If you’re like millions of other merchants out there you’ve probably heard of Square. If you’ve never used them before, wouldn’t it be great to hear from other merchants what their experience has been? Well, in these days of online reviews, you can! Check out what business owners are saying on Consumer Affairs. Square’s pricing attracts startup solo-proprietors and businesses with micro-transactions (where the average sale is $10 or less). That’s where its ideal market ends. If your average ticket size is more than $10 and you can pass basic underwriting with a merchant application, you can do better than Square.
Bad Underwriting, Funding Holds, Poor Customer Service
You’re probably asking, “Isn’t expedited underwriting on a merchant application a good thing?” Some merchants prefer to be able to process their first transaction in minutes rather than in days. But cutting corners can have negative repercussions later. A review of Square’s lack of underwriting is important. They’re quick to shut down your credit card processing or hold your funds without warning if they see something they don’t like. Because they’re essentially one big merchant account that allows access by millions of merchants, they are strict on your business having few chargebacks, and even an unusually large sale can put your funding on hold. With real merchant account providers, you want to aim for less than 1% of your transactions being charged back by disputing cardholders. Your agent can work with you to prevent chargebacks and increase your merchant account limits. With payment aggregators like Square, you need to be extra careful to abide by processing limits and avoid chargebacks to avoid account termination and funding holds. Account stability issues are by far the number one complaint about Square. Businesses get funds held for up to 6 months, account suspensions, and account terminations all while pounding their fist and being unable to get a hold of someone at Square to help them. For a good picture of what your experience may be like, check out the reviews in the comments section at the bottom of this page.
Rigid Pricing Plan
When your business does a review of Square, make sure to include their pricing plan. They use something called tiered pricing. Based on two tiers, swiped cards, and keyed cards, they charge you a flat rate for each transaction. Swiped will cost you 2.5% of the transaction + $0.10. This also encompasses things like Apple Pay and chip cards. Keyed cards or cards, not present transactions are typical for eCommerce merchants or phone orders. The tier for these transactions is 3.5% + $0.15. Square also has no monthly fees. Merchants that like this pricing model typically process under $1,500 – $3,000 per month in credit card sales or have an average ticket size of $10 or less. If this does not describe your business, then Square’s pricing is overly costly for you. The reason this is a costly pricing plan is that some cards cost less to process than others, but you’ll be paying the same high rate for them all.
Financial Weakness
It’s common for people to be concerned with the financial strength rating of their bank or their insurance provider. But what about their credit card processor? Square is actually going down very fast. According to Statista, Square has lost $592 million in 4 years! Since deciding to be a publicly-traded company, they have drastically plummeted. The merchants that are making them lose the most money are small ticket businesses, those with an average transaction size of $10 or less. You may be thinking, “But wait, I LIKE the idea of my processor not profiting off of me!” While this is attractive to some, how long can Square survive on this downward spiral of losing $150 million a year? The company has started focusing on bigger ticket merchants in an effort to survive (if they don’t go out of business first) according to digitaltransactions.net. They also have been trying to make up losses on selling other services like business cash advances and payroll processing, but to no avail, yet. One of the acquiring banks we work with is the First National Bank of Omaha, which has been in business since 1863. Will Square be around for another 150 years? I wouldn’t bank on it.
Our Review of Square?
As you can tell we’re not a big fan. If you can survive their rigid pricing model, lack of due diligence with onboarding merchants, and financial weakness, you’ll still be missing some key benefits. One of those features is monthly billing instead of the daily discount. Square doesn’t offer monthly billing, and their lack of reporting won’t grow your business as our comprehensive analytics will. Really, you can do better than Square and we can prove it if you send us a few of your processing bills from recent months. Let us do a free price comparison for you today.
