Square: Here’s What The Reviews and Experts Say About This Popular Credit Card Processor

Square’s Processing Fees are Simple

Square is known for its straightforward pricing structure, which is particularly attractive to business owners for its absence of traditional merchant service fees. This includes no activation fees, monthly fees, gateway fees, PCI Compliance fees, downgrade fees, and early termination fees. Outside of transaction fees, Square does not impose additional monthly charges, ensuring no cost is incurred by business owners in periods without sales.

Fees by Transaction Type

Square offers affordable options for processing equipment, such as the magnetic stripe card reader, and recommends the chip card reader for a low cost of $49 to accommodate the shift to chip cards in the U.S. The company maintains a uniform processing fee structure across all merchants utilizing Square Reader or Square Register.

Square’s fees are:

• 2.6% + $0.10 for swiped transactions
• 3.5% + $0.15 for keyed-in transactions
• 2.9% + $0.30 per sale through Square e-commerce

How Square’s Costs Compare

While Square’s swipe rate is higher by approximately 0.80% compared to rates achievable with a traditional merchant account, and the keyed-in rate about 1% higher for similar industries, it offers competitive rates for new businesses. Established businesses aiming for reduced fees might consider our independent statement audit service to uncover and eliminate hidden processing costs.

High Volume Businesses, Heed Caution

Despite not verifying the credit history of prospective customers, Square implements advanced systems to minimize fraud losses. It claims no transaction limits, which has been contested by numerous reviews pointing out that large or frequent sales may prompt funding holds. The specifics of these policies are not transparently communicated in advance.

Square’s Previous Rolling Reserve Policy

Until November 2013, Square enforced holds on funds from card-not-present sales exceeding $2,002 within a seven-day period. This policy was confusing due to the lack of preemptive communication about the limit. Square has since updated its stance, stating there are no processing limits, yet this assertion does not fully align with merchant experiences.

Square’s Current Fraud Triggers

Square now uses undisclosed algorithmic “risk factors” to flag transactions it deems suspicious, which has led to complaints about legitimate transactions being held for extended periods without clear communication. This approach causes uncertainty among merchants regarding transaction security and account stability.

More Transparency Needed For Risky Transactions

Square’s handling of funds from “deactivated” accounts, as opposed to “active” ones, allows it to claim it does not hold merchant funds. However, the lack of clarity and communication around its risk mitigation strategies poses risks for merchants, especially those with higher sales volumes. Improving transparency and communication could significantly enhance Square’s service for these merchants.

Some Minor Improvements Could Raise Square’s Rating

Square offers appealing pricing, contract terms, and processing solutions for many merchants, with no monthly fees or long-term contracts and a straightforward signup process. Nonetheless, the impact of sudden account deactivation on a merchant’s operations limits the company’s rating in this area. Enhancing risk management processes could improve Square’s standing among merchant services.

Gonsalves v. Block, Inc.

This case alleges violations of the Securities Exchange Act of 1934 against Block, Inc. and its top executives, including Jack Dorsey and Amrita Ahuja. The lawsuit claims that Block engaged in widespread compliance lapses at Square and Cash App, creating a haven for illegal activities such as money laundering, child sexual abuse, sex trafficking, and drug trafficking. It also alleges that Block artificially inflated Cash App user metrics through fake accounts and failed to conduct proper due diligence on customer identities and transactions. The class period is defined as February 26, 2020, to April 30, 2024, and the lead plaintiff deadline is set for March 18, 2025.

Bronstein, Gewirtz & Grossman Action Lawsuit

This securities class action lawsuit was filed by Bronstein, Gewirtz & Grossman, LLC and makes similar claims to the Gonsalves lawsuit

Privacy Lawsuit

Filed on February 23, 2024, in a California court, this lawsuit alleges that Block, Inc. violated the California Invasion of Privacy Act (CIPA). The plaintiff claims that Block used pen-register and track-and-trace technology on its website to identify users and their locations without proper consent. This technology allegedly allowed Block to gather personal information about website visitors, potentially infringing on their privacy rights. The lawsuit seeks both statutory and punitive damages against the fintech company[2].

White v. Square Inc.

This case was filed in the U.S. District Court alleging discriminatory business practices. The plaintiff, White, claimed that Square’s terms of service discriminated against bankruptcy attorneys by refusing to do business with them. However, the case was ultimately dismissed. The court ruled that White lacked statutory standing under the Unruh Act because he had not attempted to subscribe to Square’s services before filing the lawsuit. This decision was based on the precedent set in previous cases, which required plaintiffs to at least attempt to use a business’s services before claiming discrimination.