Square charges a flat rate per transaction, not a monthly fee, and deposits funds to your bank account within one to two business days
Square is a payment processor that lets you accept credit and debit cards in person, online, or by invoice. You pay per transaction rather than paying a monthly subscription. The standard rate is 2.6% plus 10 cents for in-person card-present transactions (when the customer is physically there with their card), and 2.9% plus 30 cents for online or card-not-present transactions (when you key in the number or send an invoice).
Square deposits your money into your linked bank account on a rolling basis. Most deposits arrive within one to two business days, though the first deposit may take longer while Square verifies your account. You do not need to wait for a batch or a settlement period — the money moves as transactions clear.
The main trade-off is simplicity versus cost. Square's per-transaction model means you pay only for what you process, with no hidden monthly charges. But the percentage rate is higher than some competitors charge for high-volume merchants. If you process under $1,000 per month, the simplicity usually outweighs the cost. If you process significantly more, you may want to compare rates with other processors.
Key Takeaways
- Square charges 2.6% plus 10 cents for in-person transactions and 2.9% plus 30 cents for online or invoice transactions, with no monthly fee.
- Money from card sales deposits to your bank account within one to two business days after the transaction clears.
- You need a Square account, a linked bank account, and either a Square reader (for in-person), Square Online (for web sales), or the ability to send invoices.
- Square holds a small reserve from your early transactions to cover potential chargebacks, but this money is returned to you over time.
- Refunds and chargebacks are deducted from your next deposit, so your account balance can go negative if disputes exceed your pending deposits.
What you need to set up Square payments
To start accepting cards through Square, you need a Square account, a U.S. bank account in your business or personal name, and a way to process the cards. If you take payments in person, you need a Square Reader — a small device that plugs into your phone or tablet and costs around $29 to $49 depending on the model. If you sell online, you can use Square Online (their website builder) or integrate Square into an existing site. If you invoice customers, you can send a Square invoice link and they pay by card through that link.
Square asks for basic business information during signup: your name, address, phone number, email, and the type of business. For sole proprietors, you may need to provide your Social Security number. For an LLC or corporation, you provide the EIN. Square also asks how much you expect to process monthly — this helps them set your initial reserve.
The whole signup process takes about 10 to 15 minutes online. Your account is usually active within a few hours, though Square may place a temporary hold on your first few deposits while they monitor for fraud. This is normal and does not affect your ability to process payments.
How Square's reserve and chargeback protection work
When you start processing with Square, they hold back a small percentage of your early transactions — typically 5% to 10% of your first 30 to 90 days of sales. This is called a reserve, and it sits in your Square account as a cushion against chargebacks and refunds. The reserve is not a fee; it is your money. Square returns it to you gradually, usually over three to six months, once they are confident your account is stable.
A chargeback happens when a customer disputes a charge with their credit card company and the card issuer sides with the customer. Square deducts the chargeback amount (plus a $15 chargeback fee) from your next deposit. If you have a reserve, the deduction comes from that first. If your reserve is gone and chargebacks exceed your pending deposits, your account balance goes negative and you owe Square the difference.
You can reduce chargebacks by keeping clear records of what you sold, sending receipts to customers, and responding quickly if a customer disputes a charge. Square gives you tools to upload evidence (like a photo of the signed receipt or proof of delivery) if you want to contest a chargeback.
Deposits, timing, and how money moves
Square deposits your card sales to your linked bank account on a rolling basis. This means money does not sit in a Square account waiting for a batch — instead, each transaction is processed individually and sent to your bank as it clears. Most deposits arrive within one to two business days. Weekends and bank holidays can add a day or two.
Your first deposit may take longer — sometimes up to five business days — because Square verifies your bank account and runs initial fraud checks. After that, deposits are consistent. You can see pending deposits and past transactions in your Square Dashboard, so you always know what is coming and when.
Refunds and chargebacks are also deducted from your next deposit. If a customer asks for a refund, you process it through Square and the money is pulled from your next scheduled deposit. This means your account can briefly show a negative balance if refunds or chargebacks exceed what you have pending. The balance corrects itself once the next deposit hits your bank.
Square's additional features and optional add-ons
Beyond basic card processing, Square offers tools that cost extra. Square Payroll lets you run payroll for employees, with fees based on the number of employees. Square Invoices lets you send payment requests to customers, and Square Online is a website builder with built-in payment processing. These are optional — you can use Square for card processing alone and ignore the rest.
Square also offers Square Capital, a cash advance product. If you process a certain volume through Square, you can borrow money and repay it as a percentage of your daily card sales. This is not a loan with a fixed payment — you repay by giving Square a small cut of future revenue. The cost is higher than a traditional loan, but it is available quickly and does not require a credit check in the traditional sense.
Square Cash and Square Invoicing are free to use. Payroll and Capital have their own pricing. None of these are required to process credit cards.
Comparing Square to other payment processors
Square's 2.6% plus 10 cents rate is competitive for small businesses and one-person operations, but it is not the lowest available. Stripe charges 2.9% plus 30 cents for online payments and 2.7% plus 5 cents for in-person, which is slightly lower for in-person but higher for online. PayPal Here charges 2.7% plus 5 cents for in-person and 3.49% plus 49 cents for online. Clover (owned by Fiserv) offers lower rates for higher-volume merchants but charges a monthly fee for the hardware and software.
The choice depends on your volume and how you sell. If you process mostly in-person transactions under $1,000 per month, Square's simplicity and lack of monthly fees make it hard to beat. If you process online invoices, Stripe's lower online rate might save you money. If you process over $10,000 per month, a processor with volume discounts or a monthly fee structure might be cheaper overall.
Square also integrates with many point-of-sale systems and accounting software like QuickBooks and Xero, which can matter if you already use those tools. Check whether your existing software works with Square before switching from another processor.
Common issues and what to do about them
The most common problem is a delayed or missing deposit. If your deposit does not arrive within two business days, check your Square Dashboard to see if it is still pending. If it shows as deposited but your bank has not received it, contact your bank — the delay is usually on their end. Square's support team can also trace a deposit if you give them the transaction ID.
Another frequent issue is a frozen or limited account. Square may temporarily limit your ability to process new transactions if they detect unusual activity or a spike in chargebacks. This is a fraud prevention measure. You can usually restore full access by contacting Square support and providing documentation of your business (like invoices or receipts showing what you sold).
Chargebacks are also common for new merchants. If a customer disputes a charge, Square notifies you and gives you a window (usually 7 to 10 days) to respond with evidence. Keep receipts, delivery confirmations, and customer communications so you can contest invalid chargebacks.
Frequently Asked Questions
Do I have to use Square's hardware, or can I use a different card reader?
Square's payment processing works with Square's own readers. You cannot use a reader from another company with Square's system. However, if you use Square Online or send invoices, you do not need any hardware — customers enter their card details on their own device.
What happens if I process a transaction and then the customer's card is declined?
If a card is declined, the transaction does not go through and you are not charged a fee. Square only charges you when a transaction is successfully approved. You can try the card again or ask the customer for a different payment method.
Can I get a lower rate if I process a lot of volume?
Square's published rates do not change based on volume — 2.6% plus 10 cents for in-person is the standard rate for all merchants. However, you can contact Square's sales team to discuss your specific situation. They may offer custom rates for very high-volume businesses, but this is not may provide.
How long does it take to get my money if I process a payment on a Friday?
Most Friday transactions deposit by Monday or Tuesday, depending on your bank's processing schedule. Transactions processed on Saturday or Sunday may not deposit until Tuesday or Wednesday. Holidays can add another day. You can see the expected deposit date in your Square Dashboard when you process the transaction.
What if a customer claims they never received what they paid for?
This is a chargeback situation. Square will notify you and ask for evidence. If you shipped a physical item, provide a tracking number showing delivery. If you provided a service, provide documentation like an invoice, receipt, or email confirmation. If you cannot provide evidence, Square sides with the customer and you lose the money plus a $15 chargeback fee.