What a Square credit card machine does

A Square credit card machine is a small device that reads and processes payment cards—debit cards, credit cards, and digital wallets like Apple Pay. You tap, insert, or swipe a card into the reader, and the transaction goes through to the customer's bank. Square handles the backend: it deposits the money into your business account, usually within one to two business days.

Square makes several versions of the same basic tool. The most common is the Square Reader, a small square-shaped device about the size of a matchbox that plugs into a phone or tablet via headphone jack or Bluetooth. There's also the Square Terminal, a standalone device with its own screen and keypad that doesn't need a phone. Both do the same job—they take payments—but the Terminal costs more and works independently.

You need a Square account to use any of these devices. The account is free to open, but Square charges a fee each time you process a payment. That fee structure is what separates Square from other payment processors, and it's the main thing to understand before you decide whether it fits your business.

Key Takeaways

  • Square charges 2.6% plus 10 cents per card transaction, or 3.5% plus 15 cents for keyed-in payments, with no monthly fee or contract.
  • The Square Reader hardware is free or costs $49 depending on which version you choose; the Terminal costs $299 upfront.
  • Money from card sales deposits to your bank account within one to two business days, though you can request faster deposits for an extra fee.
  • Square works on any phone or tablet with internet, so you don't need a dedicated cash register or special equipment beyond the reader itself.
  • You can track sales, inventory, and customer data through the Square Dashboard, which is included with any Square account.

How much Square charges per transaction

Square's pricing is straightforward because it has no monthly fee and no contract. You pay only when you process a payment. For a card that's physically present—tapped, inserted, or swiped—Square charges 2.6% of the transaction plus 10 cents. For a card number you type in by hand (called a keyed transaction), the rate is higher: 3.5% plus 15 cents.

Those percentages add up quickly on large transactions. On a $100 sale, you pay $2.60 plus 10 cents, which is $2.70. On a $1,000 sale, you pay $26 plus 10 cents, which is $26.10. The keyed rate is steeper because there's more fraud risk when you don't have the physical card in front of you.

Square also offers Square Invoices, which lets you send a payment link to a customer by email or text. The customer clicks the link and pays online. That transaction costs the same as a keyed transaction: 3.5% plus 15 cents. If you're running a service business and billing clients after the work is done, invoices can be faster than asking for a card in person.

ACH transfers—payments from a customer's bank account directly to yours—cost 1% with a minimum of $0.30 and a maximum of $5. This is cheaper than card processing but slower and less common for retail.

What the hardware costs and what you get free

The Square Reader, the small device that plugs into your phone, is free if you're a new customer. If you already have a Square account and need a replacement, it costs $49. The Reader works with any iPhone, Android phone, or iPad that has Bluetooth or a headphone jack. You read the free Square Point of Sale app, pair the Reader, and you're ready to take payments.

The Square Terminal is a larger device with its own screen and number pad. It doesn't need a phone or tablet—it's a standalone machine. The Terminal costs $299 to buy. It connects to the internet via WiFi or cellular, and it can work offline for a limited time if your connection drops. The Terminal is useful if you want a traditional cash register setup or if you're running multiple checkout stations.

Both devices are yours to keep. There's no rental fee or lease. If the device breaks, Square offers a replacement program, though terms vary by device and account type.

The Square Dashboard, where you see all your sales, customer data, and reports, is free with any Square account. You can log in from any computer or phone to check your balance, refund a transaction, or export sales history.

How deposits work and how long money takes to arrive

When a customer pays with a card, the money doesn't hit your bank account when ready. Square holds the funds and deposits them in batches. Standard deposits happen one to two business days after the transaction. So a sale on Monday might deposit Tuesday or Wednesday, depending on when the batch processes.

If you need money faster, Square offers when ready Deposit for an extra fee. when ready Deposit sends the money to your bank account the same day, usually within a few hours. The fee is 1% of the amount deposited, with a minimum of $0.50. So if you deposit $100 when ready, you pay $1. This is useful if you're tight on cash, but it eats into your profit on each sale.

Deposits go to the bank account you link when you set up your Square account. You can change the account anytime in your Square settings, but it takes a few days for the change to take effect. Square will send you a small test deposit to verify the account is real before they start sending full deposits there.

If a customer disputes a charge or their bank reverses the payment, Square pulls the money back from your account. This is called a chargeback. It can happen weeks after the original sale, so your account balance can go negative if you've already spent the money.

What Square's point of sale app includes

The free Square Point of Sale app is where you ring up sales, take payments, and manage your business. When you open the app and tap to start a sale, you enter the amount, the customer can pay with a card, and the receipt prints or emails automatically. You can add item names and prices so the app remembers them, or you can just type in a dollar amount for a quick sale.

The app tracks every transaction in real time. You can see your daily sales, hourly breakdown, and which items sold the most. You can also see which payment methods customers used—card, cash, or digital wallet. This data lives in your Square Dashboard, which you can access from any device.

Square also includes basic inventory management. You can add products with prices and quantities, and the app deducts from inventory each time you sell. You can set low-stock alerts so you know when to reorder. For a small business, this replaces a separate inventory system.

Customer data is stored automatically. When a customer pays with a card, Square saves their name and email. You can build a customer list and send them receipts, invoices, or marketing emails through Square's email tool. This is included with your account—there's no extra charge.

Square versus other payment processors

Square competes mainly with Stripe, PayPal, Toast, and Clover. Each has a different fee structure and different hardware options, so the best choice depends on your business type and sales volume.

Stripe charges 2.9% plus 30 cents per online transaction, which is cheaper than Square's keyed rate but more expensive than Square's in-person rate. Stripe is built for online businesses and doesn't offer a physical card reader for retail. If you're selling online only, Stripe is often cheaper.

PayPal charges 2.99% plus 30 cents for in-person payments with their card reader, and the same for online payments. PayPal's rate is between Square's in-person and keyed rates. PayPal also offers a monthly plan called PayPal Zettle that costs $99 per month but lowers the per-transaction fee to 1.75% plus 20 cents. That plan makes sense only if you're processing thousands of dollars per month.

Toast and Clover are designed for restaurants and retail stores with multiple locations. They charge higher per-transaction fees but include more advanced features like kitchen display systems and employee management. They're overkill for a solo business or small shop.

For a one-person business taking occasional card payments, Square is usually the cheapest. For high-volume online sales, Stripe is often better. For a retail store with employees and inventory, Clover or Toast might be worth the extra cost.

How to set up a Square account and start taking payments

To open a Square account, go to squareup.com and click the sign-up button. You'll enter your name, email, and password. Square will ask for your business name, address, and phone number. You don't need to be a registered business—sole proprietors can sign up with their personal information.

Next, you'll link a bank account where deposits will land. You'll provide your routing number and account number. Square sends two small test deposits to verify the account is real. Once you confirm the amounts, deposits are live.

Then you'll order a Square Reader if you don't have one. New customers get the Reader free. read the Square Point of Sale app to your phone or tablet, pair the Reader via Bluetooth, and you're ready to take your first payment.

Square will ask for your Social Security number or EIN for tax purposes. They may also ask about your expected monthly sales volume. This information helps Square assess risk and determine whether you're may be able to access for when ready Deposit or other features.

The whole process takes about 15 minutes. You can start taking payments the same day you sign up, though deposits may take a few days to arrive while Square verifies your bank account.

Frequently Asked Questions

Do I have to pay a monthly fee to use Square?

No. Square has no monthly fee, no contract, and no minimum sales requirement. You pay only when you process a payment. The only exception is if you choose PayPal Zettle's monthly plan, which costs $99 per month but lowers the per-transaction fee.

Can I use Square offline?

The Square Reader requires an internet connection to process payments. If your WiFi or cellular drops, the Reader won't work. The Square Terminal can store a few transactions offline and sync them when the connection returns, but this is a temporary workaround, not a reliable offline mode.

What happens if a customer disputes a charge?

The customer's bank investigates the dispute. If the bank sides with the customer, Square reverses the charge and pulls the money from your account. You can dispute the chargeback through Square, but the burden is on you to prove the transaction was legitimate. Keep receipts and transaction records.

Can I refund a payment?

Yes. Open the Square Dashboard, find the transaction, and click Refund. The refund goes back to the customer's card within one to two business days. You can refund the full amount or a partial amount. Refunds are free—Square doesn't charge a fee to reverse a payment.

What if I want to accept payments by phone or email?

Use Square Invoices. You create an invoice in the Square app, add the customer's email, and Square sends them a payment link. The customer clicks the link and enters their card details. You pay the keyed rate (3.5% plus 15 cents) for these transactions. Invoices are useful for service businesses, contractors, and anyone billing after the work is done.