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How To Use a Square Reader in 2024

Kamso Oguejiofor Kamso OguejioforFinance Specialist June 20, 2024
June 20, 2024
As a business owner, I’ve dealt with credit card readers that require hours of configuration, include software updates that never seem to end, and have compatibility issues that make you want to tear your hair out. These headaches take precious time away from actually running your business.

Not knowing how to use your credit card reader isn’t just a minor inconvenience – it directly impacts your business. Customers get frustrated with delays, and you risk losing sales if transactions can’t be processed smoothly. That’s money walking out the door because of avoidable technical issues.

I’ve been there, too. That’s why I spent hours researching Square’s two most popular card readers – the free magstripe reader and the contactless and chip reader – to understand how they function and how you can integrate them seamlessly into your business operations.

I’ll walk you through everything you need to know to use a Square reader effectively. I’ll also explain some of the downsides to using Square and better alternatives that are worth considering. Let’s dive in!

How To Use Square’s Magstripe and Contactless & Chip Reader

Square readers
Square offers two types of square readers

Step 1: Charge Your Reader

The contactless and chip reader comes with a charging cable, a USB port for the charging cable, a built-in contactless antenna, a power button, and a card slot. A full charge takes 2-3 hours and provides your reader with about a day of battery life. The magstripe reader doesn’t need to be charged!

Step 2: Install the Square POS App

  • Go to the Apple App Store or Google Play Store to download the Square POS app on your device. Depending on your chosen plan and device, you’ll download the Square POS, Square for Restaurants, Square for Retail, or Square Appointments app.
  • Next, open the app and sign in with your existing Square account or set up a new one.
  • Go to your device settings and turn on Bluetooth. Then, open your device’s Square POS app and select More > Settings > Hardware > Square card readers. Tap on “Connect a Reader.”
  • Next, press and hold the power button on the reader and release it when 4 orange lights start flashing. Once these lights turn green, your reader is connected to your device. If your reader disconnects from your device, press the power button once to reconnect instantly.

Step 3: Start Taking Payments

  • Select items from your Square item library and add them to the cart, or just enter a dollar amount for a new item and click on Charge.
  • When a green light appears on your contactless and chip reader, your customer can hold their card or device near the contactless symbol or insert their card into the card slot. For magstripe readers, your customer would need to swipe their card through the reader with the magnetic strip facing toward the thick side of the reader.
  • Once a checkmark appears on your POS app, or you see 4 green lights on your reader and hear a beep, the payment is complete.
Square contactless & chip successful payment
The green lights will move when the payment is still processing
  • You can then send receipts via email or text or print one by connecting a wireless printer.

Taking Payments Without Your Square Reader

In today’s fast-paced business environment, there are times when you might need to process a payment without having your Square reader handy. Whether you take an order over the phone or forget your reader, Square offers several convenient solutions for card-not-present transactions.

Virtual Terminal

One of the easiest ways to accept card-not-present payments is through Square’s Virtual Terminal. You can access it via the Square Dashboard on your computer and manually enter payment details without needing any additional hardware. Now would be a great time to set up your online store if you haven’t already.

How to use the virtual terminal:
  1. Log into your Square Dashboard on your computer.
  2. Navigate to the Virtual Terminal.
  3. Enter the transaction amount, credit card information, and any additional notes about the sale.
  4. Click “Charge” to complete the transaction.

Manually Keying In Credit Card Information

Another method for processing payments without a reader is to manually enter credit card details directly into the Square POS app. While this method carries a higher risk of fraud and higher processing fees, it’s a reliable backup option when needed.

To minimize fees and reduce chargeback risk, I recommend using manual entry sparingly and only when necessary, such as when a card is damaged or your reader is unavailable.

Steps for manual entry:
  1. Open the Square POS app on your mobile device.
  2. Enter the transaction amount.
  3. Manually input the customer’s credit card details.
  4. Complete the transaction by tapping “Charge.”

Card-on-File Transactions

Saving your customer’s card information for future transactions can streamline your sales process. With Square, you can securely store card details and use them for subsequent purchases. Remember that card-on-file transactions are considered card-not-present, so they incur slightly higher processing fees.

How to save and use card-on-file:
  1. When completing a sale, choose the option to save the customer’s card information.
  2. For future transactions, select “Card on File” to charge the saved card.

Invoices

Square Invoices is convenient for accepting payments without keying in card information. This method is particularly useful for higher-value transactions or when you’d rather avoid handling card details directly.

How to send an invoice:
  1. Open the Square Dashboard or POS app.
  2. Navigate to the Invoices section and create a new invoice.
  3. Enter the customer’s email address and the transaction details.
  4. Send the invoice. Your customer will receive the invoice via email and can securely enter their payment information from their device.

Set Up Your E-Commerce Store

If you want to sell online, you need a website to promote and sell your products. The process doesn’t have to be complicated, especially if you use an easy-to-use builder like Square Online1. The Square reader links up to the Square POS app, and it can automatically sync data to and from your Square Online store.

Using Square Online with the Square POS app provides seamless two-way inventory management. When you sell a product, your inventory updates automatically in both your physical and online stores, ensuring accuracy and saving you time. Any changes you make are instantly reflected across all sales channels. Plus, you get integrated sales reporting, giving you a comprehensive view of your business performance in one place.

Although useful, Square Online has few customization options. If you want to create an online store that accurately represents your brand and truly stands out, you’ll need to use a different platform. The best e-commerce platforms give you all the features you need to run your e-commerce business while also ensuring it is as unique and personalized as possible.

What if you don’t need an e-commerce store yet and don’t have a website, either? Well, there’s a high chance you’re losing valuable traffic to your competitors. Keep up by using a top website builder to promote your business – you can always add an online store later.

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Square Reader Pricing

Square’s pricing for its card readers is very straightforward and transparent. There are no hidden fees or compulsory subscriptions. Also, processing fees are the same regardless of the type of card. Fees vary only based on the form of payment.

Standard Processing Fees

Mobile card reader fees: When using Square’s card reader with your smartphone or tablet, you’ll incur a standard processing fee of 2.5% + 10¢ per dip, tap, or swipe payment. Or, if you’re on Square’s ‘free’ plan, you’ll pay 2.6% + 10¢ per transaction.

Manually entered transactions: When you manually enter the credit card number, the processing fee is 3.5% + $0.15 per transaction. This higher rate reflects the increased risk associated with manually entered transactions, but it’s still transparent and competitive overall.

Card-on-file transactions: When you’ve saved a customer’s card information for future transactions, it incurs a processing fee of 3.5% + $0.15 per transaction.

Invoices: For transactions where you prefer not to enter card details manually, you can send an invoice through Square Invoices. The processing fee for invoices is 2.9% + $0.30 per transaction. This method allows customers to securely enter their payment information at their convenience.

Afterpay transactions: For businesses offering the buy now, pay later option through Afterpay, Square charges a processing fee of 6% + $0.30 per transaction. While this rate is much higher than usual, it’s a reasonable trade-off: customers can avoid a large upfront cost while you still get the full amount immediately.

Card Reader Options

Upon signing up for a new Square account, you can receive a free Square magstripe reader shipped directly to you at no cost. Depending on your device’s compatibility, you can choose between:
  • Lightning connector reader for iOS Devices.
  • Headphone jack reader – compatible with most Android devices and older iOS models.
Magstripe readers for iOS and Android
The magstripe reader is available for both Android and iOS devices
There are two versions of Square’s contactless and chip card reader – the 1st generation and 2nd generation. The 1st generation costs $49 and uses a USB cable slot. Meanwhile, the 2nd generation costs $59, uses a USB-C port, and includes extra features like Stay Connected – a functionality that keeps your reader connected to your device for up to 30 days of inactivity.

Square's 1st and 2nd generation contactless & chip readers
Square has two types of contactless and chip readers
While the magstripe reader only accepts swipe payments, the contactless and chip reader processes chip cards and supports contactless payments, including Apple Pay, Google Pay, and other NFC payment methods. It’s definitely worth the investment if you want to provide your customers with more convenient ways to pay.

Consider Alternatives to Square’s Reader

Although Square has several devices available, and they’re pretty easy to set up, the payment processor itself is pretty inflexible when it comes to POS equipment. For instance, you can only use Square’s proprietary hardware as a Square merchant – you can’t reprogram your existing hardware to use with your Square account.

Plus, if you decide to switch processors in the future, you won’t be able to reuse any of the devices you bought from Square.

And crucially, while Square’s fees are transparent, they aren’t the lowest. Other payment processors offer lower rates, which matters more for your business’ earnings in the long run than having a nice card reader.

All the credit card processors below offer low rates alongside card readers that are as easy to set up as Square’s but are also more flexible.

Leaders Merchant Services1

Like Square, Leaders Merchant Services (LMS) offers free POS equipment with your deal. While you’ll have to sign a long-term contract to get this device, there are no early termination fees, so you can cancel your plan anytime. The devices LMS offers include the First Data FD150 and Magtek Mini-MICR (which is great for processing check payments).

Leaders Merchant Services is also a verified reseller of Clover devices, meaning you can buy any of Clover’s POS systems directly from LMS. Regardless of the device you get, you can rest assured that LMS’ support team will help you set things up. The processing fees start from as low as ~0.15% + $0, but you can contact LMS to negotiate even lower fees that suit your budget.

Paysafe1

Paysafe provides many POS equipment options, including from top brands like Clover and PAX. You can either lease or buy these devices, and they’re very user-friendly and easy to set up. One of the things I like about Paysafe is that it provides you with a dedicated account manager to assist you with setting up your payment processing infrastructure, including your POS systems.

You’ll also get a free mobile card reader from Paysafe. You can connect your device to the card reader and accept payments by downloading the Paysafe Mobile Pay app. You can also use the app to manually key in card information, generate receipts, and send invoices. Paysafe’s rates are affordable, starting as low as 0.50% + $0.10 per transaction and $7.95 per month.

Stax1

Stax offers a wide range of supported devices, including Swipe Simple, Dejavoo, and PAX card readers and terminals. Moreover, you can install Stax’s mobile app on your device and use it as a card reader. With this app, you can charge cards on file, manually enter card details, and create invoices on the go.

One good thing about Stax is that it integrates with over 90% of third-party POS systems, so you don’t have to change your existing devices if you switch to Stax. High-volume businesses will benefit the most from Stax’s plans, which can save you 40% on fees if you process at least $8,000 a month. Plans start from $99.00 per month and include a small, flat per-transaction fee of 0% + 10¢ (online).

Is Square’s Credit Card Reader the Best?

Square’s card readers are very good and easy to set up. They offer versatile payment methods for your customers, allowing them to swipe, tap, or dip their card to complete a transaction. But, while Square devices are good, the larger Square ecosystem has flaws.

I don’t like that Square merchants can’t use any POS device other than Square’s proprietary hardware. Plus, it’s not great that you can’t use any of Square’s devices if you move to a new payment processor.

So, if you don’t plan on staying with Square long-term or are looking to switch processors, I suggest a more flexible option like Leaders Merchant Services1.

FAQ

Do you need an app to use the Square reader?

Yes, you need the Square POS app to use the Square reader with your mobile device. To download the app, go to the Apple App Store (for iOS devices) or Google Play Store (for Android devices).

How do you use Square to receive payments?

You can use Square to receive payments using a card reader. You can also manually key in your customer’s card details on your Square POS app to process a payment. Or save their card details on file so you can automatically bill them for future purchases. Another option is to send a digital invoice to your customer, who can then make payment from their device.

How do I use my iPhone as a Square reader?

You can use your iPhone as a Square reader by first downloading the Square POS app from the App Store. Next, open the app, sign into your Square account, and link the reader to your mobile device via Bluetooth. Now, you can start taking payments with your Square reader through your iPhone.

Is there a monthly fee for the Square Card Reader?

No, there are no monthly fees for any of Square’s card readers. You only pay a one-time purchase fee, and the reader is yours.

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