Ditch Paper Money with Square for iPhone

As technology progresses, the concept of cash, or physical money, seems less and less relevant with each passing day. With the advent of bank cards, and mobile computing, it’s no longer necessary to carry a wallet filled with bills. It’s not uncommon to see cash registers at stores that don’t accept cash. Every system available now is tailored to businesses, making it easier for consumers to make purchases. But the bank card has a major limitation when dealing with money transfers between two individuals; enter Square.

Square is an iPhone application which serves many purposes. It works for small businesses, and it works for individuals. A free application, that comes with a free Square Reader. This reader plugs into the headphone jack on your iPhone, iPod Touch, iPad, and now Andriod device, and requires nothing more than a WiFi or 3G internet connection to work. Empowering anyone and everyone to accept money transfers through the use of credit and debit cards.

In this article, I plan to explain the full gamut of features Square offers, but later I’m going to share a little story that I think perfectly demonstrates why Square is such a powerful concept. As I mentioned above, Square now offers their app on the Andriod platform as well. But in this article we’re only going to be covering the iOS version.

Getting Started With Square

First things first, in order to begin accepting money through square you’ll need an account. You’ll manage your account through their website at Squareup.com but to get going, you’ll need to first create an account from directly within the iOS app. You can search the app store for the term “Square”, or you can find it directly in iTunes via this link. Install the app on your device and fire it up, you’ll immediately notice how clean the UI is, and how they really seemed to focus on making this process as pain free as possible. Click the Create an Account button to begin.

As with any other credit card processing tool, there are fees involved. One thing I’d like to point out is just how reasonable the fees Square applies are. Most merchants charge a fee per transaction, ranging from 2% – 5%, and also require the purchase of expensive card processing equipment, and various other set rate fees based on the the amount you will be using the service. With Square, there is the standard per transaction fee, but after that you pay absolutely nothing. Which is a major selling point for individuals and small businesses. Here are a few other things you’ll need to know.

• Square charges two types of fees depending on the situation.
1. If a physical card is present and can be swiped, Square charges 2.75% + $0.15 per transaction.
2. If no physical card is present, and the information must be manually keyed in, Square charges 3.5% + $0.15 per transaction.
• The Square service is limited to people that have a U.S. bank account. So if you’re living outside of the States, you can’t yet use Square. You will need to provide Square with your account number
• You’ll need to provide them with your mailing address
• You’ll also need to provide them with your Social Security Number. They run a basic credit check, in order to approve you to accept payments. But I’m pretty sure this is also a means to prevent fraudulent activity, linking every Square account to an actual person.
• At the time of writing, Square is employing a $60 max transaction. Again to prevent fraudulent activity. It makes sense, but it’s very limiting for small businesses, that may have to charge more than $60. They’ve made many statements explaining that they are working on other forms of protection that should hopefully remove this cap, or at the very least increase it to a more usable limit.

The Reader

Once your account is set up and approved, Square will send out your free card reader. The initial response seemed to be more than they planned for, with my first reader taking nearly 7 months to arrive. But according to messages on their forums, they’ve caught up with the backlog and readers are being sent out much more promptly now.

When my reader finally came, I couldn’t wait to start using it, and immediately ran into an issue. When Square went live the latest iPhone available was the 3GS. So Square shipped their readers with an extra little chunk of metal at the base, providing more length to the plug. This is because of Apple’s genius idea of making their original iPhone with a longer headphone port than standard, so that you couldn’t use any other headphones without buying an adapter. The problem I had was that the iPhone 4, no longer requires this extra length, and due to the metal frame of the iPhone 4, there was a grounding problem when the metal part of the reader touched the phone’s frame, causing the app to not find the reader. I turned to the forums, and found a little trick one of their users came up with, which involved shrink wrap tubing, cut to size, and then heated to shrink the tubing around the extra metal. It was a jerry rigged solution, but it worked.

They got the issue sorted, and within a week they sent me a new and improved reader, once again, free of charge. The new reader still has the longer plug, but this time is covered by plastic at the top, preventing the metal on metal contact that plagued the first version of the reader. In the process of fixing this, they went ahead and improved the reader as well, making it slimmer, and capable of reading swipes of various speed. Overall the new reader seems much more responsive, and a bit more solid. Oh and they also send a nice sticker along with the device, which you can stick to a window, or counter to tell the world you accept payments with Square.

Using Square

Okay so your account is set up, you’ve got the app installed on your device, and your reader finally came, it’s time to start processing payments. This is where Square really hit a home run, it couldn’t be any easier!

1. Launch the app & login to your account
2. Plug in the reader and wait for the little icon to appear right above the keypad.
3. Type in a dollar amount you’d like to charge.
4. You can add a text description to the transaction, and even take a picture using your camera of an item to go along with the transaction.
5. When you’re ready, swipe the credit card. You’ll notice the reader icon will change to the logo of the credit card and show the last 4 digits of the card number. It will begin authorizing
6. Hand the device over to the customer, so they can sign their name on the screen, and then input their email address to get a receipt sent to them.
7. And finally, smile, because you just processed a credit card payment.

Managing Your Account

Now that you’re up and running, you’ll want to set up your account through the website. Head to Squareup.com and login using your credentials. Here you can see an overview of your account, including any transactions you’ve made or processed. As well as withdraw your money to your bank account, and issue refunds.

What We Like

• The whole process just works.
• The interface is well designed, and super easy to use.
• The receipts are beautiful, providing much more information to the customer than standard receipts everyone’s so used to seeing. Receipts show what was purchased and when, it shows how many times you’ve purchased from this person, and even shows a map of where the transaction took place.
• Low processing fees, and no cost for the app or the reader.
• The iPad version of the app also lets you input preset items. You can enter the item name, description, and take a picture of it. So at the point of sale, there’s no need to fumble around and input everything, just select the item, the quantity, and swipe!

What We Don’t Like

• Initial trouble with the reader, but Square addressed this issue quickly.
• It’s only available to US residents.
• Low cap of $60 per transaction.

Final Thoughts

I admit, most of this article seems to make this seem like it’s only usable by businesses, but that’s definitely not the case. I’m not sure how many of you can relate, but my best friend is a bit sheisty. We go out to eat often, and when the bill comes, he’s always using the excuse that he only has his card, and asks me to pay the bill and he’ll pay me back. Unfortunately for me, my friend loves to exploit my terrible memory, and never actually pays me back! Without telling him I received the device, I invited him out for a few drinks. When the bill came, he began his usual speech, and I promptly cut him off to let him know that I now accept credit cards. I wish I got a picture of his reaction to show you all, because it was priceless. I paid the bill, and immediately rang him up for his portion, swiping his credit card, and having a good laugh from it. So while it does work brilliantly for small businesses, I’m using my Square reader as a way to transfer money when needed, and boy does it feel great!

The app is great for so many different types of businesses. A food truck that frequents my area just began using it, and according to the business owner, it’s increased her overall sales. Mainly because it was too expensive and difficult to accept credit cards before Square, and many of her potential customers didn’t always have cash. It truly is a revolutionary idea, and one that I’m really surprised didn’t happen earlier. Cash is a dying medium, digital money is the future!

Update: No $60 Limit!

As a few commenters have pointed out below, it looks like the $60 limit is gone, making this a near perfect app in our book!