Getting Square: A Guide to the New Mobile Credit Card Payment System for iPhone and Android

Anyone–and I do mean anyone–can sign up to use Square and begin accepting credit card payments. Here’s how it works.


Sign up for an account by visiting After entering your basic details, Square asks for a bank account number. The account is then verified through a microdeposit, the same system PayPal uses. Once confirmed, Square ships out a card reader device free of charge.


Next download the free app from either the iTunes store or Android Market. The application works with iPhone, iPod Touch, iPad, Nexus One and Droid. Once you receive the card reader, attach it to the headphone jack, fire up the app, and start swiping cards. Square accepts any U.S. credit card, including debit, pre-paid, or gift cards from Visa, MasterCard, American Express, and Discover.

There is no contract, merchant account, or monthly fee associated with the account. You do pay a flat fee of 2.75% plus 15 cents for every swipe, and 3.5% plus 15 cents for any charge where a card is not present (but the number is keyed in). “The reason we’re charging one rate is to make the whole system more approachable,” says Square cofounder Jack Dorsey. [To find out more about Square’s founders and how the company was started, read this story: Square Brings Credit Card Swiping to the Mobile Masses, Starting Today]

After a customer pays, he or she can add a tip to the bill either by percentage or adding their own amount. (Customers who pay by credit card but then leave a tip will make for a bit of an accounting mess, but it can be overcome.) If the bill is under $25 there is no signature required, otherwise a person can sign using the tip of their finger on the touchscreen instead of a pen. Once an email address or phone number is entered, the receipt is delivered electronically. The seller does not see the credit card number, and does not have access to the phone number of email address of the customer.

There is also a refund button, allowing a one-click payment back to the card. That is quite an improvement over the current refund process.

A customer can log on to the Square website to learn more about the vendor. Along with a map showing where the transaction took place, the customer can preview their receipt as it will look on the credit card statement, learn more about the seller, and even opt-in to be contacted by the merchant.

All of this information is being gathered an organized in a customizable dashboard on the Square website. A seller can create buttons to track exactly what’s being sold. The dashboard includes a complete itemized view of sales for the day, and breaks out how much tax was paid, and the total in tips. A vendor with multiple locations can click on a transaction and see a map of where it took place.


These transactions can all be downloaded to a .csv file and imported into TurboTax, Quicken or similar account software. In time, Dorsey says Square will provide more accounting tools directly from the dashboard. “Anything that improves the utility aspect of square we’re going to build into the site,” he says.

The dashboard also shows exactly how much Square owes the merchant, and the net funds are settled nightly. Depending on the bank, it could show up in the account the next day. Ordinarily, credit card companies will deduct their fees at the end of the month, making it difficult to know how much will be taken out from charge backs and refunds. “Whatever we deposit into your account, that’s your money,” says Dorsey.

There is also a built-in customer loyalty program. A merchant can customize a notifier for, say, every tenth visit by the same customer or any time a customer spends more than $100. This notification will appear on screen after the swipe and allow
the merchant to offer a discount or giveaway.

“This is data that small and medium size merchants don’t have access to,” says Dorsey. “They don’t know how many repeat customers they have, or how many cappuccinos a particular customer buys.”

The biggest challenge facing the broad adoption of Square’s technology is proving to small and medium busiensses that a better system exists at all. But instead of pushing a hard sell, Square is waiting to see how the system spreads organically. After all, there is a huge untapped market: according to a report by the Federal Reserve Bank of Philadelphia, of the 30 million businesses in the U.S. with under $100k in revenue, only 6 million accept credit cards. And that’s even before you get to the guy selling his couch on Craigslist.

About the author

I'm the executive editor of Fast Company and Co.Design.