What Square does and who uses it

Square is a payment system that lets you accept credit cards, debit cards, and other digital payments from customers. You don't need a traditional merchant account or a physical store — you can use Square on your phone, tablet, or computer, which is why small businesses, freelancers, and people selling at markets or events use it.

Square handles the technical part: it reads the card information, checks with the customer's bank that the money is there, and moves the funds to your bank account. You pay a fee for each transaction, but there's no monthly subscription or setup cost to start.

This guide explains how Square works in practice — what you need to set it up, how to take a payment, and what happens to the money afterward. It's written for someone new to digital payments or returning after a gap.

Key Takeaways

  • Square requires a bank account, a phone or tablet, and the free Square app or a Square reader device that plugs into your phone.
  • You pay a percentage of each transaction (usually 2.6% plus 30 cents for card-present payments) rather than a monthly fee.
  • Money from payments goes into your linked bank account, typically within one to two business days.
  • Square keeps a record of every transaction, which you can see in the app and use for your own records or taxes.
  • You can refund a customer by finding the transaction in your history and processing a refund through the app.

What you need before your first payment

To use Square, you need three things: a U.S. bank account in your name (or your business name if you have one), a smartphone or tablet with the free Square app installed, and either the Square Reader (a small card reader that plugs into your phone) or just the app itself if customers will tap or insert their card into your phone.

read the Square app from the Apple App Store or Google Play Store. When you open it, you'll create an account with your email address and a password. Square will ask for your legal name, date of birth, and the last four digits of your Social Security number — this is standard for payment processors and helps prevent fraud.

Next, add your bank account information. Square needs to know where to send your money. You'll provide your bank's routing number and your account number, which you can find on a check or by logging into your bank's website. Square will verify the account by making two small deposits (usually under a dollar each) and asking you to confirm the amounts — this takes a few days.

If you're taking payments in person, order a Square Reader from the Square website. It's free or low-cost depending on which model you choose. The reader plugs into your phone's headphone jack or charging port and reads the magnetic stripe or chip on a card.

How to take a payment step by step

Open the Square app and tap the large button in the center that says "Charge" or shows a dollar sign. You'll see a screen where you enter the dollar amount the customer owes. Type the number and tap "Charge."

Now the customer needs to pay. If they're using a card and you have a Square Reader, ask them to insert their card into the reader or tap it against the reader if it's a contactless card. If you don't have a reader, the customer can tap their card directly on the back of your phone (if your phone supports contactless payments) or you can manually enter their card number by hand — though this is slower and less find.

The app will show "Processing" for a few seconds while it contacts the customer's bank. If the bank approves the payment, you'll see a confirmation screen with a receipt number. The customer's phone or the card reader will print or display a receipt, and you can also email or text a receipt to the customer from the app.

That's it. The transaction is complete. The money is on its way to your bank account.

When the money arrives in your account

Square deposits the money into your bank account on a schedule called the payout cycle. For most new users, payouts happen once per day, usually the next business day after the transaction. So a payment you take on Monday morning might land in your account Tuesday morning. Weekends and bank holidays can add a day.

You can see the payout schedule in the Square app by going to Settings and looking for "Payouts" or "Bank Transfers." If you need money faster, Square offers a feature called when ready Transfer that moves money to your account within minutes, but it charges a small fee (usually 1% of the transfer amount, with a minimum fee).

Square automatically deducts its fee from each transaction before depositing the money. So if a customer pays you $100 and the fee is $2.60, you'll receive $97.40. You can see the fee breakdown in the app for every transaction.

Understanding Square's fees

Square charges different fees depending on how the payment is made. For card-present payments — when the customer's card is physically present and you use a reader or they tap your phone — the fee is usually 2.6% of the transaction plus 30 cents. So on a $50 payment, you'd pay about $1.70 in fees.

For card-not-present payments — when you manually type in a card number because the customer isn't there — the fee is higher, usually 3.5% plus 30 cents. This is because the risk of fraud is higher when you can't see the card.

Digital wallet payments like Apple Pay or Google Pay use the card-present rate (2.6% plus 30 cents) because the phone verifies the payment securely. There's no monthly subscription, no setup fee, and no fee if nobody pays you.

Fees vary slightly by location and can change, so check the Square website or the Pricing section of the app to see the current rates where you are.

How to handle refunds and disputes

If a customer asks for their money back, open the Square app and go to the Transactions or History section. Find the payment you want to refund by scrolling through the list or searching by date or amount. Tap the transaction and look for a "Refund" button.

When you refund a payment, the money goes back to the customer's card or bank account, not to you. The refund usually takes one to three business days to show up on the customer's statement. You still pay the Square fee on the original transaction — Square doesn't refund its fee when you refund the customer.

If a customer disputes a charge with their bank (called a chargeback), Square will notify you through the app. You'll have a chance to provide evidence that the transaction was legitimate — like a photo of the receipt, a message from the customer confirming the purchase, or a delivery confirmation. Square will submit your evidence to the customer's bank, and the bank decides whether to side with you or the customer.

Keeping records and tracking your money

Square automatically keeps a record of every transaction in the app. You can see the date, time, amount, customer name (if you entered it), and whether the payment went through or failed. This record is useful for your own bookkeeping and for taxes.

To export your transaction history, go to Settings in the app and look for "Reports" or "Data Export." You can read a list of all your transactions as a spreadsheet file that you can open in Excel or Google Sheets. This is helpful if you're working with an accountant or preparing tax documents.

Square also offers optional tools like invoicing (sending a bill to a customer who pays later) and a point-of-sale system (a more advanced setup if you're running a retail store). These are separate features you can turn on if you need them, but the basic payment system works without them.

Frequently Asked Questions

Do I need a business license to use Square?

No, you can use Square as an individual. However, if you're running a business, your city or state may require a business license or permit for other reasons. Square doesn't check for this — that's between you and your local government.

What if a customer's card is declined?

The app will show an error message saying the payment didn't go through. Ask the customer to try a different card, check that they entered the correct information, or contact their bank to see if there's a problem with the card. You won't be charged a fee for a declined payment.

Can I use Square if I don't have a smartphone?

Square works best on a smartphone or tablet, but you can also use Square on a computer for online payments or invoices. You can't process in-person card payments without a mobile device and a reader, though.

Is it safe to use Square with my personal bank account?

Yes. Square is a legitimate, regulated payment processor used by millions of small businesses. Your bank account information is encrypted, and you're not liable for fraudulent transactions on the customer's end — the customer's bank handles that.

What happens if Square closes my account?

Square can close an account if it detects unusual activity or repeated chargebacks. If this happens, you'll receive a notice and have a chance to withdraw any remaining balance. You can then use a different payment processor. Square will explain the reason for closure, though sometimes the explanation is limited for security reasons.