Leadership optimize

It's hip to use the Square app to accept credit card payments

The Square app for Android and Apple iOS devices is a handy method of accepting and processing credit card payments with a small card reader plus app. Derek Schauland tries it out.

Many businesses or entrepreneurs have merchant accounts with services like PayPal so that they can take credit cards as a form of payment, but this doesn't do much for collecting payments from customers who have only credit cards on them while discussing your services or wares.

Enter Square

One of the co-founders of Twitter decided to explore a way to allow people to take credit card payments on their iOS and Android devices with a swipe of the card. The company produced a card reader that plugs into the headphone jack on the device along with an app. The app works with the reader to send payments to Square for processing. Once processed, the money, minus a small fee per transaction, is deposited into the bank account you linked to your account on Square.

Being someone who occasionally does side jobs, the idea of the Square service was pretty great. Being able to perform services like fixing a computer and allow the customer to pay with a credit card is just plain convenient.

How does it work?

The Square reader plugs into the headphone jack and the Square app allows you to enter the amount and a description of the charge. Once the information is entered, I swipe the card and a signature pad appears. This allows the customer to sign with their finger (or a stylus) and the payment to be sent off for processing. Once processed, the app allows me to send a receipt via text message or email.

Figure A

The reader
What about sales tax? The account settings within the Square app allow you to enable sales tax you may need to charge. Simply enter the tax percentage in as shown in Figure B.

Figure B

Charge sales tax

In addition to tax, you can also configure the ability to allow tips. This feature is turned off by default.

In initial testing, I charged myself $5.00 to see how the application worked. The signature pad works quite well with a finger on the screen and the ability to manage a receipt via text or email. The receipt arrived almost immediately which was pretty nice.

As the charges get rolling, the Square app (both at the website and on the device) keeps track of the history of charges that you have processed. This helps keep track of charges sent, much like an invoicing system.

Selling repeat items or the same items regularly with Square is quite simple; on the iPad, swipe to the left from the main screen of the app. Doing this allows you to add products that you sell regularly to speed up the sale of these items.

But how much will I spend to use it?

The reader and application are free if purchased from the Square website and or for $10 at Apple retail locations. When purchased at Apple, Square is providing a credit of $10 into your account.

The company makes its money when you use the service by charging 2.75% per swiped transaction and 3.5% + $.15 per transaction for card-not-present or keyed transactions. The minimum charge for a card swipe is $1, but if you need to collect less you can collect cash as both options appear when you charge for items on iOS.

When accepting cash payments, the Square app is used just to keep a record of the payment. No fee is charged for cash payments.

Limitations

There are some limitations on how the service works -- none in the way of the amount that you can receive, but in the amount that will be deposited and when. The service will deposit $1000/week into the accounts of new users. Amounts over this will be deposited after 30 days. This helps Square ensure that everything is okay with the accounts being linked to the service. In addition; these limits described above, can be negotiated by emailing customer service.

Payment deposits happen within 24 hours of being taken, however it can take a few business days for them to hit your linked bank account.

Linking bank accounts

Using Square to get paid by credit card requires you to link your bank account to the service. Square is PCI-DSS Level 1-compliant; see security information here.

Figure C

App on the iPad
Bottom Line

For small businesses or sole proprietors, or those who just want to offer their friends an easy way to settle bets, Square is a great, affordable, and very easy way to collect monies via credit card. For more information check out http://www.squareup.com or their help site at https://help.squareup.com/.

About

Derek Schauland has been tinkering with Windows systems since 1997. He has supported Windows NT 4, worked phone support for an ISP, and is currently the IT Manager for a manufacturing company in Wisconsin.

10 comments
Derek Schauland
Derek Schauland

Security of customer data is paramount and care needs to be taken at all times, but the idea of the service was what caught my interest. If security is taken seriously by all parties this little gem could be a great move. But as stated by others, take great care with sensitive information.

seanferd
seanferd

With a secure and well-configured phone (show me one), and a trustworthy service, OK, it sounds good. But I don't believe these things exist. The terms/limitations are ridiculous. I get the idea behind withholding deposits to make sure everything is kosher, but again, I don't buy it. All these financial companies use your money and charge you for the privilege.

Michael Kassner
Michael Kassner

Regardless of the fact that Square is PCI-DSS compliant, the ultimate responsibility falls on you, the person swiping someone else's card. Something not typically known and changes many people's mind about using these types of devices. I also would be very careful about what apps are installed on the device using the card reader. These and many other potential issues surfaced when I was researching the following article: http://www.techrepublic.com/blog/five-tips/five-tips-to-ensure-pci-dss-compliance/498

Somewhiteguy
Somewhiteguy

I have one and have only used it a few times. My work likes to give out American Express gift cards. Luckily I don't have to worry about the tax thing because they already remove any taxes from my paycheck. Payments are easy and quick (unless Amex holds the money for 48 hours for whatever reason) and the deposits go in the evening after the funds are released. Fast, small, convenient.

Michael Kassner
Michael Kassner

You can take all the care in the world, but letting a TPV take control of other's information you are responsible for is questionable. What track record does Square have? They publish very little about their part other than PCI compliance.

santeewelding
santeewelding

As you are secure. In other words, security doesn't come in a bottle.

Derek Schauland
Derek Schauland

is to take care of the customer information while you have it. Every person/business that takes credit cards relies on credit card processors to handle the credit cards they accept. The customer and likely many times the establishment has little or no information about the processor. Square is a credit card processor, same as paypal and others.

Spitfire_Sysop
Spitfire_Sysop

I can't control what happens after the data leaves the device. I was inquiring about the data integrity in transit and storage. I was not inquiring about my own ability to keep the device in my posession.

Michael Kassner
Michael Kassner

First and foremost Square is not a financial institution. They are a TPV sitting in between customers and credit-card providers. Most businesses deal directly with credit-card providers. And, if you look pay attention to historical evidence most data breaches take place at entities like Square.