Key takeaways

  • Square is a one-stop-shop for affordable POS and payment solutions
  • The Square ecosystem features a comprehensive forever-free plan
  • In addition to being free, Square is one of the easiest POS systems to set up and use
  • For larger businesses, Square offers custom processing fees, tailored POS solutions, and advanced developer integrations

Managing a business requires tools that can automate repetitive tasks like payment processing, inventory tracking, customer relationship management, and tracking sales. And as a company grows, the same business tools should be versatile enough to scale along with increasing demands. Square is one such provider that offers an entire ecosystem of business management software that is affordable and user-friendly for small businesses but can also grow with your business.  

What is Square?

Square iPhone card reader.
Square is a fintech company offering business solutions like payment processing and point of sale. They are best known for their little “square” card reader.

Square is an all-in-one point of sale (POS) solution with a built-in payment processing service, ecommerce platform, marketing tools, and a long list of native business management tools. The software is app-based, so users can start selling by simply creating an account and downloading the free POS software on any mobile device. It offers a unified platform for selling in-person and online.

Many small and new businesses love Square for its feature-rich free plan. However, it also provides custom POS solutions, making it possible to power businesses of any size with Square. To date, the Square POS software has over 10 million downloads on iOS and Android devices and has hundreds of thousands of high ratings from real-life users.

Visit Square

Square’s Products At-a-glance 

Every free Square account comes with: 

  • Standard POS software
  • Payments processing
  • Payment gateway
  • Waived chargeback fees
  • Mobile POS app
  • Basic website builder and online store
  • Online ordering 
  • Basic invoicing
  • Virtual terminal
  • CRM
  • Starter team management plan
  • First magstripe mobile card reader

Additionally, Square offers other products and add-ons like: 

  • Advanced card readers, POS terminals, and registers 
  • SMS and email marketing
  • Customer loyalty programs
  • Customer contract creating and management
  • Employee shift scheduling 
  • Team communication
  • Payroll 
  • Checking and savings accounts 
  • Small business loans 
  • And more 

Square payment processing

Business owner accepting a card payment with Square Terminal.
In addition to its well-known “square” mobile card reader, Square has a suite of other card readers and point of sale systems.

Square is a fintech company whose payment processing services are at the core of its offerings. 

Square Payments operates as a payment facilitator. It enters into agreements with acquiring banks to create a central merchant account. Every business owner that opens a Square account is provided a sub or aggregate merchant account.

 As a payment facilitator, Square assumes the role of holding, receiving, and disbursing funds on your behalf. Square’s merchant account connects it to various payment networks such as the card network and banks for credit and debit card payments, the ACH network for ACH payments. This allows Square to process transactions and transfer funds for its business customers.

With Square, new businesses can avoid the hassle of long and complicated approvals. They can immediately accept different payment methods with competitive terms, zero monthly fees, and no long-term contracts. 

Available payment methods 

Accepted payment methods:

  • Cash, cheque, vouchers, and other tenders
  • Credit & debit card payments (Visa, Mastercard, American Express, Discover)
  • Digital wallets
  • HSA and FSA debit cards
  • ACH
  • Gift cards
  • Buy Now, Pay Later (BNPL) with Afterpay
  • Peer-to-peer payments with CashApp

Supported payment services: 

  • Mobile POS
  • In-store POS
  • Online payment gateway
  • Invoicing
  • Subscription management
  • Virtual terminal
  • CBD program

Payment processing fees

Like most payment facilitators, Square offers flat rate pricing, which may not be the lowest terms but are easiest to manage for small and new businesses. Businesses that process more than $250,000 annually must work with Square to negotiate custom rates, which typically involve volume discounts and likely better pricing models such as interchange plus or subscriptions. 

Below are Square’s standard payment processing fees:

  • Monthly payment processing account fee: $0
  • Cash, cheque, vouchers, and other tenders: $0
  • Credit cards:
    • In-person transaction: 2.6% + 10 cents
    • Online: 2.9% + 30 cents per transaction
    • Keyed-in & card-on-file transactions: 3.5% + 15 cents per transaction
    • Chargeback fee: Waived up to $250/month
  • Invoicing: 3.30% + 15 cents to 3.5% + 10 cents per transaction
  • ACH Payments: 1%, minimum $1
  • Afterpay: 6% + 30 cents per transaction
  • CBD program transactions: From 3.5% + 10 cents per transaction
  • Same-day funding: + 1.5%
  • Volume discounts: With a paid POS plan, or more than $250,000 in annual sales volume and over $15 in average ticket size

All Square payments processing comes with free dispute management, active fraud prevention, end-to-end encrypted payments, live phone support, and PCI compliance.

Hardware 

Square’s software is app-based, however, Square also has a range of proprietary hardware. All of the products are built to function across a range of business types, configurations, and sizes.

It starts with mobile credit card readers, where users get a separate magstripe and contactless device. There is also a versatile iPad stand with a built-in card terminal that can function as a countertop or kiosk. Lastly, Square provides mobile and countertop versions of a stand-alone checkout terminal, complete with a built-in touch screen, customer display, and swipe, chip, and contactless card readers. 

Square magstripe reader.
Square contactless reader.
Square Stand with 2-in-1 card reader.
Square Terminal stand alone POS with 3-in-1 card reader.
Square Register with 3-in-1 card reader.

Square Magstripe Reader

Square Contactless Reader

Square Stand

Square Terminal

Square Register

Visit Square

Square point-of-sale

Square POS on an iPad and smartphone.
All of Square’s POS systems are available on iPads, Android, iPhone, and Square’s proprietary hardware.

Square offers basic and industry-specific POS software. Every software version comes with inventory, ordering, sales, customer management, and reporting tools. 

The basic free POS software includes the following features:

  • Inventory management
  • Cash, mobile, debit, credit, and gift card payments processing
  • Invoicing
  • Website builder
  • Virtual terminal
  • CRM
  • Offline credit card payment processing
  • Returns and refunds processing
  • Tip management
  • Digital and printed receipts

Industry-specific POS software

For more advanced POS features, Square offers industry-specific POS software for retail, restaurants, and professional services. These alternatives come with their own set of free and paid plans. Unique features in industry-specific POS include advanced inventory management for retailers, seat management and a kitchen display system for restaurant owners, and scheduling for professional service providers. Square also offers discounted transaction rates for those who upgrade to a paid POS plan.   

Additional features and products 

Square offers a full ecosystem of business tools across four main categories: commerce tools like payment processing and point of sale, customer management tools like marketing and CRM, employee management tools like shift scheduling and payroll processing, and banking tools like business checking accounts. 

Here’s a full breakdown: 

Square commerce products 

Square's invoice design page on the merchant platform.
Square’s invoicing feature is easy to customize and offers automated tools for alerts and follow-ups. (Source: Square)
Square Online site builder.
Square Online comes with a drag-and-drop functionality, making it easy for first-time users to set up their website. (Source: Square)
Square’s mobile-first online menu.
Square’s mobile-first online menu opens your online ordering website like an app (Source: Square)

Square’s basic invoicing functionality is free and offers a range of customization options such as branding, line items, messaging, and more. It can also be customized for recurring billing and post-payment invoicing for businesses that require pre-authorized recurring payments.

Every Square account comes with a free website builder and management platform. Square ensures that designing a website is easy even for first-time users, complete with guides for customizing every section and page. Businesses can choose which products to sell online from the integrated inventory list on Square’s dashboard. Square Payments also comes built-in. All businesses need to do is choose the payment methods they want to make available to online customers.

Read more: Square vs Shopify

For restaurants, Square’s online ordering system starts by providing users with a mobile-friendly Square online store. It also provides QR codes for digital menus and embedded Square checkout links for social media platforms. Square can be integrated with local delivery service providers, customized from the on-demand delivery setting on the Square dashboard.

Businesses can easily create payment links from the Square dashboard. These payment links are used to send buy buttons for payment requests via email, text messages, messaging apps, or embedded checkouts on social media posts. 

Square’s buy buttons can be customized for different events and business types. For example, nonprofits can create a “donate now” button instead, and subscription businesses can customize the button to say “subscribe now” instead. Users can send custom digital receipts after every completed transaction.

Square’s gift cards are available in both physical and digital forms. Like all its other products, creating and launching Square gift cards can be done in minutes. Businesses can sell their gift cards in-store and online, and customers who use them for purchases are seamlessly tracked in the customer directory. 

Customers can easily reload and reuse their gift cards and even receive proceeds from approved refunds. Except for processing fees, there are no other costs associated with digital gift cards. However, physical gift cards will cost at least 50 cents each and discounted rates may be available if ordering over 1,000 units.

Square customer management products

Square marketing feature with sample marketing campaign.
Square combines email and text marketing with CRM to nurture your customer base (Source: Square)
Square Messages on desktop and mobile device with sample SMS.
Square Messages help businesses efficiently manage customer communications from a single platform. (Source: Square)
Square Loyalty with sample loyalty program.
Square’s loyalty program tools automatically integrate into the customer directory, tracking purchase history and customer preferences. (Source: Square)
Square customer directory.
Square’s customer directory is seamlessly integrated with other Square products such as text and email marketing and loyalty tools. (Source: Square)
Square Photo Studio with sample edited image of orange shopper tote bag in blue background.
The Square Photo Studio is integrated with the product catalog, so updates are seamless across all sales channels. (Source: Square)
Square Go on smartphone with sample appointments.
Square Go lets customers manage their appointments from a mobile app. (Source: Square)

Square offers both email and text marketing features. Users can design and automate one-time and email campaigns, as well as options to save templates for recurring campaigns throughout the year. Text marketing is effective as a stand-alone or a follow-up for email marketing blasts. Like emails, it can be customized with automation and triggered with events such as new customer promotions.

Square Messages allows you to send SMS messages to customers from the Square dashboard. Customer replies will also be visible and managed from the same platform. For professional service businesses, the industry-specific POS can launch an AI-powered online assistant for bookings and reservations.

Square’s loyalty program feature lets businesses create customized loyalty and reward schemes from the Square dashboard. This includes limited-time and recurring promotions, digital loyalty passes that customers can save in their Apple wallet, and customized VIP tiers to encourage engagement. Customers can sign up in person, on the ecommerce website, and on the Square mobile POS app.

Square offers full access to its customer directory at no extra cost. Customer records are integrated with every Square product, especially loyalty and rewards. All profile data can be manipulated to help analyze audience segments, purchasing trends, understand customer behavior, and create timely reports.

Product photos are crucial when selling online, which is why Square now offers a photo studio feature. The Square Photo Studio helps users capture and create professional product images. This app-based tool uses AI to fine-tune lighting, backdrops, framing, and other imaging tools to create eye-catching product photos.

Square Go is Square’s customer-facing marketplace app for professional services that use Square’s Appointment POS software. Customers can download the app for free, search for the nearest service provider, book and manage appointments, create reservations, and communicate with the seller. It also allows customers to leave reviews using the app.

Square Contracts is a free tool for all businesses with a Square account. It can be used to draft service agreements, policies, credit card authorizations, purchase orders, and all types of waivers a business owner may need. The Square Contract is accessible via the Square dashboard and comes with customizable templates that can be modified until the document is signed.

Square staff products

Square Shifts on desktop and smartphone with sample schedule.
Square Shifts provides automated time cards to show attendance, shift swapping and time-off requests within the app. (Source: Square)
Square Messages with sample communications about shift adjustments.
Manage shift swapping and time off requests in the Teams app (Source: Square)

Square Shifts is an app that integrates with the Square POS and merchant account dashboard to handle scheduling, time tracking, and attendance. This product also allows businesses to prepare payroll, manage compensations, and analyze labor costs with timely reports. The basic app is free, but users can get the full version for just $4 per month per team member.

The Square Teams app is a communication platform between the employer and employees. This is where managers can send announcements and share files, staff members can send updates, and everyone can react with emojis within the platform. Users can even send private messages to other team members. The Square Teams app costs $2.50 per month per user with a 30-day free trial.

With Square Payroll, businesses can run payroll in minutes at any given time or set payroll to run automatically every pay period. It pulls information directly from any of Square’s team management tools (Team app, Shifts) for time cards and tips. Square partners with SimplyInsured (for employee medical, dental, and vision insurance) and Guideline (for 401K retirement benefits). Square Payroll is also equipped to easily handle onboarding and tax filing via automation. Businesses can even arrange so employees can instantly get their wages via CashApp.

The Square HR Experts plan is an optional product to help businesses efficiently manage HR functions. It provides built-in resources for HR and compliance, such as an employee handbook builder, pay-as-you-go workers’ compensation insurance, and alerts for changes in employment legislation. This feature offers a variety of HR document templates, such as new-hire forms and performance management check-ins. When in doubt, Square HR Experts also offers a platform to consult certified HR experts for any advice, policy, and documentation questions.

Square banking products

Square Savings on smartphone with sample account balances.
Use Square Savings to set aside funds for sales tax and other business goals. (Source: Square)
Square Loans with sample loan information on the left and image of savings balance and ATM debit card on the right.
Loan application and repayment are easy and done from the Square dashboard (Source: Square)

Square Business Checking offers a fast way to set up a business checking account. Unlike traditional banks, Square does not have opening deposits or balance requirements or charge a monthly service or maintenance fee. There are also zero fees for overdrafts and foreign transactions. Most importantly, a Square Checking account gives businesses instant access to funds from sales at no extra cost.

A Square Business Savings account allows companies to automatically set aside a portion of their sales proceeds for different goals. Funds in the savings account can easily be moved to your Square Checking account for free or to a separate bank account linked to Square Savings for a fee. There are no minimum deposit requirements, and funds in Square Savings earn from Square’s 1.75% APY. Square is also a member of FDIC, meaning accounts are insured up to $2.5 million.

The Square Business Credit Card is linked to your Square Business Checking account. This means businesses are provided a credit line and will not have to wait for sales revenue to pay operating expenses. Using the Square Credit Card also comes with incentives such as points that can be applied against credit card processing fees. Application and repayments can be done from the Square dashboard, and there are no annual fees or late payment fees.

Square offers small business loans from $100-$350,000. The application is fast and easy on the Square dashboard and is based on your average card sales for a specific period. There is no interest on repayments as Square only charges a flat fee for the loans. Repayments are automated, and businesses will only have to pay an amount based on what they earned for the day.

Benefits of using Square  

All-in-one business solution

Square offers a complete business ecosystem to support its POS software. A payment processing solution and an ecommerce platform are built into the POS system, while a range of proprietary hardware is available for mobile and brick-and-mortar sales. Square also offers industry-specific software for retailers, restaurants, and professional services.

Native business integration tools such as team management, payroll, and marketing are also available as add-ons. Square also works with a long list of third-party integrations for everything from accounting to delivery apps for users who prefer to keep their current business software tools.  

Feature-rich free plan

One of the reasons why Square is popular among small and new businesses is because it offers a feature-rich free plan. This allows merchants to launch their business with Square with zero upfront cost. 

Easy to use

Square has a reputation for being incredibly easy to use. Real-life first time users can attest that it will only take minutes to sign up for a Square account. And once you get access to a merchant dashboard, users get a guided tour and set up instructions to upload inventory, create payment options, design invoice templates, and even launch a website.

Multichannel and omnichannel sales platform

Square provides its users with multiple sales channels regardless of plan type. The software is ready to conduct sales and accept payments from a mobile device, in storefronts, and online. Each Square account comes with a built-in ecommerce platform that allows users to set up and manage their ecommerce website. Square’s payment gateway service is accessible from the merchant account dashboard, where users can create payment links and QR codes to embed on invoices and social media posts and send them via email and messaging apps to collect payment.

Seamless ecosystem 

All of Square’s business management tools are fully integrated. So, inventory records are always updated in real-time, regardless of whether businesses receive sales online, in-store, or on-the-go. The built-in omnichannel functionality allows users to receive timely low-stock alerts and avoid selling out-of-stock products. It also helps provide a better customer experience by making customer profiles available on every platform.  

Read more: Square reviews

Square competitors and alternatives 

Square’s main competitors and alternatives are PayPal, Stripe, and Helcim. All three of these companies also offer free accounts with different payment processing tools. 

SquarePayPalStripeHelcim
Best forSmall businessSeasonal, occasional sellersOnline salesFast growing businesses & B2Bs
Merchant account typeAggregateAggregateAggregateTraditional/dedicated
Fee structureFlat rateFlat rateFlat rateInterchange plus
Monthly software fee$0-$89 (POS+payments)$0-$30 (virtual terminal)$0-$10 (Custom domain)$0
Chargeback feeWaived up to $250/mo$20$15$15 refundable
Volume discountsSales volume > $250,000/yearUpgrade to Braintree for interchange plus ratesCustom interchange plus rates quote for large-volume salesBuilt-in volume-based discounts
ScalabilityIntegrations, Square large business solutionsPayPal for Enterprise + upgrade to BraintreeCoding-based customizationsDeveloper tools and APIs

Read more: Check out our recommended best alternatives to Square.

PayPal vs Square

PayPal is a pioneer in online payment processing and a trusted brand known for improving online conversion rates. It supports mobile payments via a mobile POS app and proprietary mobile card reader. PayPal offers a wide range of payment solutions and is particularly unique for its proprietary payment methods that make it easy to sell to customers with a personal PayPal account.

Though both PayPal and Square are easy to set up (both are payment facilitators) and essentially mobile-based, PayPal is a better option for occasional sellers because it doesn’t require its users to create a complete POS platform to start selling. And PayPal payment methods can be easily added to any e-commerce website. Square Payments is exclusive to websites created on the Square platform.

Read more: How Square stacks up against Paypal.

SquarePayPal
Best forSmall businessOccasional sellers and ecommerce businesses
Merchant account typeAggregateAggregate
Fee structureFlat rateFlat rate
Monthly software fee$0-$89 (POS+payments)$0-$30 (virtual terminal)
Chargeback feeWaived up to $250/mo$20
Volume discountsSales volume > $250,000/yearUpgrade to Braintree for interchange plus rates
ScalabilityIntegrations, Square large business solutionsPayPal for Enterprise + upgrade to Braintree
Visit PayPal

Stripe vs Square

Stripe is a popular online payment processor that also serves as a payment facilitator, offering a free merchant account similar to Square. It is a developer-first platform that allows for nearly unlimited customization options via APIs and SDKs. That said, Stripe also offers payment processing services that don’t require coding, such as basic checkout, invoicing, and recurring billing tools. 

Stripe’s clear difference from Square is that it has no native POS software (PayPal has Zettle). It requires custom integration to use the system with a business platform but offers huge customization potential. To put it in perspective, Stripe powers Shopify’s payment processing service, Shopify Payments. Stripe also requires users to design a mobile POS app to work with their credit card readers.

Read more: Our detailed comparison of Square vs Stripe.

SquareStripe
Best forIn-person salesOnline sales
Merchant account typeAggregateAggregate
Fee structureFlat rateFlat rate
Monthly software fee$0-$89 (POS+payments)$0-$10 (Custom domain)
Chargeback feeWaived up to $250/mo$15
Volume discountsSales volume > $250,000/yearCustom interchange plus rates quote for large-volume sales
ScalabilityIntegrations, Square large business solutionsCoding-based customizations
Visit Stripe

Helcim vs Square

Helcim is a merchant account provider that offers a variety of payment methods and services. Like Square, Helcim also offers free point-of-sale, invoicing, and ecommerce software. Unlike Square, Helcim supports a number of additional cost-saving features, such as built-in volume discounts, free credit card processing, and level 2 and 3 data processing for B2Bs—all automated so savings are always optimized.

Also, unlike Square, Helcim offers a traditional merchant account. So, while it’s less prone to holds or frozen funds, it requires an approval process, for which most small businesses may not be suitable. The fee structure is also set to maximize savings compared to Square’s. 

SquareHelcim
Best forSmall and new businessesFast growing businesses & B2Bs
Merchant account typeAggregateTraditional/dedicated
Fee structureFlat rateInterchange plus
Monthly software fee$0-$89 (POS+payments)$0
Chargeback feeWaived up to $250/mo$15 refundable
Volume discountsSales volume > $250,000/yearBuilt-in volume-based discounts
ScalabilityIntegrations, Square large business solutionsDeveloper tools and APIs
Visit Helcim

FAQs

The major benefit of using Square is the access to a complete suite of business software solutions to customize and grow a POS system based on your business needs. Square is a one-stop-shop, which makes for an easy set up.

Square works by integrating its core POS software with its in-house payments, ecommerce, and other business management tools. It runs sales and manages inventory across multiple channels from a single POS dashboard and supports real-time inventory and sales information on all of your selling platforms (mobile, in-store, ecommerce, virtual terminal).

Yes. Square provides one of the most feature-rich free plans in the market that includes payment processing, website builder & management, mobile POS app, virtual terminal, and a free magstripe mobile card reader.

Yes, Square is a great POS system that offers the best value-for-money especially for small and new businesses. Square also offers great potential for building a custom POS solution for large businesses.

Yes, you will need to link a business bank account when you sign up for a Square account. Square will send the proceeds of your sales (net of transaction fees) to your business bank account.

Yes, Square is used by many large businesses such as Shake Shack, SoFi Stadium, and Ben & Jerry’s. It utilizes a combination of advanced developer tools and various third-party partnerships to provide tailored solutions.

Square’s POS software is HIPAA compliant. It signs business associate agreements (BAA) with healthcare providers, making handling patient information in the Square POS system legal. Square integrates directly with popular EHRs Remedly and DrChrono, and can process payments using Health Savings Account (HSA) and Flexible Spending Account (FSA) debit cards.

Anna Lynn Dizon Avatar
Anna Lynn Dizon
Senior Staff Writer
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Anna is a retail software expert and senior staff writer for Fit Small Business. She specializes in POS and payments technology and has evaluated dozens of software for more than six years. She began her career in PayPal customer service, resolving account and technical issues. She also spent 4 years handling business and financial management with hands-on experience in setting up payroll and banking automation for a US Risk Mitigation company based in Singapore.