Square changing the way entrepreneurs, small businesses get paid

Since Square became available to the public in October 2010, it has revolutionized the way entrepreneurs and small businesses get paid.

For the uninitiated, Square allows anyone with its card reader and/or  iPhone, iPad, or Android application to accept credit card payments. The fee structure is straightforward: 2.75 percent per swipe and 3.5 percent plus 15 cents per transaction when card numbers are entered manually.

“With Square, there are no activation or annual fees, monthly fees, gateway fees, or chargeback fees,” says Lindsay Wiese, spokeswoman for Square. “The hardware and software is free, and Square doesn’t require a merchant account, which is expensive, complicated and often turns down new business owners.”

Wiese says more than 1 million U.S. merchants now accept credit cards using Square.

“We’ve seen great adoption of Square in Central Ohio,” she  says. “Currently there are nearly 3,000 Square users in Columbus.”

Among those users are Kelly Harvey, owner and wine maker at Signature Wines; Allison Lehman, graphic designer at Allison Lehman Design; and Andrew Moon, chief technologist at Network Logix.

All three started using Square in 2011, but their reasons vary.

Moon liked the convenience, Lehman began gaining local clients who wanted to use credit cards (versus out-of-state clients who rarely asked to pay by card), and fees were putting a sizable dent in Harvey’s profits.

“The majority of sales we have from either festivals held at the winery, like the Sangria Festival, or that we participate in, like the DIG Fest, are cash and the majority of sales for customized labels are paid with a check, so I was paying a lot in monthly credit card fees −that were always going up− when I wasn’t making that many credit card sales,” Harvey says.

To date, all three business owners are happy with Square.

“It’s so easy to use and the fees deducted are less than Paypal’s,” Lehman says. “As soon as I swipe or manually enter my client’s card, I send the receipt to their email or cell phone. It also automatically transfers the balance into my bank account after 24 hours.”

She and Moon say their clients love Square. Harvey says hers react differently, depending on age.

“If they are young, they usually have used it before or have read about it,” she says. “If they are older, they seem to get a kick out of the new technology.”

Despite set fees, there is at least one payment drawback to using Square.

“I learned the hard way that a sale that is more than $1,000 and you are punching the numbers in versus swiping the card, Square will hold the money for a month before releasing it to your account,” Harvey says. “You can have the $1,000 limit increased, but I had a few $1,000 sales occur before I realized they would hold the money.”

Nonetheless, Harvey, Lehman and Moon say they have no plans to stop using Square.

“If Square started charging a monthly fee or if my bank offered the same type of service for the same price…[those] would be the only reasons why I would consider not using Square,” Harvey says.

More information can be found online at www.squareup.com.