[David Strom's Web Informant] 1 November 2011: A simpler way to process credit cards

David Strom david at strom.com
Mon Nov 1 11:20:18 EDT 2010

Web Informant 1 November 2011: A simpler way to process credit cards

Earlier this year (http://strom.wordpress.com/2010/02/22/creditcard/)
I wrote about ways that you could take credit card payments via the
Internet, using a variety of online banking services. At the time I
signed up with Intuit's Merchant Services, and I was generally happy
with them.

But I don't get a lot of my clients paying me via credit card, and the
fees were beginning to add up. Fortunately, there is a new game in
town (quite literally, as some of the developers are based here in St.
Louis) called Square. It is a great service, easy to use, tremendously
easy to setup, and cheap. There is no fee for account activation,
monthly banking, early termination, or anything other the actual card
processing fee itself. You don't have to buy anything: they send you
the hardware gratis.

Most of the credit card machines that you see in retail stores use a
dial-up phone line and have a small printer that will reel out your
receipt and call the merchant bank to process the transaction. Square
uses the Internet and email, which is appealing. So how does it work?

When you go to Squareup.com, you sign up for an account, and link it
to your bank checking account. Like Intuit and other online merchants,
Square makes a couple of deposits in the next couple of weeks and asks
you to verify the amounts so they can be sure it is really your
account. Then they send you the hardware in the mail in another couple
of weeks.

The hardware is the most curious thing about Square: it a small piece
of white plastic a little bigger than a quarter that attaches to the
earphone jack on your iPhone or Android phone. Yes, your cell phone.
You download the app (indeed, you have to do this first before you
sign up, which is a nice touch) on your phone. The plastic has a
groove it where you can swipe your credit card and initiate the
transaction. The whole process is incredibly simple.

If you have an actual card present, you get charged 15 cents for each
transaction plus 2.75% of the transaction. This is about typical for
many card processors, and is a bit higher than what Intuit charges. If
you don't have a card present, you can still key in the card number
and you will get charged 3.5% of the transaction plus 15 cents.

Square will transfer the funds to your checking account within a few
days; again this is typical of many online solutions. They will hold
anything more than a $1001 for up to 30 days, but you can get this
ceiling raised if you contact their support department. They take any
US-issued credit, debit and gift cards.  When you login to your
account using a Web browser, they have a series of reports to show
your deposits and transactions.

Retweet this: @dstrom SquareUp, a simpler way to process credit cards

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