In our ongoing series of posts on the trickery of credit card processors, we’re setting our sights on Square (aka SquareUp.com) – which is not accredited by the Better Business Bureau. Perhaps you’ve seen their fancy, newfangled device that plugs into an iPhone, iPad, or other pre-approved mobile device. It’s touted as an easy-to-use, mobile device for small businesses to accept payments anywhere they have wireless reception.
Be warned…don’t get sucked into the cuteness of the Square card reader!
Yes, the device looks cool and fits right on to your mobile device, but there are serious concerns about this merchant account provider…
- Square overcharges merchants with one-flat-rate of 2.75% (swiped) and 3.5% (keyed).
.
Did you know that the industry-wide Interchange rate (passed along from Visa and Mastercard) for a debit card transaction is .65%? That means that Square is making 2.10% on every swiped debit card transaction you take. Since debit cards are the most widely-accepted card by small businesses, that means that they’re making loads of cash off of each transaction. (Just to compare, Best Merchant Rates offers .49% on top of the Interchange rate from Visa and Mastercard (.49% + .65% = 1.14% per debit transaction). It may seem like a good deal at first, but you’re really paying a lot more for the convenience.
. - Square is prone to holding on to money for an undetermined amount of time.
.
Merchant Maverick has done a great job outlining the ways that Square can prevent you from accessing your own money:
- $1000 new account limit: If you process more than $1000 in transactions per week as a new Square user, anything above that $1000 will be held for an undetermined amount of time. Usually, until they verify that you’re not a fraudulent company. Once they verify, they’ll upgrade your payout schedule to reflect a higher limit. The verification process can be initiated by yourself (recommended for faster turnaround), or Square. Either way, until you’ve been upgraded, expect a delay in receiving any funds over $1000.
. - $1000 card-not-present limit: If you process more than $1000 in card-not-present (CNP) transactions per week, anything above that $1000 will be held for 30-days. Similar to the new account limit, merchants can apply to have the CNP limit raised as well.
. - Withholding of funds for high dollar transactions: Big ticket transactions may throw up a red flag with Square’s underwriting department. If that happens, then they may hold those funds for an undetermined amount of time. Make sure you let them know ahead of time if you plan on processing high dollar transaction amounts.
- $1000 new account limit: If you process more than $1000 in transactions per week as a new Square user, anything above that $1000 will be held for an undetermined amount of time. Usually, until they verify that you’re not a fraudulent company. Once they verify, they’ll upgrade your payout schedule to reflect a higher limit. The verification process can be initiated by yourself (recommended for faster turnaround), or Square. Either way, until you’ve been upgraded, expect a delay in receiving any funds over $1000.
- Square is notorious for not providing customer service.
.
If you’re not convinced already, you should read through some of the complaints about their customer service. Go ahead and try to find a phone number on their website. I dare ya! Couldn’t find one, could you? That’s one of the biggest complaints people have about Square is the lack of access to a real person and the delays in hearing from someone via email. Here are just a few examples we found…
. - Jerica states, “Square has NO customer service if you have an issue (which i have). They only provide you with an e-mail address which they dont respond to. my hair dresser uses square and square charged me the payment which i owed him plus two bogus charges of $140 each back to back . . . ive seen alot of complaints from several different square users with the same issue as i have. i would NOT ADVISE ANYONE TO USE SQUARE!”
. - Benjamin says, “Square Inc. = NO CUSTOMER SUPPORT! I’ve only had two transactions so far, and I’m running into trouble with my Square Inc. account, and there is no number and no email for customer support. I’ve combed their site and the internet and there is NOTHING! Lame-sauce!”
. - Mitch commented, “Great idea. Lousy company. I tried Square Up. I did three transactions, had a problem with one. And that’s when I learned they have no customer support. They say they will respond in 24 hours, they did, by assigning me a number and asking for account info. That was the last I heard from them. I’ve emailed them almost every day for going on 2 weeks. Nothing. But they collect their fees real well. Just hope you never need to communicate with them. I think it’s little more than a boiler room operation.”
Beyond the major concerns above, be aware of the inherent challenges in working with a wireless and paperless system. If (or should we say ‘when’) you don’t have access to a wireless signal, the Square device and app are completely worthless. On top of that, many people want a paper receipt rather than one sent to their email. Square doesn’t have any way of providing that to your consumer.
.
Square may be a good solution for you if you don’t accept transactions very often, don’t need customer service, and aren’t concerned about how long it takes you to finally get your payments to land in your bank account. Thank about it. There’s always a better option.