Square Credit Card Reader Removes Processing Barrier to Entry for New Businesses

by John Cummings on May 14, 2012

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How do you find a good credit card processor?  Get the Square. Finding the best credit card processing company to take credit cards is one of the biggest obstacles and challenges I find new business owners complaining about. Like many other hurdles that I coach startup founders through, this “barrier” is one that I already thought was just a big fat excuse to begin with. Now, I can confirm that anyone who mentions credit card processing as a problem is just looking for excuses not to launch.

On Thursday, I’m going to a convention to launch a new product for one of my website businesses. I already have a credit card account with a merchant that lets me take cards on line and on the phone but I don’t usually swipe cards because I don’t see many customers in person. But at a trade show, like many face to face sales, authorizing a credit card immediately can be the difference between closing a sale and trying to resell at some later date.

So when I looked into what options I had for a handheld credit card swipe reader, I was surprised to find that my own credit card company was recommending Square Credit Card Reader. My first concern, since I need the actual card reader in less than 3 days, was “how do I get my hands on the hardware.” Turns out you can just buy the reader at Target, Radio Shack, Best Buy and other stores for $10.  Yes, $10.  And, you get the $10 when you create your Square account at http://squareup.com

Of course, there is a price to this convenience in the form of a 2.75% processing fee that you pay to Square on all of your charges.  That’s about a point higher than most Visa/MasterCard charges and slightly higher than you would pay to process American Express, but there are several reasons why it’s worth it.

For companies looking to get started, the process of opening a merchant processing account to take credit cards can be just daunting enough of a task to force you to put it off for “one more week.” (over and over again).  But in a start up environment, the most important thing is to just get out there and see if anyone will pay you for your product.  So if you have to pay an extra buck per $100 to experiment with your new business, so what? This is the way to get the rubber to meet the road.

I bought this at Radio Shack near my house and brought it home to set it up while eating dinner. Downloading the app and creating my Square account took under 5 minutes on my iPhone and I was able to take a test transaction immediately.  No contract.  No additional fees. No additional steps. I just plugged the reader into my phone, entered an amount and swiped my card. You can sign with your finger on your phone’s screen, email the receipt (or text it) and the money is deposited into your account the next day.

You can also take credit cards without a swipe for a fee of 3.75%.  That’s a bit hefty but if you have no time to set up a payment system and PayPal won’t do for all of your transaction, Square is a great way to start.  I’m looking forward to paying 2.75% in charges on thousands of dollars in charges at my convention this week and having wiser business people tell me I could have saved 1 percent with some other option. I’m going to smile and just keep swiping cards on my iPhone.

Whether you’re a seasoned merchant or a babysitter, drop $10 on one of these today and start taking money from your customers in 5 minutes.

Cons: I don’t see a way to set up recurring transactions but I’m sure that at 2.75%, Square will have that figured out by the time I publish this article.


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