Square is a US-based mobile card reader for small business owners, founded back in 2009. Square was very successful back in the States in the early 2010s but delayed its UK launch until 2017. By this time, iZettle and SumUp had consolidated much of the market and Worldpay had launched then retired its own credit card reader called Zinc.
So, did Square leave it too late to enter the UK market or is the Square reader a bit of a dark horse? In this article, I’ll discuss everything you need to know about Square.
What is Square?
Square was the first mobile credit card reader that worked with mobile devices. It launched in 2009, a full year before iZettle and two years before SumUp. However, for the first seven years, Square stuck to America, building up a dedicated customer base.
The Square reader is a small device (around the size of a coaster) with a slot in one side for a credit card or debit card. You pair the card reader to a mobile device (a smartphone like an iPhone or a tablet like an iPad) via Bluetooth and use the Square Point of Sale (POS) app to set up each transaction in real time.
Square Reader works with the free Square Point of Sale app to allow everyone to take payments on their smartphone or tablet. (Square)
Part of the reason why Square took so long to arrive in the UK was the design of the card reader itself. Unlike any of the other mainstream card readers, the Square reader is basically just a chip reader. Since the card reader doesn’t have a keypad, it uses a system called ‘PIN on Glass‘ to capture the customer’s PIN on the Square POS app running on a smartphone or tablet. This posed some regulatory problems in the UK but changes in 2017 meant Square could eventually launch in the UK.
The Square reader can accept all major credit card networks (Visa, MasterCard, American Express, etc.) as well as Google Pay (formerly Android Pay) and Apple Pay. It can also accept contactless payments.
Like all mobile card readers, merchants don’t have to set up their own merchant account. Instead, they ‘borrow’ Square’s master merchant account, which then transfers the money to a regular bank account.
What Square products are available?
When Square was only operating in the US, we heard nothing but good things about the quality of the hardware so we were pretty excited when it launched in the UK. The good news is that Square more than lived up to the hype! While its product line is a bit smaller than other card readers, everything seems really well thought out and expertly designed.
Here’s a quick recap of what’s on offer.
- Square Reader: The Square Reader is the bit of tech that underpins everything. It’s a small square device (roughly the size of a coaster) that allows a customer to insert their card into it. The device then reads the data and sends it to the Square POS app for processing. Unlike other card readers, the Square device doesn’t have a keypad and relies on “PIN on Glass” technology for authorisation.
- Square Stand: Square offers an iPad stand and a card reader dock. Both accessories are designed to make your set up look more professional and more like a proper POS system.
- Cash Drawer: The Square POS software doesn’t just deal with card payments, it also deals with cash. When you combine the app with a cash drawer, it looks and functions like a traditional retail POS.
- Receipt Printer: While the Square POS supports virtual receipts, it’s often a good idea to have physical receipts as an option. The receipt printers (either standalone or integrated into a cash drawer) are all pretty decent. (The POS app can also issue digital receipts.)
In the US, Square also offers two all-in-one POS devices — the Square Register and the Square Terminal. Unfortunately, neither is available in the UK just yet and we’ll have to wait and see if they arrive at a later date.
Is the Square reader easy to use?
The Square Reader is very easy to use, although this is partly because it does less than other competing card readers. To pay with a credit card or debit card, customers have two options: Chip & PIN or contactless.
For contactless, you just tap the card against the top of the reader like any other card reader or card machine.
For Chip & PIN, you plug your card into the reader and enter your PIN via the POS app. Asking your customers to enter their PIN on the app is a little clunky and we have heard reports of customers refusing to use the app but these reports seem to be dwindling as PIN on glass becomes more common.
How good is the Square POS app?
One of Square’s biggest selling point is its POS app, which is, in a word, fantastic. Out of the three big names in the card reader market — iZettle, SumUp and Square — I’d say Square’s app is the most powerful and intuitive to use.
If you have experience with POS, mPOS or e-commerce systems, it won’t take long to get your head around Square. Everything from setting up your products and product library to actually starting a transaction is pretty simple and intuitive. For the more technically-minded, the app has a bunch of excellent advanced features like product modifiers, categories and so on.
Another great thing about the app is you can set it up to operate in any number of different business environments. Say you’re running a food business, you can set it up to print kitchen receipts, include tipping options and manage reservations.
And behind all the smart business-specific stuff there are some outstanding core features like customisable receipts, digital receipts, split tender transactions and so on. The reports are handy too and give you access to reams of sales data.
How much does Square cost?
Like most mobile card readers, Square is very transparent surrounding pricing. If you visit Square’s website, you can find information on the hardware costs and debit/credit card processing fees. If you’ve dealt with traditional card machine rental companies, you’ll know how hard it can be to get processing fee information out of them.
With Square, you have two separate costs to think about: the card reader itself and the ongoing payment processing fees.
In the next few sections, I’ll run through what the card reader will cost you upfront, how much Square charges to process your transactions and I’ll finish by comparing Square’s fees with some of its competitors.
Square card reader cost
The Square Reader costs £19 + VAT when purchased directly through SquareUp. As with most mobile card readers, you can find the device for less if you check deal websites or find an affiliate link.
Unlike with the traditional card terminal rental model, you actually buy the Square Reader outright. So when it breaks, it’s down to you to replace it. (Unless it’s under warranty.) Based on our experience, the Square reader is fairly sturdy and should last several years. Again, this is partially because it’s a simpler device than its competitors. If there’s no keypad or screen to break, there’s obviously a lot less to go wrong.
Square transaction fees
As I mentioned before, the device cost is one of two you have to think about. The second (and usually more significant cost) is the on-going cost of payment processing.
Square offers a flat rate fee of 1.75% to process every major debit or credit card and 2.5% for any virtual terminal, invoice or e-commerce payment.
Square compared to other readers
Square is really competing against two different types of product: first, other mobile card readers and second, traditional rented card terminals.
Let’s start by comparing Square to its direct competitors in the card reader niche.
|Product||Payment Processing Fee|
|PayPal Here||1.00 to 2.75%|
|Shopify||1.5 to 1.7%|
As you can see, the mobile card reader niche is a contested market and there’s not a lot between the best and worst deal. The Square Reader costs £19 so it’s cheaper than the iZettle, PayPal Here and SumUp.
However, you should remember that the Square device is simpler than competing devices as it doesn’t have a screen or keypad. Also, remember that most readers can be purchased via an affiliate link with up to 50% off the list price.
Next, let’s discuss Square’s payment processing fees. At a flat rate of 1.75%, Square and iZettle are at the higher end of the scale. SumUp is the cheapest, charging just 1.69%. However, to put that in context, Square and iZettle charge £350 to process £20,000 and SumUp charges £338. Yes, you save money with SumUp but it’s not a huge amount.
PayPal Here is the odd one out as it uses a sliding fee scale. Basically, the higher your monthly card transaction turnover, the lower Square’s processing fee. If you process up to £1,500 per month, PayPal charges you 2.75%. If you process up to £6,000, PayPal charges 1.75%. And so on up to monthly sales volumes of £25,000 or more which attract a 1% fee.
While a 1% fee sounds great, your business needs to turn over £300,000 per year to get it. At that level, you are almost always cheaper going with a traditional rented card terminal.
The second part of the processing fee is comparing Square to a traditional rented card terminal. These traditional terminals work by companies renting the terminal out to merchants on multi-year deals. The deals usually have minimum monthly charges that kick in if you don’t hit a lower threshold. Since the contracts are much longer and include a minimum monthly charge, providers can charge a much lower payment processing fee — typically less than 1%.
Generally speaking, if you process more than £2,000 per month, you’re much cheaper ditching the mobile card reader and going with a full-service payment system.
Is Square safe for my business?
Whether you run a microbusiness, small business or larger organisation, all business owners ought to be thinking about payment security. When a customer trusts you with their payment information, you should do your utmost to keep it safe and secure.
So, how safe is Square? Very!
Square meets PCI Compliance Level 1, the strictest of PCI’s security standards. While there’s way too much technical stuff to go into in this article, here’s a few security highlights:
- The Square App uses proprietary tokenisation so unencrypted payment data is never stored on your device.
- Square manufactures all its own hardware with end-to-end encryption.
- All Square’s developers work to industry-standard secure coding guidelines.
- Square handles all PCI DSS compliance so you don’t have to.
If you’re interested in security, check out Square’s website for more information.
How is Square’s customer service and support?
For many micro and small businesses, services like Square are often their sole way of accepting debit or credit card payments. If something should go wrong with the device or the system behind it, merchants need to know that Square’s customer support team is waiting to fix the problem.
Square has a few ways to contact their support team.
The three main channels are email, phone and Twitter (@sqsupport). The email and Twitter channels are best for non-urgent issues. If you need help in a pinch, you’re best off contacting Square via their phone number. Phone support is available 9 am to 5 pm during weekdays. In our experience, Square’s support staff are well trained and are equipped to deal with most issues.
For general issues and education, there’s also the Support Centre, which is genuinely impressive. The Support Centre is basically a collection of ‘How To’ articles covering everything from the basic set up process to the payment dispute process. For 90% of issues, you should find a solution in the Support Centre.
Should I use Square for my business?
Square is a very impressive company. Its business model is different to that of iZettle or SumUp as it’s focusing far more on its app and far less on its card reader. And so far, it looks like this gamble is paying off. Reviews are positive across the board and largely match our experience with the device and app.
Here is a quick snapshot of Square’s reviews.
However, as I’ve said in other articles, Square’s long-term battle isn’t against other card readers, it’s against the established terminal rental model.
As you can see above, the leading card readers are fairly similar in terms of capital costs, running costs and functionality.
When comparing card readers with terminals, however, the differences are much clearer. Traditional terminals have long contracts and minimum monthly fees. That makes them unattractive for low volume and irregular merchants. However, traditional terminals come with significantly lower payment processing fees.
Once your turnover hits approximately £2,000 per month, it’s almost always cheaper to ditch the card reader and invest in a traditional card terminal.
So, whether Square is right for your business is really a question of turnover. If you’re under the £2,000 threshold, Square will provide an excellent, flexible and affordable means of processing payments. Over the £2,000 threshold and you’re probably better investing in a more traditional set-up.
While card readers are great for small or mobile merchants, they are almost always more expensive than a traditional card terminal.
To see what payment options are available to you, click here to go to our comparison engine. (It only takes 2 minutes and could save you up to 40% on your card processing fees!)
How do I sign up with Square?
After our in-depth review, you should have a good feel for if Square is the right choice for your business. If you’re confident that it’s the right fit for you, here are the next steps you need to take.
- Set up an account via the Square website. (You will need some personal and business information, including your bank account details.)
- Purchase a Square card reader.
- Download the Square point of sale app.
- Pair the reader to your phone or tablet.
- Start processing payments.