Using Square to pay and get paid – anyone can now accept credit card payments using Square Credit Card Processing.
For small businesses, start-up and on-the-go sales it’s now easy and cost effective for everyone to accept credit card payments. sing a smart device (Android, iPhone or iPad), standard cellular service and the free Square Card Reader a payment can be processed with a swipe and a click. You’ll never miss a sale again!
Jack Dorsey, the co-founder of Twitter, is the entrepreneur behind Square. The idea came originally when he realized his artist friends were losing out on sales because they had no way to accept credit card payments. The traditional method was to have a merchant account with a bank, a credit card reader for point-of-service processing and high monthly fees. Just getting a merchant account can be a weeks’ long process and often times requires a corporate filing and a stack of paperwork.
Mr. Dorsey also saw a large potential to transition a cash based economy at Farmer’s Markets, Flea Markets and Art Fairs to a credit transaction. And to even make this accessible to everyone for simple things like garage sales and auctions.
His ultimate goal is to make the payment process transparent and easy for both the consumer and the seller.
“You don’t think about how the money is transferring. You just think about what you want and if you can afford it. And that’s really all you have to consider,” he said.
Since founding Square in 2009, he has moved from merely taking payments to allowing customers to make payments. He has created the Square App for the iPhone which allows Starbucks patrons to pay for their coffees and pastries completely hands-free. For other options on how people pay for things, please see the related article on Digital Wallet .
The set-up for Square is quick and easy.
First, you’ll need to get a free card reader. Just go to the Square Website and register. The reader will arrive in the mail in a few days. To read about what’s inside the Square, please read the related article Square Tear Down .
Second, download the free app for your smart device and link the payments to your bank account.
You’re done! No up-front cost and no stacks of paperwork. Plug the reader into your smart device when you want to take transactions, and deposits typically show up the next business day in your account. You can get email confirmations.
For customers that want a receipt, just enter their email address along with the transaction and it’s emailed directly to them. I recently bought a book at a book-signing event where the author was using Square. Before she was finished writing in the book, my iPhone had received the emailed receipt. It’s that fast and easy.
The costs are also very simple and straight-forward, unlike some merchant accounts. And there are no commitments, contracts or buried fees. With Square you can pay a flat rate of 2.75% for every swiped payment with a Visa, MasterCard, American Express or Discover credit card.
You can also accept payments without a card swipe, for telephone or internet sales, with a slightly higher rate of 3.5% and $0.15 per transaction. The higher cost for a manually entered transaction is due to the higher fraud rates, charge backs and errors that can happen.
For the business owner or higher volume sales organization, Square also offers an alternate to the single transaction fee, a flat $275 month with $0 per transaction.
With per-swipe pricing, the fees are taken out of each payment as they occur so there is no fee schedule. Square does not require a contract upon signup or have any monthly minimums. Best of all, it doesn’t cost you anything if you don’t use it. Restaurant and service industry providers do need to be aware that the 2.75% fee is taken out of the total amount of each transaction, including tax and tip.
Square can charge these comparatively low rates since all the individual Square users are basically aggregated under the Square account rather than being unique to themselves. In the banking terminology, Square functions as an IPSP, or Internet Payment Service Provider. This is supported under a Visa designation of registered service providers with similar registration with the other card brands.
In addition to the payment process, Square also has powerful tools for the business owner to understand the revenue stream. Square provides point-of-sale analytic tools to track, monitor and report sales details. It also simple to create loyalty programs and to connect units sold with inventory management.
The technology running behind the application is pretty impressive. Dealing with money and banks, security is one of the highest priorities along with ease of use. Square protects the vendors and customers with secure data encryption and only using Square’s dedicated secure servers to process transactions. Both the software and hardware meet or exceed all PCI-Compliant regulations.
From their website, Square outlines the physical and network security employed to ensure the integrity of the payment process:
• Fully encrypted: Square performs data encryption within the card reader at the moment of swipe.
• Sensitive data is encrypted using industry-standard methods when stored on disk or transmitted over public networks. • Only standard, well-reviewed cryptographic protocols and message formats (such as SSL and PGP) are used when transferring data.
• Symmetric cryptographic keys are required to be at least 128 bits long. Asymmetric keys must be at least 2048 bits long.
• Security updates and patches are installed on servers and equipment in a timely fashion. • Security settings of applications and devices are tuned to ensure appropriate levels of protection.
• Square’s website and API are accessible via 128-bit, extended-validation SSL certificates issued by VeriSign.
• Networks are strictly segregated according to security level. Modern, restrictive firewalls protect all connections between networks.
• Card-processing systems adhere to PCI Data Security Standard (PCI-DSS), Level 1.
Web and Client Application Security
• Card numbers, magnetic stripe data, or security codes are not stored on Square client devices.
• Applications developed in-house are subject to strict quality testing and security review. Web development follows industry-standard secure coding guidelines, such as those recommended by OWASP.
• Card-processing applications adhere to the PCI Data Security Standard(PCI-DSS), Level 1.
• Access to sensitive data, including application data and cryptographic keys, is strictly controlled on a need-to-know basis.
• Two-factor authentication and strong password controls are required for administrative access to systems.
• Security systems and processes are tested on a regular basis by qualified internal and external teams.
• All access to secure services and data is strictly logged, and audit logs are reviewed on a regular basis.
• Security policies and procedures are carefully documented, and are reviewed on a regular basis.
• Detailed incident response plans have been prepared to ensure proper protection of data in an emergency
The final opinion on Square is that this is an exciting way for any seller to easily accept non-cash payments in a very cost effective manner. Square works with any US-issued and most non-US issued credit, debit, pre-paid or gift cards with a Visa, MasterCard, American Express or Discover logo. Square processes all with the same simple rates.
To get an inside look at Square, check out the Tear Down article….