Square payment is a way to accept card payments using a small device that plugs into your phone or tablet
A Square payment is any transaction processed through Square, a company that lets small businesses and individuals accept credit and debit cards without a traditional merchant account or expensive equipment. Instead of a bulky cash register or a trip to a bank, you use a small card reader that connects to your phone or tablet, or you can key in card details manually. The money goes into your bank account, usually within one to two business days.
Square started in 2009 and is now one of the most common payment systems for small vendors — food trucks, freelancers, market stalls, repair shops, and anyone else who needs to take cards on the spot. You do not need to own a business or have a business license to use it, though you do need a bank account and a smartphone or tablet.
Key Takeaways
- Square lets you accept card payments using a small reader that plugs into your phone, without needing a traditional merchant account or expensive equipment.
- You pay a fee for each transaction — usually a percentage of the sale plus a small flat fee — rather than a monthly subscription.
- Money from card sales deposits into your personal or business bank account within one to two business days.
- You can use Square to accept payments in person, online, or by phone, depending on which Square product you choose.
How the Square card reader works
The most common Square product is the Square Reader, a small white device about the size of a large postage stamp. It plugs into the headphone jack or charging port of your phone or tablet. When a customer wants to pay with a card, you insert their card into the reader, and the card information appears on your screen. The customer can sign on the screen or enter their PIN, and the payment goes through.
You do not need an internet connection at that exact moment — Square can process the payment offline and sync it later when you reconnect. This makes it useful for outdoor markets, events, or places with spotty service. The reader itself costs money upfront (usually between $10 and $50 depending on the model), but there is no monthly fee for having it.
Square also offers other ways to take payments. You can type in card details manually using the Square app on your phone, which is slower but works if you do not have the physical reader. You can send a payment link to a customer by text or email, and they can pay from their phone. You can also set up an online store through Square Online and accept payments that way.
What fees you pay
Square does not charge a monthly subscription. Instead, you pay a small fee each time someone pays you. For in-person card payments using the Square Reader, the fee is usually 2.6% of the sale plus 10 cents. That means if someone buys something for $100, you pay $2.70 and keep $97.30.
If you key in the card number manually (called a "keyed" or "card-not-present" transaction), the fee is higher — usually 3.6% plus 10 cents — because there is more risk of fraud. If you use a payment link or online store, the fee is also 2.9% plus 30 cents.
These fees vary slightly depending on your location and the type of card being used (some business cards have higher fees than personal cards). Square publishes their current rates on their website, and you can see the exact fee before you complete each transaction.
How money gets to your bank account
When a customer pays you through Square, the money does not go directly into your pocket. Square holds it for a short time, then deposits it into the bank account you linked when you set up your Square account. This usually happens within one to two business days, though it can take longer on weekends or holidays.
You can check your balance and transaction history anytime in the Square app. You can also set up automatic deposits so the money moves to your bank account on a schedule you choose — for example, every day, every Friday, or once a month. Some people prefer daily deposits so they know exactly how much came in each day. Others wait until the end of the week to reduce the number of transfers.
Who uses Square and why
Square is popular with people who do not have a traditional storefront or who move around. A plumber who visits customers' homes can take card payments on the spot instead of mailing an invoice. A freelance photographer can accept payment at a session. A farmer at a farmers market can take cards instead of only cash. A small restaurant can use Square as their main payment system or as a backup if their main system goes down.
Square is also used by people who are new to accepting cards and do not want to sign a long contract or deal with a bank. The barrier to entry is low — you can be set up and taking payments within an hour. You do not need to prove you have a certain amount of revenue or pass a lengthy underwriting process, though Square does review your account for fraud.
Square versus other payment systems
Square is not the only company that lets you accept cards on a phone. Stripe, PayPal, and Toast are competitors with similar products. The main differences are in fees, which features are included, and how straightforward they are to use.
Square's main advantage is simplicity — the app is straightforward, the reader is cheap, and you can start when ready. The main disadvantage is that the per-transaction fees add up if you process a lot of payments. A business doing $10,000 in sales per month would pay around $260 in fees with Square, which is significant. Some larger businesses switch to a system with a monthly fee once their volume gets high enough.
Square also owns Cash App, a money-sending app, and Square Invoices, which lets you send bills to customers. If you use multiple Square products, they all connect to the same account, which can be convenient.
What you need to get your free guide
To use Square, you need a smartphone or tablet with the Square app installed, a bank account in your name, and a way to verify your identity (usually a photo ID and Social Security number or tax ID). You do not need a business license, though if you operate as a business, you should have one for tax and legal reasons.
If you want to use the physical card reader, you order it from Square's website and it arrives in a few days. You can start taking payments with just the app while you wait. If you plan to take payments online or by phone, you do not need the reader at all.
Square asks for information about what you sell and how much you expect to process per month. This helps them assess fraud risk. If your answers raise red flags, they may decline to set you up or limit how much you can process until you have a track record.
Frequently Asked Questions
Do I need a business license to use Square?
No, Square does not require a business license. You can use it as an individual. However, if you are running a business, you should check your local rules — many places require a license regardless of what payment system you use.
What happens if a customer disputes a charge?
Square handles disputes through a process called a chargeback. The customer contacts their bank and says they did not authorize the charge or did not receive what they paid for. Square investigates and either refunds the customer or sides with you. If you lose, the money comes out of your Square account. You can provide evidence (like a receipt or photo) to help your case.
Can I use Square if I do not have a smartphone?
Square requires a smartphone or tablet to use the app. You cannot process payments on a regular phone. If you do not have a smartphone, you would need to buy one or use a different payment system.
Is my customer's card information safe with Square?
Square encrypts card information and is certified for PCI compliance, which is a security standard for handling card data. Your customers' full card numbers are not stored on your phone — Square handles that securely. However, like any online service, there is always some risk, so you should keep your phone find and use a strong password for your Square account.
What if I process a lot of payments — is there a better option?
If you process thousands of dollars per month, the per-transaction fees may become expensive. Some businesses switch to a system with a monthly fee (like $30 to $100 per month) plus lower per-transaction fees. Square can help you explore other options if your volume grows, or you can compare with Stripe, Toast, or other providers.