It’s OK to be square…..

This weeks blog post will be geared a bit towards other photographers and non-traditional small business owners.  Let me start by saying that I’m not sponsored at all so my opinions on products are solely based on my experiences with them and not influenced at all by sponsorship payments or anything like that.  I try to keep an eye out for products and services that could help make my business more efficient and help make things simpler for my clients.

One thing that I’ve found to be really convenient is the ability to accept payments via credit card.  I went with Square Up as my credit card payment solution.  For those that aren’t familiar with Square Up, it is not a credit card processor; it’s an aggregator. Paymentech is the company that processes transactions for Square, and JP Morgan Chase is the company’s acquiring bank.  Square’s application collects credit card information and routes it to Paymentech where it is then routed through the credit card company’s network to the customer’s issuing bank.  Square has a very simple setup process: create an account by providing some basic information to verify your identity; download the app onto your iPad, iPhone or Android device; connect your bank account to the app; and then just wait for your free credit card swiper to arrive in the mail. Once the little plastic card reader arrives you plug it into the headphone jack of your mobile device and, just like that, you’re ready for immediate payment processing.  The Square app has an easy-to-navigate interface that transforms an iPad into a sleek point of sale station.  Square has zero setup cost and no monthly fees, making it a great solution for low-volume business or individuals who would find a traditional merchant account too pricey.

Is Square perfect?  Unfortunately, the answer to that question is NO.  Square is a good fit for small businesses who need portability, simplicity and cheap service fees. The Square card reader and accompanying app are trendy yet practical: a clever option for small business owners who want a hassle-free and sleek way to accept credit card payments.  However, for larger businesses who swipe a lot of cards and process larger transaction amounts, implementing this mobile credit card processing solution can be like trying to fit a square peg in a round hole. The double-edged pricing structure can be a burden for high-volume businesses. Technically, Square is free. The Square Register app is free and so is the credit card reader. They make a profit through credit card processing fees and equipment sales. Rates and fees are:

  • Monthly fee – $0
  • Swiped card – 2.75%
  • Keyed-in cards – 3.5% + $0.15

On the Square site, you’ll see that there are no fees for:

  • Activation
  • Early termination
  • Interchange
  • Chargebacks
  • Cash payments
  • Refunds
  • PCI compliance

Additionally, you won’t see any monthly minimums, statement fees, inactivity fees, address verification fees, batches fees, application fees… so on and so forth.  The major concern I have here is the matter of processing limits. One reason that other credit card processing companies like Flint can provide such predictable and reliable service is that, like any other standard merchant account provider, they make your per-transaction and per-week processing limits crystal clear. They also set up a protocol for you to increase these limits if needed. With Square, you are left guessing. There are no limits made explicit anywhere. This leads merchants to believe it’s okay to process large transactions, and then leaves them surprised when the transactions are held for three months.

The Square iPhone card reader, app and services are all secure. Critics have pointed out that the Square reader does not use hardware encryption and can be manipulated and used as a card skimmer. I actually agree with Square’s rebuttal however and admit that anytime you give your card to someone who wants to steal your info, the criminal already has everything they need. The payment card industry recognizes these risks and has implemented protection measures across the board.  The Square reader’s security isn’t as rock-solid as iPhone card readers that use hardware-based encryption, but merchants and customers are still more than adequately protected from card fraud. The solution does use encryption when transferring sensitive data. Their network and servers are all secure, and cardholder data is never stored on the iPhone or the swiper.  If security is one of the most important aspects of your mobile credit card processing decision (and it should be), other vendors offer more. But merchants certainly don’t need to be afraid of any increased liability or security holes from Square.

To wrap this up, there are many things to like about Square. The practical benefits are geared toward small-business owners and non-traditional sellers who might not need a dedicated merchant account for their situation (like photographers). While the decision of which mobile credit card processing solution is best for you is in your hands, I can wholeheartedly recommend Square as an option worthy of your serious consideration.

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