Agree with our rating?
Leave a comment below
Square Capital Review
Agree with our rating?
Square Capital (squareup.com/capital) is a merchant cash advance service offered by mobile POS provider Square. Launched in May 2014, Square Capital is intended to be a simpler alternative to third-party merchant cash advance programs, which can require business owners to undergo a rigorous screening process before receiving their funding. With Square Capital, merchants are preapproved based on their processing history, which enables them to sign up for financing in just a few steps within the Square dashboard. They then repay the total amount borrowed by giving Square a fixed percentage of their daily credit card sales.
Square Capital is repaid as a fixed percentage of credit card sales. There is no repayment schedule, and the amount owed does not change for the merchant. For instance, if a merchant receives $10,000 from Square Capital, that merchant might then owe Square $11,000, which will be repaid with 10% of the merchant’s daily credit card sales (actual figures will vary depending on a merchant’s business type and processing volume). The merchant will pay this 10% amount until the amount is fully repaid, regardless of how long it takes.
Square Capital Customer Reviews
Here's What Their Clients Say
|Total Online Complaints||10+|
|Live Customer Support||Active Merchants Only|
|Most Common Complaint||Merchant Eligibility Revoked|
Despite the astronomical number of online complaints that have been filed against Square’s credit card processing service, there are very few Square Capital negative reviews to be found in public forums. In fact, the main complaint voiced by Square Capital users is that they were denied additional opportunities to obtain Square Capital advances for various reasons. This indicates that most users are happy with the service and only dissatisfied when a separate issue with Square prevents them from using it.
Square Capital appears to dodge many of the issues that plague third-party cash advance providers because it limits eligibility to merchants who are very likely to repay their advances. This allows Square to collect a modest amount of “interest” while still keeping the repayment plan manageable for merchants. However, one major drawback to Square Capital is the fact that it comes as part of Square’s credit card processing service.
Square is best suited for individuals who need to accept occasional credit card payments, like flea market vendors or babysitters. High-volume businesses or heavily trafficked retail locations, however, run the risk of having their accounts frozen and funds held by Square with little advance warning. In addition, Square’s customer service is conducted entirely through email and through an FAQ section on its website. In other words, there is no way to contact Square by phone in the event of a problem, which can be a very frustrating situation for a growing business that needs a reliable revenue stream.
Square Capital is only available to merchants with established processing histories, so it is likely that the service is targeted at businesses that are projected to grow steadily over the course of the repayment period. Therefore, it’s possible that a merchant could outgrow Square’s processing solution but still have to remain with Square because of the binding Square Capital agreement. Put another way, this means that Square Capital may partially function as a merchant retention tool that allows Square to keep merchants who might otherwise require a more robust processing solution.
Square Capital Online Ratings
Here's How They Rate Online
|Product & Service Complaints||549|
|Billing & Collection Complaints||277|
|Advertising & Sales Complaints||461|
|Guarantee & Warranty Complaints||34|
Note: We have adjusted this company’s BBB rating according to our own standards. To better understand why we adjust BBB ratings, please see our Rating Criteria.
As of this update, the Better Business Bureau is reporting an “A+” rating for Square despite 1,384 complaints filed in the last 36 months. This complaint total is up from the company’s total at the time of our last update (1,185), which may indicate that Square’s BBB complaint total could increase further. The number is up from 812 complaints as of our January 2014 update and 603 complaints as of our July 2013 update, and has skyrocketed from just a few dozen complaints since we first published this review in April of 2011. Surprisingly, the BBB has also raised Square’s grade from a “B+” in July of 2013 to an “A+” despite the rising complaint volume.
Due to the company’s high complaint count, rapid growth, and short time in business, we have adjusted the BBB’s rating to a “C” for the purposes of this review.
Square Capital Fees, Rates & Costs
A Closer Look at The Contract
|Early Termination Fee||None|
Square Capital’s pricing and terms are similar to other cash advances or loans with the exception that they are repaid over an undefined period of time in the form of higher per-transaction fees charged by Square. The total costs of Square Capital cash advances are outlined up front, as are the elevated fees that the merchant will pay until their cash advance is repaid. This makes a Square Capital cash advance a predictable, flexible source of funding.
The primary advantage that Square Capital offers over its competitors is its simplicity. Once a merchant qualifies for the program, a notification will appear in the Square dashboard explaining the program and all available financing options. From there, the merchant just has to select a proposed funding amount and agree to the terms. The funds will then be delivered to the merchant’s bank account within a day or two and repayment will begin seamlessly as the merchant continues to process payments.
The fact that Square does not make the program eligible to new merchants is another key factor in its favor. Square bases program eligibility on each merchant’s processing history, meaning that the company has a large amount of sales information to draw upon when crafting a cash advance proposal. Square advertises that it drafts its cash advance proposal with the expectation that the merchant will repay the advance in full within about ten months. Provided that the company takes this claim seriously, it appears that merchants are unlikely to find themselves saddled with a crushing financial burden through the program.
Aside from Square’s unique signup process, the program offers the same advantages as all other merchant cash advances. Its eligibility requirements are far less stringent than traditional small business loans, and the cash advance amount cannot be collected in the event that the merchant’s business fails. This is because a merchant cash advance is a sale of future card proceeds rather than a loan. Therefore, if a merchant’s card proceeds are zero, then Square cannot collect any earnings.
Square Capital Employee Reviews & Sales Tacitcs
Should You Work For Them?
|Employs Independent Resellers||No|
|Advertises Deceptive Rates||No|
|Discloses All Important Terms||Yes|
Square Capital is marketed in two stages: first, as a general product available from Square, and second, as a personalized offer sent to Square users. In terms of its public marketing, Square Capital is presented transparently as a subsidiary service of Square and does not display any “teaser” offers to deceive merchants.
On an individual merchant basis, Square Capital is unique in that merchants cannot apply to the program on their own. Square alone determines which merchants are eligible for Square Capital based on their processing histories, and the company then extends these merchants offers via an email or a dashboard notification. This promotional approach may still allow merchants who should not qualify for cash advances to obtain funding, but at least it still restricts the service to merchants who Square expects to repay their loans. This seems like a responsible way to market merchant cash advances and has earned the service an “A” in this category.
Copyright © 2023 CardPaymentOptions.com, Inc. (Digital Fingerprint: 0d38c6720f0d78a701b74d58653af608). Getting paid to re-write this page? Click here to earn a reward.
Any unauthorized copying and reproduction of the content of this page, including all meta data and computer code, is strictly prohibited. While the information in the above article is believed to be accurate as of its publish date, the author and publisher make no representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the contents. The author and publisher shall in no event be held liable to any party for any direct, indirect, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this material, which is provided “as is,” and without warranties. Any and all use of trade names and/or marks are for identification purposes only and shall not be construed as a claim of affiliation, or otherwise, with CardPaymentOptions.com, Inc. ("CPO") in any form. The sole purpose of the material presented herein is to alert, educate, and inform readers. It is not intended as legal or financial advice. We may earn revenue if you obtain services from a provider that we recommend. See this page to learn how we support our operations.