Square sells you one thing that looks simple and is built from a dozen smaller charges. You tap a card, a sale goes through, and a few days later money shows up at your bank minus an amount that depends on how the card was taken, which plan you are on, and what kind of card it was. This post covers the setup in the order Square’s own help page gives it, the way the fees are put together, and where to look for the rates that apply to you. It leaves out the percentages, and I will say why further down.

How to Take Contactless & Chip Payments | Square Reader Setup Tutorial [2023 Version], Square on YouTube

Where I come from on this

The Heritage Diner in Mount Sinai ran on Aldelo for more than twenty years. The license was a lifetime one with free upgrades, support was paid, and the server sat in the building. Separately, through Nanos Media, the technology and consulting business I owned for restaurants, I installed point-of-sale systems and trained managers and staff on them, and I was a reseller of NextPOS, which became Aldelo. After COVID the diner moved to Square, a cloud system, because delivery through DoorDash and Uber integrated poorly with Aldelo.

That is the extent of my claim. I work at the family restaurant, I did not open the Square account for this post, and I am not going to describe a walkthrough as if I had just done one. The steps below come from Square’s get-started guide, which I have linked, and the fee description comes from its help pages.

The setup, in Square’s order

Tablet checkout stand at a cafe counter

The help guide opens with a rule that decides who does the work: “Only account owners can create a Square account.” Everything else hangs off that, so if the business has more than one owner, or an accountant who normally handles such things, settle who the account owner is before you start.

After that the guide lists eight steps.

  • Choose your business structure. Square asks for business details that vary by business type or share structure.
  • Verify your identity and onboard your business. There is one guide for sole proprietors and one for registered businesses.
  • Sign in to your account, through the Point of Sale app or the Dashboard.
  • Link a bank account. The guide says you need a verified bank account before your first transfer.
  • Set up transfer options. Transfers follow a schedule, and you can pick instant or same-day transfers for faster access to funds.
  • Order hardware, unless you already have Square hardware.
  • Create your item library in the Dashboard.
  • Set up your team before you start selling.

Two of those deserve more attention than they get. The business-structure step is where a sole proprietor and an LLC part ways, and picking the wrong one means redoing the identity step. The bank-account step has a small trap in it: Square’s deposit options FAQ says to verify the bank through the email Square sends to the account address, and if the bank details change later, to update them so funds do not go to an old account.

Item library and team come last in the guide, but I would not treat them as an afterthought. A restaurant that skips the item library and rings everything as a custom amount gets a deposit and almost no data about what sold. That is my reading of what the library is for, not a statement from the guide.

How the fees are built

Owner at a desk with a laptop and pen

Square’s page on what its fees are does not give one rate. It sorts charges into groups.

  • In-person card payments: tap, dip or swipe, plus contactless and Tap to Pay.
  • Keyed-in payments, meaning manually entered cards and cards on file, which the page says carry a higher rate.
  • Online and invoice payments: online checkout, Square Invoices, payment links, and payments through the API.
  • Alternative payment methods: ACH bank transfers, Afterpay, Cash App Pay and EBT.
  • Gift cards, with load fees on physical and digital cards and no fee on redemption.
  • Bitcoin, with its own conversion, buy and sell, payment and withdrawal charges.
  • International cards, which carry an extra surcharge when the card was issued in a different country from your Square account.

The page also lists what it says costs nothing: cash, check and other tender payments, plus chargebacks and dispute management, activation and account inactivity, among others.

The part I would read twice is how the money is taken. Per the page, card processing fees are subtracted from each transaction’s total, including tax and tip, before funds reach your bank account. That sentence is easy to read past. A sale of one amount plus a tip and tax is charged on the whole figure, so a restaurant, where tips ride on the card, pays on money that never belongs to the house. A shop with no tipping and little sales tax is in a different position.

The rates themselves depend on your plan, which the page names as Square Free, Plus or Premium, or a legacy plan. Sellers above a certain annual sales level can contact Square sales for custom pricing, according to the same page, and the page gives the level, which I have left out for the same reason as the percentages.

Getting the money

Open cash drawer and receipts on a diner counter

Getting paid is a separate decision from taking the payment, and Square treats it that way. Its transfer timing page describes four ways to move funds to your bank: a standard next-business-day transfer, which is the default schedule; a same-day transfer; an instant transfer, at any hour; and a manual transfer you trigger yourself. The standard schedule does not run on Saturdays, and by default Friday’s funds stay in the Square balance over the weekend. Same-day and instant transfers cost a fee that the standard schedule does not, and new sellers face limits on instant transfers.

The deposit FAQ lists what looks like a hold but is a rule: cutoff times, weekends and bank holidays, minimum balances, limits on large individual payments for the faster transfer types, and the speed of your own bank. Square states that it will not hold funds based on the amount, frequency or type of transaction on standard or custom schedules, which is the sentence a new seller worried about a frozen account should read.

I have left out the cutoff hour, the transfer fee and the limit amounts, because those are the kind of figures the company changes, and a number in a post outlives the number on the page.

Where I left the numbers out

No percentages appear in this post. The fees page itself declines to print one rate and tells you to look at the Pricing & subscriptions area of your Dashboard, found through Settings and then Account & Settings, where you can filter by location. For someone who has not opened an account yet, the pricing page that the get-started guide links to is the place: squareup.com/us/en/pricing. I am not repeating a rate from memory or from another site.

A fair objection is that a post about fees with no fees in it is half a post. It is half a post. The other half is the structure, and the structure is the part that does not go out of date as quickly: the groups above, the rule that fees come off the full total, and the order in which Square asks you to set things up.

What to compare before you choose

The sources do not say which processor to pick, and I am not going to turn them into a recommendation they do not make. They do suggest what to compare, if you are weighing Square against anything else.

  • Your own sales mix. Count how much of your volume is tapped in person, keyed in, taken online, or invoiced, because the groups carry different rates.
  • Whether tips and tax ride on your cards, since the fee is on the whole total.
  • How fast you need the money, and whether the faster transfer is worth its own charge to you.
  • What the account does when something goes wrong. The fees page names chargebacks and dispute management as a no-fee service, but it does not describe how disputes are handled, so that question still needs an answer before you rely on it.
  • What the processor connects to. In the diner’s case it was delivery integration that decided the move, not the rate.

For informational purposes only; fees and plan terms change, so check Square’s current pricing and consult a licensed accountant or financial advisor about what fits your business.

Sources