DirectPayNet

Category: SQUARE

  • Square vs PayPal: Which Payment Solution Is Better?

    Square vs PayPal: Which Payment Solution Is Better?

    Choosing the right payment processor is a decision that affects any business’s bottom line. Two of the most popular options—Square and PayPal—offer free accounts, easy setup, and a slew of features for in-person and online sales.

    But how do they compare? Which is best for your business? And what should you consider as you scale?

    OPEN A DEDICATED MERCHANT ACCOUNT

    Pros of Square

    1. Low-Cost Entry and Transparent Pricing

    Square is known for its affordable, flat-rate pricing model. There are no monthly fees for basic payment processing—you only pay when you take a payment. This makes it ideal for startups and small businesses that want to avoid upfront costs and complicated contracts.

    2. All-in-One Business Tools

    Square offers a full suite of business management tools beyond payment processing. These include inventory management, customer directories, sales reporting, invoicing, and even appointment scheduling. For brick-and-mortar businesses, Square’s POS (point of sale) system is intuitive and easy to use.

    3. Versatile Hardware Options

    Square provides a range of hardware, from simple card readers for mobile devices to fully-fledged terminals and register setups. This flexibility allows businesses of all sizes and types—food trucks, pop-up shops, and traditional retail stores—to accept payments anywhere.

    4. No Long-Term Contracts

    You can upgrade, downgrade, or cancel your Square account at any time without penalties. This flexibility is especially valuable for seasonal businesses or those testing new markets.

    5. Offline Mode

    Square allows you to complete sales even without an internet connection, syncing transactions as soon as you’re back online.

    *NOTE: Warn your customers if transactions will go through at a later date or time to avoid disputes.

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    Cons of Square

    1. Not Ideal for All Industries

    Square’s POS is less specialized than some competitors for certain industries, such as restaurants or high-risk sectors. Businesses in high-risk categories may face account holds or terminations.

    2. Flat-Rate Pricing Can Be Expensive at Scale

    While Square’s flat-rate pricing is simple, it can become costly for businesses with large transaction volumes or high average ticket sizes. Some competitors offer lower interchange-plus rates for high-volume merchants.

    3. Account Stability Issues

    Some users report sudden account freezes or holds, often related to Square’s fraud detection algorithms. This can disrupt cash flow and operations.

    4. Limited Support

    Customer support is not always available 24/7, and some users have reported difficulties reaching support during off-hours.

    AVOID ACCOUNT FREEZES OR TERMINATION

    Pros of PayPal

    1. Security and Protection

    PayPal is renowned for its security measures, including encryption, fraud detection, and both buyer and seller protection programs. This helps reduce the risk of chargebacks and unauthorized transactions.

    2. Convenience and Ease of Use

    Setting up a PayPal account is quick and easy. You don’t need to share your credit card details with every merchant, and funds can be sent instantly to other PayPal users.

    3. Global Reach

    PayPal is available in over 200 countries and supports multiple currencies, making it a strong choice for businesses with international customers.

    *NOTE: Display and charge customers in their local currency to avoid declines and disputes.

    4. Integration and Merchant Perks

    PayPal is easy to integrate with most e-commerce platforms and POS systems. The PayPal logo adds a layer of recognition for customers, which can increase conversion rates.

    5. Recurring Payments

    PayPal supports recurring billing, making it a good choice for subscription-based businesses or those with regular invoicing needs.

    BETTER RATES FOR INTERNATIONAL SALES

    Cons of PayPal

    1. Transaction Fees

    PayPal’s fees can be steep, especially for businesses with low margins. Fees are charged on every transaction, and international payments can be particularly costly due to currency conversion charges.

    2. Account Holds and Freezes

    PayPal has a history of placing holds or freezes on accounts suspected of suspicious activity. This can disrupt cash flow and operations, especially for new or high-risk businesses.

    3. Limited Crypto Options

    While PayPal allows users to buy and sell cryptocurrency, you cannot transfer crypto in or out of your wallet. This limits flexibility for crypto enthusiasts.

    4. Customer Service Challenges

    Some users report difficulties contacting PayPal’s customer support team and receiving prompt, helpful responses.

    DON’T LET PAYPAL DESTROY YOUR BUSINESS

    How Square and PayPal Are Similar

    – Free Accounts: Both offer “free” merchant accounts with no monthly fees for basic payment processing.

    • Pay-as-You-Go: Neither requires long-term contracts or cancellation fees.
    • Easy Setup: Both platforms are designed for quick onboarding and minimal technical expertise.
    • Mobile and Online Payments: Both support in-person, online, and mobile payments.
    • Business Tools: Both provide invoicing, reporting, and basic business management features.

    OPEN A BACKUP PAYMENT PROCESSOR

    How Square and PayPal Differ

    Comparison chart of Square and PayPal payment solutions

    BETTER RATES DESIGN FOR YOUR BUSINESS

    Pricing Comparison

    Square

    • In-Person Transactions: 2.6% + $0.10 per transaction (varies slightly by region).
    • Online Transactions: 2.9% + $0.30 per transaction.
    • Keyed-In Transactions: 3.5% + $0.15 per transaction.
    • No Monthly Fees for Basic Plan: Free plan available; paid plans start at $35/month for advanced features.

    PayPal

    • In-Person Transactions (US): 2.7% per swipe for mobile/in-store payments.
    • Online Transactions (US): 3.49% + $0.49 per transaction.
    • Keyed-In Transactions (US): 3.5% + $0.15 per transaction.
    • International Fees: Currency conversion fee of up to 4.5%.
    • No Monthly Fees for Basic Plan: Free plan available; additional fees for advanced features.

    ONLY PAY FOR SERVICES YOU NEED

    Why a Dedicated Merchant Account Is Better for Scaling

    While Square and PayPal are excellent for startups and small businesses, they have limitations as your business grows.

    1. Lower Fees at Scale

    Dedicated merchant accounts often offer interchange-plus pricing, which can be significantly cheaper than the flat rates charged by Square and PayPal—especially for high-volume or high-ticket businesses.

    2. Greater Control and Stability

    With a dedicated merchant account, you have a direct relationship with an acquiring bank. This reduces the risk of account holds or freezes and gives you more control over your payment processing.

    3. Customization and Scalability

    Dedicated merchant accounts can be tailored to your business needs, including custom reporting, advanced security features, and support for high transaction volumes.

    4. Improved Cash Flow

    Many dedicated merchant accounts offer faster access to funds and more predictable settlement times, which is critical for growing businesses.

    OPEN YOUR NEW MERCHANT ACCOUNT

    When to Use Square or PayPal

    Square is best for:

    • Brick-and-mortar businesses (retail, food service, appointments)
    • Startups and small businesses that need affordable, easy-to-use tools
    • Businesses that want all-in-one POS and business management

    PayPal is best for:

    • Online businesses with global customers
    • Businesses that need recurring billing or subscription management
    • Merchants who want the trust and recognition of the PayPal brand

    USE SQUARE OR PAYPAL SECURELY

    Why Start with Square or PayPal?

    Despite the advantages of dedicated merchant accounts, Square and PayPal are ideal for gathering a few months of processing history. This history is often required by banks and merchant account providers when you apply for a dedicated account. Starting with Square or PayPal allows you to:

    • Test your business model with minimal risk and cost
    • Build a track record of sales and chargebacks
    • Access business tools that help you manage inventory, invoicing, and reporting

    Once you have a solid processing history and your business is growing, you can use this data to negotiate better rates and terms with a dedicated merchant account provider.

    NEGOTIATE YOUR RATES TODAY

    Conclusion, Which Is Better?

    Square and PayPal are both user-friendly payment processors that make it easy for small businesses to accept payments and manage sales. Square excels for in-person and omnichannel businesses, while PayPal is a top choice for online and international sales.

    However, as your business scales, the flat-rate pricing and account limitations of Square and PayPal can become costly and restrictive. Transitioning to a dedicated merchant account offers lower fees, greater stability, and more customization—making it the best long-term solution for growing businesses.

    For now, starting with Square or PayPal is a smart move. Use these platforms to build your processing history, prove your business model, and access essential business tools. When you’re ready to scale, you’ll be in a strong position to negotiate the best terms with a dedicated merchant account provider.

    APPLY FOR A DEDICATED MERCHANT ACCOUNT

  • 5 Fraud Prevention Methods for Businesses Using Square Payments

    5 Fraud Prevention Methods for Businesses Using Square Payments

    Fraud hits businesses hard every year, costing companies billions in lost revenue and damaged reputations.

    If you use Square Payments, I’ve got you covered. You need a solid fraud prevention strategy that protects your business without losing sales. Let’s dive into the top five proven methods that will help you build a fortress around your revenue.

    APPLY FOR A REAL MERCHANT ACCOUNT

    Square-Specific Fraud Prevention Tools

    Square gives you powerful built-in tools to fight fraud before it happens. These features work behind the scenes to protect your business from suspicious transactions—and they’re easier to use than you might think.

    Use Square’s Risk Manager and Fraud Analysis Tools

    Square’s fraud analysis system automatically evaluates every transaction for potential red flags. Here’s what it does for you:

    • Risk scoring: The platform assigns each order a risk level—low, medium, or high—based on multiple fraud indicators
    • Visual warnings: You’ll see warning symbols next to medium and high-risk orders on your orders page
    • Investigation time: This gives you the chance to dig deeper before fulfilling suspicious orders

    The Risk Manager tool takes this protection even further. You can set up automated rules to block suspicious orders or require additional verification.

    What makes this really powerful? Square combines machine learning, human expertise, and their massive transaction database to spot emerging fraud strategies. Your business benefits from patterns Square discovers across their entire network of millions of merchants.

    Enable 3D Secure Authentication and Smart Payment Limits

    Square automatically enables 3D Secure authentication, which adds an extra verification layer that fraudsters hate. Here’s how it works:

    • Customer redirect: When customers make purchases, the system sends them to their card issuer’s domain for identity verification
    • Liability shift: This process moves responsibility for fraudulent chargebacks from you to the card issuer
    • Seamless experience: Legitimate customers barely notice the extra step

    Square also implements smart payment limits as a protective measure. While these might seem restrictive at first, they actually protect your business from excessive chargebacks that could damage your merchant account. Square applies limits based on factors like new merchant status, high dispute rates, or erratic processing activity.

    LOWER YOUR RISK OF FRAUD

    General Fraud Prevention Strategies

    Beyond Square’s built-in tools, you should implement broader fraud prevention measures that work across all aspects of your business. These strategies give you even more control over who gets through your defenses.

    Collect and Verify Additional Customer Data

    Smart data collection creates multiple verification points that fraudsters struggle to fake. Think of each data point as another lock on your door—the more you have, the safer you are.

    Essential verification steps:

    • ZIP code matching: Compare the billing ZIP code to the credit card’s registered address
    • Reasonable explanations: If addresses don’t match, ask customers to explain why
    • Government ID: For higher-value transactions, request identification to verify the buyer’s identity
    • Never store sensitive data: Don’t keep credit card numbers on any system—this violates security standards and creates liability; tokenize instead

    For online transactions, implement address verification systems (AVS) and require card security codes (CVV). These tools add authentication layers that make it much harder for fraudsters to complete unauthorized purchases using stolen card information.

    Monitor Transaction Patterns and Velocity

    Fraudsters often reveal themselves through their behavior patterns. They’re usually in a hurry and don’t act like normal customers. Here’s what to watch for:

    Red flag behaviors:

    • Multiple rapid transactions: Several purchases in quick succession from the same customer
    • Unusual order sizes: Orders that are significantly larger than your typical sale
    • Geographic inconsistencies: Shipping addresses that don’t make sense with billing information
    • Off-hours activity: Transactions happening at unusual times for your business

    Set up alerts for transactions that exceed certain thresholds or show suspicious patterns. Many payment processors, including Square, offer velocity checking that automatically flags customers making too many transactions too quickly.

    Seasonal awareness matters too. Fraudsters often ramp up activity during holidays when businesses are busier and less likely to scrutinize individual transactions carefully.

    Implement Multi-Factor Authentication and Device Fingerprinting

    Modern fraud prevention goes beyond just checking credit cards—it looks at the entire digital footprint of each transaction.

    Device fingerprinting tracks:

    • Browser information: Type, version, and settings
    • IP address patterns: Location and consistency over time
    • Device characteristics: Screen resolution, time zone, and installed plugins

    This creates a unique “fingerprint” for each customer’s device. When someone tries to use a stolen credit card from a completely different device or location, the system flags it immediately.

    Multi-factor authentication adds another security layer by requiring customers to verify their identity through multiple channels. This might include:

    • SMS verification codes sent to registered phone numbers
    • Email confirmations for high-value purchases
    • Biometric verification on mobile devices
    • Security questions for account access

    The beauty of these systems? They’re mostly invisible to legitimate customers but create major headaches for fraudsters trying to use stolen information.

    SET UP FRAUD ALERTS

    Best Practices for All Payment Types

    Regardless of how customers pay, follow these universal fraud prevention practices that have stood the test of time:

    • Never wire money or send funds to third parties at customer requests
    • Don’t accept credit cards for services outside your normal business scope
    • Use certified delivery services like UPS or FedEx—avoid sketchy shipping requests
    • Avoid payment splitting: Large orders broken into multiple small payments often signal fraud; offer installment plans instead

    OFFER WHITE-LABEL BNPL AT CHECKOUT

    Responding to Square’s Fraud Notifications

    Square monitors transactions in real-time and will alert you via email about suspicious activity. When you get these alerts, here’s your action plan:

    • Don’t ship investigated orders until Square completes their review
    • Avoid accepting additional payments from flagged customers during the review period
    • Expect resolution within one business day, followed by a detailed follow-up email

    For suspicious account activity, Square sends SMS notifications to your registered phone number. Contact Square immediately when you receive these messages—don’t wait.

    LOWER YOUR FRAUD SCORE

    Building Long-Term Protection

    Fraud prevention isn’t a “set it and forget it” situation. It requires ongoing attention and regular updates to stay ahead of increasingly sophisticated fraudsters.

    Monthly tasks:

    • Review fraud alerts and patterns from the previous month
    • Update any security settings based on new threats
    • Check for software updates on your payment processing systems

    Quarterly reviews:

    • Analyze your chargeback rates and dispute patterns
    • Evaluate the effectiveness of your current fraud prevention measures
    • Consider working with fraud prevention professionals for policy analysis

    Remember that fraud prevention balances security with customer experience. While you need strong protections, overly restrictive measures can frustrate legitimate customers and hurt sales. Use Square’s tools strategically, stay alert to emerging threats, and maintain vigilant oversight of your payment processes.

    By implementing these five fraud prevention methods, you create multiple layers of protection that make your business a much harder target for fraudsters while keeping things smooth for legitimate customers. Start with Square’s built-in tools, then add the general strategies that fit your business model and risk tolerance. Your bottom line will thank you.

    CONNECT WITH A MORE SECURE GATEWAY

  • Block Inc Accused of Fraud, Is Square Payment Processing Unsafe?

    Block Inc Accused of Fraud, Is Square Payment Processing Unsafe?

    In the high-stakes world of e-commerce, payment processors play a critical role in the success and stability of your business. These platforms are the lifeblood of your online store, enabling seamless transactions between you and your customers. But what happens when the safety of your payment processor is called into question?

    The thought alone sends shivers down the spines of merchants who rely on these services to protect their hard-earned revenue and customer trust. Square, a widely-used payment processor, has recently found itself under a dark cloud of suspicion.

    E-commerce merchants who have built their businesses on the back of this popular platform are now grappling with growing unease and uncertainty about its future. As whispers of fraud accusations continue to swirl, the question remains: Are you at risk?

    It’s time to face the chilling possibility that your trusted payment processor may have betrayed your business. We will investigate the safety of Square, assess the potential dangers, and explore the steps you can take to protect your livelihood. The stakes have never been higher, and your business’s future may depend on the decisions you make in the face of these alarming allegations.

    Understanding Square’s Fraud Accusations

    Former social media owner, co-founder, and CEO Jack Dorsey’s Block, Inc is under fire after a two-year investigation wraps up with serious accusations of fraud. Here’s the story.

    The Sinister Allegations: A Summary

    As fear and anxiety grip the e-commerce community, it is essential to dissect the fraud allegations that have cast a shadow over Square. Various sources have accused Square of engaging in fraudulent or criminal activities and falsifying financial metrics, raising red flags for merchants who rely on the platform. The accusations range from skirting regulatory revenue caps to enabling illegal and illicit transactions.

    In the report, former employees expressed internal concerns that were ignored or hushed.

    “A pattern of disregard for Anti-Money Laundering (AML) and Know Your Customer (KYC) laws” was brought to light by Hindenburg’s report. Hindenburg also calls the financial service a “wild west” for payment processing.

    As an example, the short seller was able to effortlessly open accounts under the names of both Donald Trump and Elon Musk with no required due diligence. This reflects the ease of a single individual creating accounts under false names.

    Another example was the conglomerate’s promotion of accepting pandemic stimulus checks immediately without banking details. Underbanked users can too easily accept large sums of money for more nefarious reasons, like sex trafficking, scams, or other illegal operations.

    These claims have been brought forward by short seller Hindenburg Research. Understanding the motives behind these accusations is crucial in evaluating their legitimacy and determining the level of risk involved for e-commerce merchants.

    Potential Impact of the Accusations on E-commerce Merchants

    The potential fallout from these fraud accusations is vast and varied, with e-commerce merchants facing numerous risks. Financial losses due to unauthorized transactions or chargebacks can severely impact the bottom line, while reputational damage may result in the loss of existing customers and difficulty attracting new ones.

    Furthermore, the erosion of trust between merchants and their customers could lead to a decline in online sales and damage customer loyalty. Legal implications may also arise, with regulatory penalties and possible lawsuits on the horizon for both Square and the merchants who have used the platform.

    Square’s Response: Shedding Light on the Accusations

    In the wake of these alarming accusations, Square Inc has issued official statements to clarify its stance on the issue and reassure its users. The company has maintained its commitment to security and fraud prevention, disputing the legitimacy of the allegations and emphasizing its rigorous safeguards and protocols.

    Block Inc has outright denied the accusations against its business practices, namely Cash App. The company has even stated in a press release that the CashApp business today is more than willing to work with the SEC (Securities and Exchange Commission) to take legal action against the research firm.

    However, all of Block’s financial offerings are under fire—especially after a steep 15% dip for shares of Block.

    So the question remains: is Square payment processing safe for merchants? And does the company’s denial of well-researched fraudulent activity further harm the businesses that use the fintech payment company’s services?

    Do you use Square for payment processing? Tell us your experience here.

    Assessing the Safety of Square

    Despite the unsettling accusations, it’s essential to consider Square’s track record in providing secure payment processing for e-commerce merchants. Over the years, the payment platform has implemented robust security measures such as end-to-end encryption, tokenization, and strong authentication protocols to protect sensitive data and minimize the risk of fraud.

    It’s worth noting that fraud accusations are not unique to Square; several payment processors have faced similar allegations in the past. In fact, PayPal’s own small-bank routing method to skirt revenue caps was called into question.

    To further evaluate Square’s safety, consider third-party assessments and certifications. Square has undergone various security audits, such as the Payment Card Industry Data Security Standard (PCI DSS) compliance audit, which validates its commitment to protecting user data.

    To correctly answer the question, “is Square safe for merchants?”, you need to compare their offerings with your business model.

    Square’s Position as a “Safe” Payment Processor

    Safe for whom? Most online merchants are high-risk, even though most of them don’t know it (until it’s too late). Block Inc, CashApp, and by extension Square position themselves as supporting high-risk businesses and transactions. Let’s take, for example, CashApp and its most popular use case. Many users of the app make digital payments for illegal substances or sell adult content.

    Adult content is not illegal, but it is not supported by most acquiring banks or payment processors. But CashApp positions itself as a legal way of accepting these payments, even if it isn’t. So users of Square are more likely to assume they can use this more powerful payment processor as a legal way to sell high-risk content. In this sense, Square is not safe for online merchants.

    Best Practices for E-commerce Merchants to Mitigate Risk

    To minimize the risk of fraud and security breaches, e-commerce merchants should regularly monitor their transactions and account activity. Staying vigilant and proactive can help identify suspicious patterns, enabling merchants to take prompt action to prevent potential fraud.

    E-commerce merchants should consider implementing additional security measures to safeguard their businesses. Two-factor authentication can offer an extra layer of protection for your account, while Secure Socket Layer (SSL) certificates ensure encrypted data transmission between your website and your customers, reducing the risk of data interception.

    Implementing 3D Secure (3DS) and other security measures at checkout will help mitigate fraud and reduce chargebacks.

    To further mitigate risk, e-commerce merchants should consider diversifying their payment methods and evaluating alternative payment processors. Reducing reliance on a single payment processor can help minimize the potential impact of fraud allegations and security issues. Additionally, offering a variety of payment options caters to different customer preferences, potentially increasing sales and customer satisfaction.

    Here’s a short list of ways to mitigate fraud and chargebacks no matter your business’ risk profile:

    1. Identify suspicious patterns
    2. Implement on-site and checkout security measures
    3. Educate customers
    4. Utilize alternative payment options and gateways

    We can help assess your risk profile!

    Evaluating the Need for a Payment Processor Switch

    As an e-commerce merchant, you may be contemplating a switch to another payment processor in light of the recent accusations against Square. When evaluating potential alternatives, consider factors such as:

    • security features,
    • transaction fees,
    • integration capabilities,
    • and customer support.

    Comparing these aspects will help you determine the most suitable payment processor for your business needs.

    Before making a switch, weigh the pros and cons of changing payment processors. Potential benefits include enhanced security features, lower transaction fees, and better customer support. However, switching may also bring drawbacks such as disruption to business operations, integration challenges with your existing e-commerce platform, and confusion for your customers during the transition.

    PayPal, Stripe, Adyen, and Braintree are among the most common online payment processors, though none of these support high-risk businesses. It’s important to evaluate your risk profile and understand your merchant category code before applying to any payment processor or fast-approval merchant account.

    Conclusion — Should You Keep Using Square as Your Payment Processor?

    In this blog post, we have confronted the unsettling fraud accusations against Square, a popular payment processor used by countless e-commerce merchants. By examining the allegations in detail, assessing Square’s safety, and exploring best practices to mitigate risk, we have provided you with the tools and insights to make informed decisions for your business.

    We encourage e-commerce merchants to remain vigilant, implement additional security measures, educate their customers, and diversify payment methods to reduce risks and maintain customer trust.

    As a final note, we urge e-commerce merchants to stay informed and proactive in the face of these challenging circumstances. Your business’s success and the trust of your valued customers depend on the choices you make and the security measures you implement.

    By opening a high-risk merchant account with DirectPayNet, you can secure your business with a payment processor that truly supports your business model and merchant category. Contact us today to get started.

    GET PAYMENT PROCESSING THAT WORKS FOR YOUR BUSINESS MODEL

  • RIP Square, iPhones as POS Devices — What Merchants Need to Do Next

    RIP Square, iPhones as POS Devices — What Merchants Need to Do Next

    Square built it’s merchant empire by providing (at the time) easy-to-use dongles that turned your smartphone into a point-of-sale (POS) device. Over the years, those devices have been upgraded to fit other pieces of technology including tablets like iPads, more operating systems like iOS and Android, and target more merchant categories.

    How many times have you been to a coffee shop and seen those giant white POS with an iPad and an awkward card reader?

    That’s all changing now, and it spells the end of Square as we know it. Apple announced Tap to Pay for iPhone, and it’s the new 3rd-party POS killer.

    Upgraded, Not New, Contactless Payments

    Digital wallets with the functionality to make contactless payments are nothing new. Apply Pay and Google Pay have been around for years. The technology, however, is getting a major upgrade for those in Apple’s ecosystem.

    Reading the headlines can be a bit confusing. We already have tap-to-pay, right? Yeah, we do. So what’s different now? Apple products have always been ready to be transformed into POS devices through third-party apps and add-ons, like the Square card reader. Apple products have also been able to be use to make payments at stores via Apple Pay for several years now.

    The tap to pay feature is the only way to use Apple Pay through the Apple Wallet app on iOS devices, including iPads and Apple Watches, when making in-person purchases. It uses NFC for contactless credit card and debit card payments, and it’s come a long way since its announcement. This new feature is the next evolution of the Apple payments ecosystem, though it’s limited to iPhone devices as of right now and no older than the iPhone XS.

    Now, an iPhone can accept payments from cards directly. Not Apple-to-Apple (that already exists with Apple Cash). But using the phone as a point of sale payment terminal for accepting direct contactless payments from a card on any payment network. That could be Apple Pay, sure. But it could also be Google Pay or payments from a Samsung phone. Or American Express, Discover, Visa, or MasterCard (including the Apple Card).

    This news isn’t about P2P payments, it’s about merchants accepting payments with no additional hardware. Retailers are free to carry their small business with them wherever they go with no plugins, no dongles, no cases. Just a phone and a merchant account.

    Is Square Really Dead?

    Not right now, and they’ll live on in other ways. The iPhone/Apple isn’t a merchant account nor a payment processor. Square can still provide sub-merchant accounts as a payment aggregator and use Apple’s new tech to avoid shipping out and producing their dongles. In fact, it’ll probably save them a good chunk from halting manufacturing of said devices.

    The real Square killer is how open the mobile-device-as-a-POS market it is now. Before, there were just a handful of providers and Square pioneered it. Now, as long as you have a merchant account and a payment processor that is approved by Apple, then you’re good to go.

    Square will most likely continue providing payment processing services for merchants, and they’ll continue to use the idea that they’re simpler and easier to use than traditional merchant accounts. While that’s true in some ways and they won’t need to send out physical card readers or point of sale devices, there’s nothing left that makes them stand out.

    Does Square have competitive rates and low fees? Not really. They have competitive rates in comparison to other 3rd-party processors like Stripe and PayPal, but no 3rd party has good rates or low fees.

    Is Square easy to use? Absolutely. It does offer an all-in-one solution at the expensive of customizability. So while you can take care of your whole business within Square’s offerings, you can’t turn on/turn off/add features, customize your payment gateway, or offer customers more ways to pay.

    Here’s What Merchants Who Use Square Should Do

    If you’re an online seller only, then you don’t need a POS anyway. If you’re using Square, then you should ask yourself what you’re benefiting from it, analyze if you’ve grown since you started with Square, and identify how Square is helping or hindering your progress.

    Consider Your Risk Profile

    If you are a high-risk business or a startup, then we urge you to leave Square and open a high-risk merchant account. Square doesn’t allow you to sell what’s considered as high-risk or high-ticket options due to the higher risk of fraud and chargebacks. The service may be convenient, but it’s certainly not sustainable.

    If you notice a lot of features that Square provides, but you only use a fraction of them. Or they don’t offer features that you do need or would like to implement, then you should open your own merchant account. This doesn’t mean closing down your shop and starting all over again. You can keep your Square account open as a backup but swap over to your new, more powerful merchant account and payment processor as your primary source.

    Speaking of risk, security is one requirement and aspect of your business you should pay close attention to (especially for high-risk merchants). With Tap to Pay on iPhone, you benefit from built-in biometric security features like FaceID and TouchID, which will automatically add some level of fraud and chargeback protection to the checkout.

    Identify Necessary Payment Options

    Are customers paying in a way that’s most convenient to them? Square does offer a user-friendly payment gateway that accepts the major card networks, but what if you need something else? Or what if your customers prefer something else?

    If you sell to foreign markets, you need a gateway that can not only display local currencies, but also accept them and the payment methods that locals use. Credit cards aren’t the only payment type. People are more eager to spend their crypto these days, others only use debit or ACH. You need to identify the payment methods your customers prefer and offer it.

    Square offers some of the these features, but not all of them. If you find that you’re losing sales because customers can’t pay in the way they want, then it’s time to make the switch.

    Weigh Your Need for Omnichannel Sales

    Square’s biggest gimmick is offline sales, as in in-person sales. If you don’t sell your product in person, then there’s no need for a service whose entire business model is stacked on that concept.

    But if you do sell offline, then consider how your business is with Square and if you’d be better off using another provider. With Apple opening up a merchant’s iPhone as a POS, you could essentially take your pick and use a service provider that better meets your needs. Or you could stay with Square, the choice is yours. The point is that now you have options.

    How Merchants Can Expect Square to Respond

    Square’s in trouble here. While they’ll be saving resources by shutting down production of their credit card readers, they’ll also be losing their entire hardware revenue stream.

    Merchant’s who use Square for online sales only will probably see no change (hopefully). It wouldn’t be fair to raise prices for an entire customer base who doesn’t use the feature Square is losing.

    For those who do perform live sales, we would expect transaction fees, monthly fees, or device activation fees to increase. Square will have to make up for their lost revenue in some way, and unless they become the sole partner on this new Tap to Pay on iPhone endeavor, then the burden gets transferred to the merchants.

    We can say with 99% certainty that Square won’t be a sole partner here. On Apple’s Tap to Pay on iPhone info page, they clearly state, “Apple will work closely with leading payment platforms and app developers across the payments and commerce industry”. Nothing about Square and the notion that there will be multiple providers. The feature will roll out in the coming weeks with SDKs being send to iOS app developers and payment processors. Now’s your opportunity to audit your own business model and decided if Square is helping or hindering your growth.

    Ditch Square Before Your Prices Are Hiked. Open a Merchant Account Today.

    Opening your own merchant account provides you with the ability to customize your features and negotiate your rates. You’re not stuck with a flat fee for the entirety of your career.

    Get in touch with us here at DirectPayNet to open your own merchant account. We’ll pair you with a payment process that works with the Tap to Pay on iPhone once we know which processors have the capability so you can do business the way you want.