not a requirement Square imposes.

What happens if a customer disputes a charge?

Square handles chargebacks and disputes through a process called the chargeback process. When a customer's bank investigates a disputed transaction, Square notifies you and gives you a window to respond with evidence (like a receipt or shipping confirmation). If the dispute is ruled against you, Square removes the money from your account. Square also flags patterns of disputes and may close your account if chargebacks become frequent.

Can I use Square if I do not have a smartphone or tablet?

Yes, if you buy the Square Terminal (the standalone device). It does not need a phone — it connects to the internet directly and processes payments on its own. The Terminal costs 399 dollars upfront, so it makes sense if you want a dedicated device or do not want to rely on your personal phone's battery and data connection.

How long does it take to get paid after a customer pays?

Most deposits arrive within one to two business days. Some accounts receive daily deposits; others receive them once or twice a week. Deposits do not process on weekends or federal holidays, so a Friday payment may not arrive until Tuesday. You can see the expected deposit date in the Square Dashboard before the money is transferred.

What if I want to accept payments but do not want to use Square's point-of-sale app?

You can use Square's payment processor with other point-of-sale systems. Some third-party apps integrate with Square's API, which means they can process payments through Square without you using Square's own app. This requires technical setup and is more common in restaurants and retail shops that have already invested in a specific system. Contact Square's support team if you want to explore this option.