When you think of Square, what do you think of? The little headphone jack card reader that made them famous? The sleek, white POS systems used by coffee shops and restaurants across the country? Perhaps they're a one of the big brand names that keeps popping up while you're looking to set up payments at your business.
When it comes down to it, Square has some major name recognition among merchants, and a lot of new business owners give them a first look, but how do they stack up against the competition? We decided to take a look at Square's payments offering to give you an idea of whether or not they could be the right payment processor for you in the short and long term.
Jack Dorsey, primarily known as the founder of Twitter, founded Square in partnership with Jim McKelvey in 2009. Square's first platform launch was a year later in 2010, and their headphone jack swipe reader quickly made an impact. This revolutionary technology simplified signups for businesses wanting to accept credit cards, and helped Square to quickly grow into one of the largest payments companies in the world. In 2015, the company went public, and six years later has a current market capitalization of $120 billion USD.
One of the main attractions new businesses feel towards Square is the feeling of simplicity. They like the aesthetics of the white terminal, and it feels fresher than the old clunky bank terminals. The promise of easy, low costs is a breath of fresh air- but is it really true?
A deeper look
As of 2022, you can still sign up for a Square account at no cost and they'll ship you one of their magstripe readers for free. With magstripe readers going the way of the Dodo though, merchants should restrain their excitement about this freebie. It's hard to say how much longer merchants are going to be able to accept magstripe payments- card brands have already announced that magstripe will be going away completely in Canada and the USA-so instead, you'll need to upgrade to the chip reader which starts at $299 + the must-have $39 ethernet cord. Keep in mind any POS equipment you want to use including ipads or desktop screens will have to be Square brand (and cost) which will quickly add up as your business scales.
Now, if you want a more complete offering from Square; including their POS and payroll management software, it's going to cost you more monthly, so merchants also need to be aware of this. They also offer merchants the ability to create a free online store, but a custom domain is going to cost you monthly as well.
For example, apart from Square's free starter account, their "Plus Account" goes for $60 USD per month per location and gets you some extras like advanced inventory tools and Square Team Management. Square's rates may be affordable at first glance, but the charges start to add up as your enterprise begins to grow.
Square prides itself on offering transparent and easy to understand flat rate pricing. But is flat rate all it's cracked up to be? While this pricing structure certainly is simple, it likely won't save you money. In fact, flat rate pricing costs more than some of the other pricing structures out there. Typically, the most cost-effective pricing in the industry is actually interchange plus pricing, and unless you're really sold on Square's hardware, we would suggest looking for a payment processor that offers this instead. Check out this comparison chart to see how these two pricing models compare:
Square vs. Competitors
Let's take a look to see how Square stands out compared with other payment processors in the market.
There are a few key factors to consider when choosing the right payment processor for your business. Customer service is important to consider - who will you be able to contact if you have questions or need help? Or, when it comes to hardware and software - how easy is it to use the system, and how quickly can you get help if you need it? Pricing is also an important consideration - what are the fees associated with each system, and which one offers the best value for your needs?
You might be thinking, "I don't need anything fancy, I just need to be able to get set up quick and start taking payments!" While that sounds great, there is always a catch. Let's see why that might be too good to be true.
With Paypal, Stripe, and Square the sign-up process is quick and easy. That sounds like a good thing right? That is because they offer shared merchant accounts for businesses who sign up and without a lot of vetting or approval required to get started. We mention the pros and cons of quick signup merchant account providers like these in our "How to choose a merchant account in 2022." We talk about the increased chances of frozen funds or account termination due to lower leniency for risk of fraud, high risk businesses, chargebacks or even just an increase in activity that might be deemed suspicious (the most common complaint when it comes to Square users.)
When you think of Square, you might think of minimalism. Clean, easy set-up with a sleek aesthetic square tap terminal. Of course, the other sign of that coin is sacrificing aspects that might be deemed as "bulky" or time-intensive. What that really means is that you are getting a bare bones software and hardware setup, with limited customization and integration options.
Square vs. Stripe
Both of these platforms have distinct features that make them more suitable to different business types. Whereas Square is geared towards in-person payments, Stripe has made a mark on the mobile and Ecommerce merchants.
Stripe products and services are geared towards recurring billing, greater reporting capabilities with stripe Sigma and greater developer customizability and freedom. Square is focused more on user friendly POS options for their app and one-size (supposedly) fits all e-commerce and app integration, management software, but at the cost of limited customizability and cutting corners when it comes to costly add-ons such as live customer service. Square vs. PayPal PayPal offers more customizability and eCommerce integration and control than Square. Hence, why their audience is focused more heavily on Ecommerce and online payments than in-person.
With PayPal Payments Advanced and PapPal Payments Pro, however, you are paying an extra fee for features such as a virtual terminal, or recurring billing tools that come standard with some payment processors such as Helcim at no additional cost. While neither charges a monthly fee, paypal is able to accept more payment options online. Square does offer more software integration options.
Square vs. Helcim
As discussed, Square offers a third-party shared merchant account, vs. Helcim gives users an individual merchant account. With Square, sign-up is free (like Helcim), quick, and relatively easy, but you will have to pay for essential functionalities like equipment and the app, not to mention those cons of a quick sign-up that we discussed earlier.
While their POS system is flexible for most businesses, you will have to pay additional fees to use it. This includes Square for Retail and Square for Restaurants which are specifically designed interfaces. Helcim lets you customize your interface and use the POS system at no extra cost. We even host your online store and offer online food ordering software.
Square focuses on team management software but at an additional cost for features such as extra permissions for multiple users and most reporting capabilities.
Worth noting: Don't fall into equipment leasing or pay for those monthly equipment fees. At Helcim, our card reader is a one-time fee, but you won't pay any hidden or additional fees for using our app or POS system. All our tools are free with your Helcim account, and our prices are transparent with interchange pricing. Read more about how to interchange pricing works by taking a consistent small margin and passing on the fluctuating savings to the merchant.
Finally, reviews will tell you how customer service compares from Helcim vs Square. While Square offers email and phone support, they have notoriously long wait times (which can be excruciating when your funds are frozen!)
You can give them a call between 6 AM -6 PM Monday to Friday, but they do not offer weekend support. While you could email them, reviews and phone support suggest not to expect a response until the following business day.
With Helcim, you can get customer support right away from Monday to Friday, 9 AM-9 PM, and Saturday and Sunday from 11 AM-7 PM ET.
With Square, sign-up is free, quick, and relatively easy, but you will have to pay for essential functionalities like equipment and the app.
While their POS system is flexible for most businesses, you will have to pay additional fees for more then the basic software and any add-ons that come included with a Helcim merchant account.
Curious about rates?
Many people like the stability of a consistent rate. It's easy to understand. What they won't tell you, is that they are counting on you not to understand interchange rates to see how much margin they are skimming off the top on every transaction.
See how the savings from interchange pricing can quickly add up when compared to Square flat rates.
In addition, don't fall into the trap of equipment leasing with monthly and cancellation fees. At Helcim, our card reader is a one-time fee, but you won't pay any hidden or additional fees for using our app or POS system. All our tools are free with your Helcim account, and our prices are transparent with interchange pricing. Read more about how interchange pricing works by taking a consistent small margin and passing on the fluctuating savings to the merchant.
Square is often at the forefront of conversation, and offers a ton of software and hardware for all kinds of merchants. At the same time though, being at the top for so long can lead companies to become lackadaisical about customer service. Square gives merchants the basics, but their pricing model capitalizes on merchants not being educated about how interchange fees work, and takes advantage of this with flat rate prices that, while simple, don't benefit business owners as much as they do Square's bottom line. Plus, as you scale, Square creates barriers with extra costs for add-ons and expensive equipment.