Square is one of the most popular payment processing and point-of-sale (POS) platforms for small businesses. It helps merchants accept payments, manage inventory, create invoices, track sales, and sell both online and in person from a single system.
In this guide, we’ll explain what Square is, how it works, its pricing structure, key features, supported payment methods, and whether it’s the right solution for your business in 2026.
What is Square? A Quick Understanding
Square is a financial technology (fintech) company that provides payment processing, point-of-sale (POS) software, business management tools, and commerce solutions for small and medium-sized businesses. Merchants can use Square to accept card payments, manage inventory, create invoices, schedule appointments, run marketing campaigns, and sell products online or in person.
Square is currently available in the United States, Canada, Australia, Japan, the United Kingdom, the Republic of Ireland, France, and Spain.
Currently, Square offers a free entry-level plan for many of its products. While payment processing fees are one of its primary revenue sources, the company also generates revenue through subscriptions, business banking services, hardware sales, payroll solutions, and financing products.
How does Square work?
Square works by providing businesses with payment processing software, POS tools, and business management features through a single platform. After creating an account, businesses can accept payments online, in person, or through invoices. Square processes the transaction, deposits funds into the merchant’s linked bank account, and provides reporting, inventory management, and customer management tools to help run the business efficiently.
How Does Square Make Money?
Simply put, Square charges a processing fee for every transaction your business makes.
Here’s a simplified overview of Square’s standard payment processing fees:
NOTE: Square’s pricing may vary by country, product, and transaction type. Always check Square’s official pricing page for the latest rates.
- In-person Square charges 2.6% + $0.10 per transaction on taps, dips, or card swipes.
- For eCommerce stores, 2.9% + $0.30 per transaction for purchases made through the eCommerce API.
- When entering a customer’s card details manually, you pay 3.5% + $0.15 per transaction.
- When paying invoices, either in person or online, you pay 3.3% + $0.30 per transaction.
- For ACH Bank Transfers, 1% with a $1 minimum transaction.
Key Features and Services Offered by Square
Square focuses on businesses irrespective of their size or niche, and with its free-to-start model and super-ease of use, businesses choose Square over competitors.
Here’s a detailed look at each of their offerings:
Square POS Services
Point-of-sale (POS) software is a business tool for managing sales, accepting payments, customer relationship management (CRM), employee management, reporting, analytics, and tracking merchandise. It is used by physical and online stores across industries.
On top of that, the app also has dedicated functions and features according to the industry. Square offers such feature-rich POS applications with every free account. The app runs seamlessly on both Android and iOS. The user-friendly application also has an offline mode, making it suitable for in-store sales. Square also offers dedicated POS software for retail, restaurant, and appointment-based businesses.
Payment Processing
Payment processing is Square’s core offering. Businesses can quickly create an account and begin accepting payments without applying for a traditional merchant account.
Setting up a Square payment account is very simple. Instead of creating bank accounts or using third-party services, Square operates using an aggregated merchant account model, allowing businesses to start accepting payments without setting up a dedicated merchant account through a traditional payment processor.
This makes it easier for Square to hold, receive, and disburse funds on your behalf. As a merchant, you can accept payments via various services, including Apple Pay, Google Pay, Gift Cards, and more.
Other payment options include:
- Cash, checks, vouchers, and other tenders
- Credit & debit card payments (Visa, Mastercard, American Express, Discover)
- Digital wallets
- HSA and FSA debit cards
- ACH
- Gift cards
- Buy Now, Pay Later (BNPL) with Afterpay
- Peer-to-peer payments with CashApp
Note: WP EasyPay helps you seamlessly integrate Square with WordPress and accept payments via the above-mentioned options on your WordPress site with just a few clicks.
Square Marketing Tools
Marketing is a vital part of a business strategy. Having precise information about how your customers respond to your business, products, and strategies can enable you to take calculated steps, eventually helping you create products and services your customers love and earn tons of revenue.
Unique marketing services allow you to create email campaigns, track analytics, send promotional messages via SMS or email, and offer numerous email templates.
Square Marketing helps businesses:
- Build customer email lists
- Send promotional campaigns
- Recover inactive customers
- Track campaign performance
- Automate customer engagement
Note: Square has updated its email and text marketing pricing. It’s only available in Square Plus and Square Premium memberships.
For Square Plus:
→ 500 texts free – Additional texts are 3 cents per text.
→ Unlimited email marketing campaigns
For Square Premium:
→ 2,500 texts are free – Additional texts are 1.5 cents per text.
→ Unlimited email marketing campaigns
Square Appointments
Square also offers a dedicated service for service-based businesses called Square Appointments. This application includes a built-in POS system and offers everything you need to run a small service-based business.
The service has a generous free plan and flat-rate transaction fees for paid plans. In both (free and paid) plans, you get automated reminders. It is rated 4.8/5 by Forbes Advisor, and many small businesses rely entirely on Square Appointments to run their operations.
Lastly, looking at the downsides, their support team receives mixed signals; critics often complain about the need for rapid assistance and bash the app for taking extended periods to solve basic problems.
Square Invoices
Freelancers, online business owners, small businesses, and every entity or organization that deals online require a professional way to request payments. Square Invoices was created for this sole purpose.
The app offers a straightforward way to generate personal or business invoices, send them directly to the payer via email or SMS, and receive payments by credit or debit card or via direct bank transfer.
Square Payroll
As the name suggests, this app simplifies payroll processing for full-time, part-time, and contract-based employees. It also handles the tax filing and reporting. You can manually enter working hours or import time cards to accurately accumulate an employee’s monthly or weekly income.
If combined with Square Shifts, an employee shift management solution, you can also automatically calculate the commissions per sale by employees, along with complete analytics about an individual’s working time.
Once you run Square Payroll, employees will receive an email with a link to view their pay slips.
Square Capital
As stated earlier, Square assists small businesses with a wide range of needs. For businesses with tight budgets trying to scale up, Square Capital offers easily accessible loans to eligible businesses. The process is simple, and you can get financial aid without filling out extensive forms.
Currently, loans are offered by invitation. Simply put, Square monitors your processing activity and reaches out to you via email with your eligibility status and, if possible, a tailored plan. You don’t have to worry about paying back because that is automatically deducted from your sales and adjusted to your cash flow.
Remember what we said before? Square only makes money when you do. This image from the service’s page encapsulates the idea well.
Pros and Cons of Square
Like any business platform, Square has its strengths and limitations. It’s important to consider both the benefits and potential drawbacks before making a decision.
Pros of Square
- Free to Get Started: Create an account and access core business tools without upfront costs.
- Easy Setup and Use: User-friendly interface with minimal learning curve, making it ideal for beginners.
- All-in-One Business Platform: Combines payment processing, POS, invoicing, marketing, payroll, and more under one ecosystem.
- Multiple Payment Options: Supports credit cards, digital wallets, ACH payments, BNPL services, gift cards, and other popular payment methods.
- Industry-Specific Solutions: Offer dedicated tools for retail stores, restaurants, and service-based businesses.
- Omnichannel Selling: Manage online and in-person sales from a centralized dashboard.
- Transparent Pricing: Square offers straightforward transaction-based pricing with no long-term contracts for most services, making costs easier to predict.
- Fast Onboarding: Businesses can create an account, complete verification, and begin accepting payments quickly without extensive setup requirements.
- Extensive App Ecosystem: Square integrates with numerous third-party applications and business tools, allowing merchants to extend functionality as their business grows.
- Integrated Hardware Options: Businesses can choose from a range of hardware solutions, including Square Reader, Square Terminal, and Square Register, to support different selling environments.
Cons of Square
- Customer Support Experience Varies: While many users report positive experiences, others have cited delays in resolving complex issues.
- Account Reviews and Holds: Like most payment providers, Square may place temporary holds on funds or review accounts that trigger risk or fraud concerns.
- Advanced Features Often Require Paid Plans: While the platform is free to start, premium tools such as advanced marketing, payroll, and specialized business features come at an additional cost.
- Limited Availability by Country: Square is only available in selected countries, which may restrict access for international businesses.
- Account Reviews and Holds: Like many payment processors, Square may temporarily review accounts or hold funds when unusual activity or elevated risk is detected.
- Custom Pricing May Be Required for Large Enterprises: Businesses with complex payment requirements or very high transaction volumes may need customized pricing and solutions beyond Square’s standard plans.
Who Should Use Square?
Square is ideal for:
- Small businesses
- Retail stores
- Restaurants
- Freelancers
- Service providers
- Appointment-based businesses
- eCommerce stores
- Nonprofit organizations
It may not be the best fit for:
- High-risk industries
- Large enterprises requiring a custom payment infrastructure
The Bottom Line: Is Square Worth It?
For small businesses looking for an all-in-one payment processing and business management platform, Square remains one of the strongest options available in 2026.
Its combination of payment processing, POS software, invoicing, online selling, payroll, and customer management tools makes it especially appealing for startups and growing businesses.
If you’re running a WordPress website and want to accept Square payments without coding, WP EasyPay makes it easy to connect your Square account and start accepting payments directly from your website.
Frequently Asked Questions
What is Square used for?
Square is usually used by small businesses for a variety of purposes. Square has a popular payment processing platform with cheap transactional fees, POS services, inventory and employee management tools, marketing tools, and much more. Businesses use it according to their preferred requirements.
Is Square free to use?
Creating a Square account is free and offers multiple useful services. However, some services can cost money, depending on the service. Some services require an upfront fee, and others charge you upon transaction or sale. For instance, the processing rate is 2.6% + $0.10 for every tapped, dipped, and swiped payment.
Does Square work with contactless payments like Apple Pay and Google Pay?
Definitely! Square allows contactless payments for Apple Pay and Google Pay. Enable these services through Square’s POS app using a compatible Square reader. This should allow users to tap their phone to pay with their preferred mobile wallet.
Does Square offer any financing options for businesses?
Yes! Square offers multiple options for businesses, including loans, merchant cash advances, and buy now, pay later (BNPL) options. BNPL services allow store owners to offer interest-free (if paid on time) installment options to customers who are not comfortable paying higher prices.
Moreover, Square Capital provides financing options to eligible businesses. Repayment terms and fees vary based on the financing offer and merchant eligibility. The return policies are easy as well. The payback is deducted automatically from your sales.
Does Square require a merchant account?
No. Square uses an aggregated merchant account model, which means businesses can start accepting payments without applying for a traditional merchant account. This simplifies the setup process and allows merchants to begin processing payments much faster than many traditional payment providers.
What businesses use Square?
Square is widely used by small businesses, retail stores, restaurants, coffee shops, freelancers, appointment-based businesses, healthcare providers, nonprofit organizations, and e-commerce stores. Its flexible ecosystem makes it suitable for both online and in-person selling.
Is Square safe for online payments?
Yes. Square uses encryption, fraud monitoring tools, secure payment processing infrastructure, and PCI compliance measures to help protect customer payment data. These security features make Square a trusted option for businesses accepting online and in-person payments.
Can I use Square with WordPress?
Yes. You can integrate Square with WordPress using WP EasyPay. The plugin allows you to connect your Square account, create payment forms, accept one-time or recurring payments, and process transactions directly through the Square payment gateway without requiring custom development.
