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Square (financial services)

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This article is about the financial services platform. For its owner that was formerly known as Square, Inc., see Block, Inc.
Square
Square reader and POS register
Type of site
Financial services platform
Available inEnglish, Spanish, French, Japanese
Country of originU.S.
Area served
List of countries
  • U.S.
  • Australia
  • Canada
  • France
  • Japan
  • Republic of Ireland
  • Spain
  • U.K.
Created byJack Dorsey, Jim McKelvey
Industry
Products
List of products
  • Square Point of Sale
  • Square for Restaurants
  • Square for Retail
  • Square Online
  • Square for Beauty Salons
  • Square Payments
  • Square Invoices
  • Square Appointments
  • Square CRM
  • Square Subscriptions
  • Square Shifts
  • Square Loans
Services
List of services
  • Card payment processing
  • E-commerce management
  • Customer bookings
  • Inventory management
  • Payroll processing
  • Shift scheduling
  • Small business banking
  • Small business financing
RevenueIncrease $7.03 billion (2023)
ParentBlock, Inc.
URLsquareup.com
Users4 million sellers
Launched2009; 15 years ago (2009)
Current statusActive

Square is a point-of-sale system for businesses with physical or online stores.[1][2] Launched in 2009 by Block, Inc.,[3] it enables sellers to accept card payments and manage various business operations. As of 2023, Square leads the U.S. point-of-sale systems market,[4][5][6] serving 4 million sellers and processing $210bn annually.[7][8]

Square is cloud-based and offers both physical devices, which read payment card information, and software.[9][1] It offers financial services and includes features designed to support business operations.[10][11] Square provides e-Commerce and inventory capabilities,[12][2] customer appointments,[13] payroll processing, shift scheduling, and access to banking and business loans.[14][15] As of 2024, Square is available in the U.S., Australia, Canada, France, Japan, Republic of Ireland, Spain and the U.K.[16]

History

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2009–2011: Launch, early years

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The inspiration for Square occurred to Jack Dorsey in 2009, when his friend Jim McKelvey was unable to complete a $2,000 sale of his glass faucets and fittings because he could not accept credit cards.[17][18] In December 2009, Dorsey announced the launch of Square, which allowed merchants and individuals to accept secure payment from credit and other cards using a mobile phone and a "card-reading dongle".[3]

At the TechCrunch Disrupt conference in May 2011, Square announced the release of two apps, Square Card Case (later rebranded Square Wallet)[19] and Square Register. Square Wallet, before it was removed from the Apple App Store and Google Play Store in 2014, allowed customers to set up a tab and pay for their order by providing their name (or a barcode) using a stored credit, debit, or gift card.

2012–2016: Feature additions

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In April 2012, rival payment company Verifone claimed that the Square system was insecure and that a reasonably skilled programmer could write a replacement app that could use the Square device to skim a credit card and return its details, because of the lack of encryption. VeriFone posted a demonstration video and sample skimming app to its web site.[20] Dorsey called VeriFone's claims "neither fair nor accurate", noting that all card data can be compromised by visually examining the card and that even if an attack succeeded, card issuers offered fraud protection.[21] Square later introduced strong encryption on its devices.[22] In August 2012, Starbucks announced it would use Square to process transactions with customers who pay via debit or credit card.[23] In December 2012, the service introduced virtual gift cards.[24]

In May 2013, Block announced that its Square service was available in Japan after agreeing to a partnership with Sumitomo Mitsui Card Corporation. In May 2013, Square announced it would no longer support firearms-related transactions.[25] In June 2013, the firm launched Square Market, which allows sellers to create a free online storefront with online payment processing functionality.[26] Square Stand was introduced the same month.[27]

In February 2014, Whole Foods Market announced it would use Square Register at select stores' sandwich counters, pizzerias and coffee, juice, wine and beer bars.[28] In March 2014, the firm announced it would allow sellers to accept bitcoin on their own storefronts through Square Market. The seller takes no risk of bitcoin value fluctuations.[29] In July 2014 the firm announced a card reader that would accept chip cards and contactless cards.[30] Later in the year, Square added physical gift cards as a feature.[31] Square Appointments, an online booking tool, was launched the same year.[32] In December 2014, The Wall Street Journal and CNN reported that Starbucks had stopped accepting payments from Square Wallet, and that the partnership between Starbucks and Square had been a money loser for Square and was nearing an end.[33][34]

In June 2015, Apple announced Square would release a reader device capable of accepting Apple Pay and other contactless payments.[35] In the same year, Square launched a reader for Android and iOS that accepts contactless and chip card payments.[36] Additionally, the firm launched Square Payroll for small business owners to process payroll.[37]

2017–2021: Banking approval

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In February 2017, Bloomberg reported that Square was growing the number of larger merchants on its platform by offering additional services such as loans through Square Capital, food delivery through "Caviar" and tools for managing inventory and analyzing sales.[38] In October 2017, Square Register, was announced for small to medium-sized businesses.[39] Square launched in the UK in 2017.[40]

In August 2018, Square released a version of its magstripe reader with a Lightning connector, allowing it to be used on iPhones without a headphone jack.[41] In October 2018, the company introduced its Terminal product.[42] That Square began allowing merchants to develop custom interfaces for the platform, via an application programming interface.[43]

Square Financial Services was officially launched as an industrial loan company in March 2021. This has allowed it to offer business loans to sellers who use Square's services.[44][45][46][47]

2022–present: Leadership change

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In February 2023, Block reported that Square served 4 million merchant clients over January-December 2022.[7] According to the company, its "larger business customers", identified by Square as generating more than $500,000 in annualized gross payment volume (GPV), made up 40% of its seller base in the third quarter of 2022. Sellers generating less than $125,000 in annualized GPV were said to be responsible for a slightly larger share of Square's 2022 mix than its mid-sized sellers (generating between $125,000 and $500,000 in annualized GPV).[48]

On September 7-8, 2023, Square experienced a 14-hour long outage that left businesses unable to process customers' payments. The service recommended vendors switch to an offline mode to mitigate the issue, where the payments get processed once the network connectivity is re-established but were met with mixed results. Several days later, Square it was determined that the disruption was caused due to a misconfiguration in the Domain Naming System (DNS).[49][50] Later in the month, Block said in a regulatory filing that the CEO of its Square business, Alyssa Henry, was set to leave the company in October 2023, and that Jack Dorsey would take on an additional role of "Square Head".[51]

According to CNN in April 2024, Square was available in the United States, Australia, Canada, France, Japan, Republic of Ireland, Spain, and the United Kingdom.[16] In February 2024, Block reported that its Square segment processed payments worth US$209.6 billion, while generating $7.03 billion in revenue and $3.13 billion in gross profit, for the year 2023.[8] In May 2024, Square was found to be the market leader in point-of-sale systems for small businesses.[5][6]

Devices

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Square Reader for magstripe

[edit]
In 2010, the Square device was able to communicate with the Square app through the phone's audio jack.

The Square Reader was the firm's first product. It accepts credit card payments by connecting to a mobile device's audio jack. The original version consisted of a read head directly wired to a 3.5 mm audio jack, through which unencrypted, analog card information was fed to smartphones for amplification and digitization.[52] Square Reader also supports Apple Lightning on post-2018 products.

Neither card numbers, nor magnetic stripe data, nor security codes are stored on Square devices.[22] Square Reader is Payment Card Industry Data Security Standard (PCI) compliant and Verisign certified.[22]

Square provides its magnetic stripe card readers to sellers without charge.[53] Square charges $99 for Square Stand and $59 for its chip-based Square Reader.[54] The Square app is freely downloadable from the Apple App Store and the Google Play Store.

Square charges a fee of 2.6% plus $0.10 on every electronically scanned credit card transaction[55] or 3.50% plus $0.15 per manually-entered transaction. No monthly or set-up fees are charged. The firm claims that its costs are, on average, lower than the costs charged by conventional credit card processors.[56] Swiped payments are deposited directly into a seller's bank account within 1-2 business days. In some instances, Square withholds payments pending issues related to chargebacks.[57]

Square no longer returns fees for refunds or cancelled transitions (as of 4-2023)

Square Reader for chip and contactless

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Square Reader's bluetooth-connected reader allows Android and iOS devices to accept contactless and chip card payments.[36]

Square Terminal

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Square Terminal features a display, prints receipts, and accepts chip, swipe, and contactless payments.[42] Unlike the basic card reader, it does not require a phone or tablet. It is more affordable than Square Register. It was designed to replace the older credit card terminals encountered in many stores. Square argued that these terminals often come with onerous contracts, and are not a positive experience for consumers. Terminal works with WiFi and is powered by an all-day battery, so it can be carried around the store and handed to customers.[58]

Square Stand

[edit]
Square Stand at a coffee shop turned around for the customer to choose a tipping option

Square Stand turns the Apple iPad into a more complete point-of-sale system.[27]

Square Register

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Square Register is a standalone point-of-sale system.[39] It consists of a merchant tablet and a customer tablet, with a built-in swipe, chip, and contactless reader.[59]

Services

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Square provides sellers with e-Commerce and inventory capabilities,[12][2] and also allows sellers to manage customer appointments.[13]

Square Payroll allows small business owners to process payroll.[60] The product is available in the United States. It automatically handles withholding, payments, and tax filings.[37] As of 2015, Square Payroll charges sellers a monthly fee of $20 plus $5 for each employee paid.[61]

Square offers virtual and physical gift cards. A QR code is scanned to use the funds.[24][31]

Square Market enables businesses to accept online payments.[62]

Square Capital offers banking services and loan financing to merchants using Square.[14][15][63]

An online booking tool allows small businesses to accept appointments on their website,[32] but does not accept restaurant reservations.[64]

Merchants can develop custom interfaces for the platform, via an application programming interface.[43]

Firearms

[edit]

Square does not support firearms-related transactions. The company denied that this move was related to the debate over gun control in the United States.[25]

Controversies

[edit]

In June 2019, The Wall Street Journal reported that Square inadvertently sent transaction receipts to the wrong email address, leading to adverse consequences such as outing one woman's impending divorce.[65]

A Canadian food truck which sold Cuban coffee faced a loss of C$14,000 because transactions were processed through a Canadian subsidiary of Chase Manhattan Bank, contracted by Square to handle its Canadian accounts. As the parent company is governed by US laws, the bank would have been subject with charges of trafficking in prohibited Cuban goods if it had processed the fund transactions.[66]

Square marks certain merchants as high risk, a designation that can come suddenly and without warning. Merchants classified as risky can have 20-30% of their funds withheld to handle chargebacks and disputes. Square received criticism from affected merchants due to the opaque nature of the process, its suddenness, and difficulties in appealing the designation.[67][68]

In October of 2024, Nathaniel Gutierrez and Josiah Medina, two McDonald’s employees used the Square app to commit fraud.[69]

See also

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References

[edit]
  1. ^ a b Ponce, Gina; Campbell, Sierra (2024-10-04). "Toast vs. Square: Differences, Pros and Cons in 2024". USA TODAY. Retrieved 2024-10-22.
  2. ^ a b c Uher, Amanda; Ballard, Danielle; Cother, Jason (2024-10-03). "Square vs. Shopify: Which is best in 2024?". CNN. Retrieved 2024-10-22.
  3. ^ a b Buskirk, Eliot Van (2009-12-01). "Twitter Creator Launches 'Square' -- Like Smartphone Paypal for Credit Cards". Wired. ISSN 1059-1028. Retrieved 2024-09-21.
  4. ^ Morrison, Sara (October 7, 2022). "Everyone wants a tip now. Do you have to give them one?". Vox. Retrieved October 30, 2023.
  5. ^ a b Rivera, David (2024-04-02). "21 Point-of-Sale Statistics to Know in 2024". Fit Small Business. Retrieved 2024-09-16.
  6. ^ a b Elliott, Jessica (2024-05-27). "What Is a Point-of-Sale (POS) System?". www.uschamber.com. Retrieved 2024-09-21.
  7. ^ a b Mullen, Caitlin (2023-04-18). "Square rolls out new features for merchants". Retail Dive. Retrieved 2024-02-07.
  8. ^ a b Block, Inc. (2024-02-22). "Form 10-K for the fiscal year ended December 31, 2023". www.sec.gov. Retrieved 2024-02-23.
  9. ^ Kharpal, Arjun (2017-03-28). "Square launches in UK, CEO Jack Dorsey says on the lookout for AI firms to acquire". CNBC. Retrieved 2024-10-22.
  10. ^ Morgenson, Gretchen (2024-05-01). "Prosecutors are examining financial transactions at Block, owner of Cash App and Square". NBC News. Retrieved 2024-10-19.
  11. ^ O’Shea, Dan (2017-02-08). "Square rolls out retailer-focused POS platform, toolbox". Retail Dive. Retrieved 2024-10-19.
  12. ^ a b McAlpine, Cat; Campbell, Sierra (2024-10-04). "Square vs. Squarespace: Differences, Pros and Cons in 2024". USA TODAY. Retrieved 2024-10-22.
  13. ^ a b Clague, Casey; Ballard, Danielle (2024-07-30). "Square pricing in 2024". CNN. Retrieved 2024-10-22.
  14. ^ a b Orland, Kevin (2022-04-28). "Dorsey's Block Takes Swipe at Canada Banks With Loans Service". Bloomberg. Retrieved 2024-10-15.
  15. ^ a b Irrera, Anna (2021-07-21). "Square launches small business banking". Reuters. Retrieved 2024-10-16.
  16. ^ a b Davies, Rhiân; McHugh, Kevin; Coates, Kristen (2024-04-29). "Stripe vs. Square: Which is best in 2024?". CNN. Retrieved 2024-11-09.
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  19. ^ Harrison Weber (June 13, 2013). "Square Wallet for iPhone gets redesigned with a visually-driven UI and streamlined payments". The Next Web. Retrieved March 11, 2014.
  20. ^ Hsu, Tiffany (March 9, 2011). "Square's mobile credit card reader easily hacked, says VeriFone". Los Angeles Times. Retrieved March 11, 2011.
  21. ^ Olivarez-Giles, Nathan (March 10, 2011). "Square answers VeriFone's accusations on security of mobile credit card reader". Los Angeles Times. Retrieved March 11, 2011.
  22. ^ a b c "Square - Security". Squareup.com. Retrieved September 19, 2011.
  23. ^ Miller, Claire Cain (2012-08-08). "Starbucks and Square to Team Up". The New York Times. ISSN 0362-4331. Retrieved 2020-05-21.
  24. ^ a b Thomas, Owen (December 10, 2012). "Square Now Offers Gift Cards, Thrusting It Deeper Into The Money Business". Business Insider. Retrieved May 8, 2018.
  25. ^ a b Sperry, Todd (May 13, 2013). "Mobile-payment service Square blocks gun sales". CNN. Retrieved December 5, 2013.
  26. ^ "Square Market launches, provides easy online storefronts for small businesses". Engadget. 26 June 2013. Retrieved 2020-05-21.
  27. ^ a b Terdiman, Daniel. “At Square, an obsession with the 'magic' of hardware design”, CNET, June 13, 2013.
  28. ^ "Whole Foods signs on to use Square". Washington Post. ISSN 0190-8286. Retrieved 2020-05-21.
  29. ^ Protalinski, Emil March 31, 2014. TheNextWeb "Square now lets sellers accept Bitcoin on their own storefronts"
  30. ^ Marcus Wohlsen (July 30, 2014). "Square Bets Big on Next-Gen Credit Card Tech". Wired.
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  37. ^ a b "Square feels your pain, debuts payroll service". San Francisco Business Times. June 30, 2015.
  38. ^ Wang, Selina (2017-02-22). "Square Tops Sales Estimates on Growth of Bigger Merchants". Bloomberg.com. Retrieved 2024-10-21.
  39. ^ a b Yurieff, Kaya (30 October 2017). "Square unveils cash register of the future". CNNMoney. Retrieved 31 October 2017.
  40. ^ David Grossman (2 January 2018). "Bank branch closures: How one town has coped". BBC News. Retrieved 2 January 2018.
  41. ^ Fingas, Jon (29 August 2018). "Square finally has a Lightning card reader for newer iPhones". Engadget. Retrieved 29 August 2018.
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  43. ^ a b Kastrenakes, Jacob (2 August 2018). "Square checkout systems can now have custom interfaces". The Verge. Vox Media. Retrieved 5 August 2018.
  44. ^ Beyoud, Lydia (2020-03-19). "Square, Nelnet Get OK to Form Banks from State, U.S. Regulators". Bloomberg Law. Retrieved 2024-10-23.
  45. ^ Rudegeair, Peter (2020-03-18). "Square Gets Green Light to Open a Bank". The Wall Street Journal. Retrieved 2024-10-23.
  46. ^ Duffy, Clare (2021-03-02). "Watch out, PayPal. Square just launched its own bank | CNN Business". CNN. Retrieved 2024-10-23.
  47. ^ "FDIC Approves the Deposit Insurance Application for Square Financial Services, Inc., Salt Lake City, Utah | FDIC". www.fdic.gov. Retrieved 2024-10-22.
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  49. ^ Jay, Marley (8 September 2023). "Square outage costs small-business owners thousands in lost revenue". NBC News.
  50. ^ Williams, Chris (11 September 2023). "Square blames last week's outage on DNS screw-up". The Register.
  51. ^ Thorbecke, Catherine (2023-09-18). "Square CEO Alyssa Henry is stepping down, and Jack Dorsey will take over for now | CNN Business". CNN. Retrieved 2024-10-21.
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  53. ^ "Free Credit Card Reader". Square. Block, Inc. Retrieved July 25, 2012.
  54. ^ "Square Reader for contactless and chip (2nd generation)". Square Reader for contactless and chip (2nd generation). Block, Inc. Retrieved January 9, 2024.
  55. ^ "Square's Fees".
  56. ^ "Square - Pricing". Square. Block, Inc. Retrieved September 19, 2011.
  57. ^ Fast deposits intoyour bank account. (June 25, 2013). "Square Merchant Agreement". Square. Block, Inc. Retrieved December 5, 2013.
  58. ^ "Square unveils the Square Terminal, designed to replace old keypad credit card machines". TechCrunch. 2018-10-18. Retrieved 2022-08-18.
  59. ^ Liao, Shannon (30 October 2017). "Square made its own payment register". The Verge. Vox Media. Retrieved 31 October 2017.
  60. ^ O'Reilly, Dennis (2023-05-25). "Square Payroll Software Review and Prices". U.S. News & World Report. Retrieved 2023-02-05.
  61. ^ Spector, Nicole (2 July 2015). "Square Launches Payroll, Expanding Suite of Services for Small Businesses". Street Fight. Retrieved July 2, 2015.
  62. ^ Malik, Om. "Square Market is attracting sellers that have never taken a Reader payment". GigaOm.
  63. ^ "Square's cash advance: Don't call it a loan". CNN. May 28, 2014. Retrieved May 28, 2014.
  64. ^ Baldwin, Roberto (August 11, 2014). "Square introduces Appointments online scheduling system for small businesses". The Next Web. Retrieved May 8, 2018.
  65. ^ Rudegeair, Peter. "Square Sends Millions of Digital Receipts, Sometimes to the Wrong Person". The Wall Street Journal.
  66. ^ Rubin, Josh (2 October 2019). "T.O. food truck caught up in Trump's battle with Cuba". Toronto Star. Retrieved 3 October 2019.
  67. ^ Keyes, Daniel. "Square is under fire for withholding funds from merchants". Business Insider.
  68. ^ Ray, Siladitya. "Square Is Withholding Up To 30% Of Payments Made To Some Merchants". Forbes.
  69. ^ https://www.fox21news.com/news/two-arrested-in-scheme-to-fraudulently-charge-mcdonalds-customers
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