Headquartered in San Francisco, Square Inc. created an app that plugs into iPhones, iPads and Android devices to process credit-card and debit-card transactions and deposits money into individual or business bank accounts.
Twitter co-founder Jack Dorsey developed Square in 2009 as a way for anyone to conduct business anywhere at any time. The product hit the market in 2010 and has been popular among small-business owners, despite charging a 2.75 percent transaction fee per credit card swipe or 3.5 percent for entering a card number manually.
Square Inc. is among several companies offering mobile card-processing devices. Two other popular brands have followed suit, including Intuit, known for QuickBooks and TurboTax, and PayPal, an internationally used service for online payment processing. These companies have released Intuit GoPayment reader and the PayPal Here reader, respectively.
Some local businesses, such as Pateros Creek, elected to use Square above other point-of-sale systems for its efficiency, mobilization, easy-to-use technology and static fees.
“Other POS systems could beat (Square) percent-wise, but we found that they would nickel and dime us in other areas,” Gilbert said. “We would find things in our batch-outs that would come to be way over the Square percent and charge us closer to 7 or 8 percent per transaction.”
A batch-out is a daily report that incorporates all credit-card transactions throughout the day and identifies remaining and sold inventory.
Gilbert said the company pays approximately $400 to $500 in fees to Square per month, which translates to about $14,000 to $18,000 in credit-card sales per month. There is no fee for a cash-only transaction.
“Square is for everyone, and we have seen a wide range of users in various industries adopting Square across the country,´ said Square spokeswoman Catherine Ferdon, “from freelance photographers to hairstylists, restaurants, cafes and even Whole Foods. Individuals can use Square to hold a garage sale, split the bill at dinner or run a business.”
Mobile credit card processing can allow businesses on the go to accept credit cards as payment for customers. This is important since more consumers are expecting businesses and individual sellers to accept credit and debit cards as a form of payment, said Shelley Polansky, vice president for communications at the Better Business Bureau serving Northern Colorado and Wyoming.
Businesses can utilize Square through a variety of devices. The Square Reader is a small attachment that connects to the audio jack of iPhone, Android and iPad devices, and the Square Stand turns an iPad into a fully functional POS system. These devices can operate with the company’s three software designs, including Square Wallet for simple, in-person transactions, Square Market for online purchases and Square Cash for electronic money transfers.
McCabe Callahan founded Mugs Coffee Lounge in 2002 and currently operates two locations in Fort Collins. Prior to Square, Callahan said, he used a variety of POS systems. Square, however, has saved him thousands of dollars, which is significant for any business owner.
“I saved almost $18,000 switching to Square last year,” he said. “Small-ticket items add up quick for credit-card processing.”
Such mobile payment systems eliminate the need for expensive software and equipment, which can save entrepreneurs technical and financial headaches.
“I was a Micros user before,” Callahan said. “They were not my credit-card processor, however, they were my POS. It has saved me over $30,000 a year making the switch. That is another shop assistant manager for me.”
Square has targeted small businesses and entrepreneurs because they need simple, trouble-free sales and payment systems.
“The 23 million small businesses in America account for 54 percent of all U.S. sales,” Ferdon said.
According to Square, more than 15,000 sellers in Boulder, Broomfield, Larimer and Weld counties use the device.
Although Square is gaining popularity among small businesses, there have been 868 complaints filed against the company since 2010, according to a Better Business Bureau report. Of those, 498 are attributed directly to problems with the product or service and 298 pertain to billing or collection issues.
Still, Square retains an “A” rating with the BBB on a scale from A+ to F. One of the reasons for its good standing is its response to and resolution of the complaints, according to the BBB. In the past 12 months, the company has closed 428 complaints.
Despite good standing and product proficiency, users say they’d like to see some improvements. Pateros’ Gilbert said he cannot open multiple tabs under the system. If patrons elect to “start a tab” at the bar, a credit card is given to the bartender and kept behind the bar with a sticky note detailing what was ordered until the customer is ready to pay.
Implementing the ability to open several transactions at once potentially could attract larger retailers and restaurant businesses.
“If they did that, they could reach anyone,” Gilbert said. “It wouldn’t matter how small or big the business is.”