Credit card processing is a necessary component of doing business, and finding a good merchant account provider with reasonable costs, accessibility, and support is crucial.
Having a cost-effective and reliable way to accept chip cards and contactless payments is essential given that 80% of shoppers use eWallets and credit cards as their preferred method of payment.
You need a secure way to get banking information from your customer’s credit or debit card to process payments, and credit card readers simplify that process. Your customer simply swipes or dips their card, and the device will extract the relevant banking information to be transmitted to your payment processor, and back to you to finish the sale.
There are multiple providers that offer card readers and other payment processing services, but this article will focus on Square — specifically the Square card reader.
You will discover how it works and the applicable Square card reader fees.
What is the Square Card Reader?
Square was the first payment processing company to introduce card readers that let cell phones accept card readers. It is for good reason that the company’s highly portable card readers are found at small businesses across the country.
The Square Reader for Magstripe is free and you can either use it with a headphone jack for Android or a Lightning connector for iPhone. When plugged into your phone, it connects with the Square Point of Sale (POS) app to start accepting swipe cards.
However, the Square Reader for Magstripe has limited protection from fraudulent swipe card purchases and it’s only suitable when you process payments sporadically.
You are better off with the Square Reader for Contactless and Chip. It is compatible with EMV-enabled cards, and accepts both chip cards and tap-to-pay cards with an embedded NFC chip. NFC support includes Apple Pay, Google Pay, Samsung Pay, and others.
The Square Reader for Contactless and Chip is competitively priced at just $49, and the company offers a 30-day money-back guarantee on all hardware purchases.
It is a pretty versatile card reader. Not only does it support NFC cards, there is also a slot for chip and PIN cards to be inserted for physical transactions. You can either use it as a stand-alone mobile processing device or as an extension of your iPad Square Stand.
A key limitation of the Square Reader for Contactless and Chip is that it does not support magstripe credit card payments. This is not a big issue since EMV chip cards are now the standard method of accepting credit and debit card payments across the country. If you really need a magstripe card to take payments, you can get the Square Reader for Magstripe for free.
Square Card Reader Fees
Square uses a flat-rate pricing structure where you pay a set percentage plus a few cents for each transaction, regardless of the type of credit card used. Rates will vary depending on whether it is an in-person transaction or a keyed-in transaction. In-person transactions have much lower fees than keyed-in transactions.
Your transaction costs will really be determined by the type of Square POS app you are using:
- Square POS: 2.6% + $0.10 per swipe, dip, or tap
- Square for Restaurants: 6% + $0.10 per swipe, dip or tap
- Square for Retail: 2.6% + $0.10 per swipe or dip, and tap (3.5% + $0.15 for keyed-in transactions)
- Square Appointments For Teams: 2.5% + $0.10 per swipe, dip, or tap
- Square Appointments for Individuals: 2.6% + $0.10 per swipe, dip, or tap (3.5% + $0.15 for keyed-in or Card on File transactions)
Square’s rates are comparable to that of other payment processors including PayPal and Stripe, but businesses with a high volume of transactions prefer a payment processor that offers a lower interchange-plus pricing and lower credit card processing fees. Also, Square doesn’t offer discounts for high-volume businesses except they have annual sales of $250,000 or more and average transactions over $15.
The company doesn’t have any chargeback fees, and rates are low enough to make it very attractive for low-volume and new businesses.
How to Get a Square Card Reader
The straightforward way to get your Square reader is to order it from the company’s website. Follow the few steps below and you get your card reader delivered to your doorstep within five to seven days:
Step 1: Create your Square account. Hit the get started button on the company’s website, add your email, password, and follow the prompts to agree to the e-sign consent form and privacy policy.
Step 2: Answer questions about your business. Here, Square will ask a few questions about the nature of your business (brick-and-mortar, online, etc.), and how you plan to receive payments. They will also ask for your personal and business information including your Taxpayer Identification Number (TIN), bank account information, social security number, and more.
Step 3: Identity verification. The company will ask for your address to verify who you are. The verification process will only take a few seconds.
Step 4: Choose your Square Card Reader. Select from either the Square Reader for Contactless and Chip or the Square Reader for Magstripe. You must also choose either the headset jack (Android) or Lightning connector (iPhone). You can opt to wait for five business days to receive the devices, or if you can’t wait that long, get the card reader from large retailers like Amazon, Walmart, and Best Buy.
Step 5: Set up your credit card reader. Plug your card reader into your mobile device and open the Square POS app on your phone.
Go to the settings menu on the app, scroll to “Card Readers”, and press the “Connect a Card Reader” tab. The app will ask what kind of Square reader you are using, select the relevant reader, and follow the on-screen instructions to pair your reader to the app.
Press and hold the power button until you see the four lights flash orange to approve the pairing request. Then, follow the prompts on the screen of the card reader to approve the request.
After a successful pairing, the app will download all relevant updates, and notify you that the Square reader is ready for use.
You can now start collecting payments from customers. You swipe the card straight through in a swift, smooth motion, and the reader will capture your customer’s information.
Square says the card reader is designed for all-day use, but some users have complained about the reader’s battery life, and you should consider buying a charging dock.
Also Check Out: The Best Mobile Credit Card Readers for Small Businesses
Using a Square Credit Card Reader in Your Store
Like we mentioned above, the Square Point of Sale app is crucial to unlocking your card reader. You can download it via the Apple (iOS) and Google app stores.
The app and the reader work well for most small businesses and the only notable issue is that the Square Reader for Contactless and Chip doesn’t work offline. To process offline payments, you will need the Square magstripe reader.
The Square card reader will work with all the other Square POS apps including Square for Retail, Square for Restaurants, and Square for Appointments.
The Square app offers numerous features including:
- Product Library: add items, item categories, photos, prices, barcodes, and more to individual products.
- Payment Methods: Square accepts Mastercard, Visa, American Express, and more. Apart from physical cards, you can also type in card details manually. You can send invoices and print receipts to be sent via email or text message.
- Payment Protection: fraud protection services are built-in and all payment information is encrypted. The company also automatically takes care of PCI compliance requirements for you.
- Offline Mode: the Square POS app works offline and transactions will be pending for 72 hours to ensure the payment will be processed as soon as you are online.
- Reporting: the Square dashboard lets you view all transactions and payouts at a glance. You can generate reports and payment analytics on best-selling products, average customer spend, and more.
Customer Complaints
Many users are happy with Square’s card readers but they aren’t perfect, and here are some issues we have discovered:
Funding holds and terminated accounts. The bulk of customer complaints is about having their funds placed on hold suddenly or even having their accounts deactivated without any notice. No one wants to have their cash tied up without notice or lose their accounts with little to no warning.
Faulty Bluetooth connection with mobile devices. Some customers reported problems with maintaining the Bluetooth connection between the card reader and their mobile device.
Flawed customer support. Square’s customer support can be difficult to reach to the frustration of many users. The company focuses on offering a good enough product at a low cost and this may explain the relatively poor quality of its customer service.
Should You Get the Square Card Reader?
Square’s card readers are excellent for new or micro-businesses that don’t process a lot of credit cards. They work seamlessly with its free POS app, and are available for free or at a relatively low price point. Also, the flat-rate pricing model for payment processing makes it an acceptable option for small businesses that process low volumes of transactions.
However, it is not the only processing option out there, and other merchant providers like Stax can offer you a more affordable service when you outgrow the relative advantages of Square’s pricing model.
Stax’s pricing model lets you pay a monthly fee to access wholesale interchange rates. Businesses that process large volumes of transactions will find the monthly subscription model attractive since it can provide lower per-transaction costs.
If you’d like to learn more about our payment processing solutions (including hardware like card readers) fill out the form below or contact the Stax team directly.
FAQs about Square Card Reader
Q: What is the Square Card Reader?
The Square Card Reader is a device designed by Square, the payment processing company, to enable businesses to accept card payments. The company provides two types of card readers: The Square Reader for Magstripe and the Square Reader for Contactless and Chip. The former is suitable for businesses that sporadically process payments, while the latter accepts both chip cards and tap-to-pay cards with an embedded NFC chip, which includes Apple Pay, Google Pay, Samsung Pay, and others.
Q: How does the Square Card Reader work?
The Square Card Reader works by connecting it to your mobile device via a headphone jack for Android or a Lightning connector for iPhone. When connected, it interacts with the Square Point of Sale (POS) app to start accepting card payments. The customer simply swipes or dips their card, and the reader extracts the relevant banking information, which is then transmitted to your payment processor and back to you to complete the sale.
Q: What are the Square Card Reader fees?
Square uses a flat-rate pricing structure, where businesses pay a set percentage plus a few cents for each transaction, regardless of the type of credit card used. The rates vary depending on whether it’s an in-person transaction or a keyed-in transaction, and also the type of Square POS app you are using. For example, with the standard Square POS app, you pay 2.6% + $0.10 per swipe, dip, or tap.
Q: How can I get a Square Card Reader?
You can order a Square Card Reader directly from the company’s website. After creating your Square account and providing the necessary information about your business, you can select the type of reader you want, either the Square Reader for Contactless and Chip or the Square Reader for Magstripe. You can also choose either the headset jack (Android) or Lightning connector (iPhone).
Q: What are some common complaints about the Square Card Reader?
Some users have reported issues such as sudden fund holds or account deactivation, faulty Bluetooth connection, and inadequate customer support. However, it’s important to note that many users are satisfied with Square’s card readers and the issues reported do not represent the experience of all users.
Q: Is the Square Card Reader suitable for all businesses?
Square’s card readers are excellent for new or micro-businesses that don’t process a lot of credit cards. The flat-rate pricing model for payment processing makes it an acceptable option for small businesses that process low volumes of transactions. However, businesses with a high volume of transactions may prefer a payment processor that offers a lower interchange-plus pricing and lower credit card processing fees, such as Stax.
Q: Can I use the Square Card Reader offline?
The Square Reader for Contactless and Chip does not work offline. To process offline payments, you will need the Square Magstripe Reader, which works with the Square POS app offline and transactions will be pending for 72 hours to ensure the payment will be processed as soon as you are online.
Q: What features does the Square POS app offer?
The Square POS app offers features such as a product library to add items, payment methods including Mastercard, Visa, American Express, and more, payment protection with built-in fraud protection services, and reporting capabilities to view all transactions and payouts at a glance. It also provides payment analytics on best-selling products, average customer spend, and more.
