Square iPhone Credit Card Reader

By Randall Sutherland
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The Square swiper is a small but significant iPhone credit card reader. The size and simplicity of Square are the highlights of the swiper, but the Square solution is full of interesting contradictions. Square is a small credit card reader with huge potential. The Square iPhone card reader and service are remarkably straightforward, which in the payment card industry is actually thinking outside the box. Square is like its namesake shape: complete, direct and well balanced. But at the same time it isn’t mundane, stiff or ordinary.

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The incongruence of the Square iPhone credit card reader has been fodder for a lot of press coverage, and reasonably so. Proponents are heralding it as an innovative miracle that will turn the credit card industry upside down. Naysayers have pointed out potential security risks and higher per-transaction fees. Both sides of the argument cite the fact that Square’s CEO is Twitter founder Jack Dorsey to either illustrate innovation or scoff at social trends.

There are several very compelling features of the Square reader, accompanying iPhone app and payment service, but they aren’t without their downsides. The Square credit card reader is extraordinarily small (and free), but it isn’t as stable or secure as the best iPhone swiper sleeves. The Square iPhone app is practical and professional, but it also isn’t perfect. The pricing structure is a mixed bag: There is no contract, monthly service fee or even a merchant service fee. However, the per-transaction “discount” percentages for each transaction are slightly higher than competitive payment processors. You would probably be better served by one of the three iPhone credit card readers that are the winners in our review: USAePay PaySaber, ROAM Data ROAMpay and VeriFone PAYware Mobile.

So is it hip to be Square? We love the idea behind Square and the innovative approach in hardware, pricing and service, but we admit that Square isn’t for everyone. Our recommendation on Square depends on the unique outlook of your business.

Square is a perfect fit for small businesses who need portability, simplicity and cheap service fees. The Square card reader and accompanying app are trendy yet practical: a clever option for small business owners who want a hassle-free and sleek way to accept credit cards on their iPhone.

However, for larger businesses who swipe a lot of cards and process larger transaction amounts, implementing this mobile credit card processing solution can be like trying to fit a square peg in a round hole. The double-edged pricing structure can be a burden for high-volume businesses, and the Square credit card reader isn’t as reliable or effective for continuous use in comparison to more robust and durable iPhone card readers.

Physical Features
When people think of Square, they think of the physical credit card swiper. The small credit card reader dongle visually exemplifies the differences between Square and the rest of the credit card payment industry: trendy vs. traditional. The Square credit card swiper plugs into the iPhone through the 3.5mm headphone jack. The ironic thing is that this more universal connection method is actually inconsistent with the conventional 30-pin connection used by almost every other card reader in the industry.

The Square reader has been through a few redesigns already, but the current Square dongle is whiter, thinner, and has nicer curves than previous models. The remarkably small reader is about an inch square and less than half an inch thick. The new Square has a plastic ring connecting the swiper and the audio jack (as opposed to bare metal) so it works with the iPhone 4. A small hole in one corner can be used to attach the Square to a lanyard or keychain.

Square is compatible with several Apple iOS and Google Android devices. The mobile credit card reader works with the iPhone 3G, 3GS and 4, iPod Touch and iPads. On the Android platform, Square is compatible with many devices, including (but not limited to) a handful of Droids, the HTC Nexus One and myTouch, Samsung Galaxy phones, LG Ally and Dell Streak. The unique headphone jack connection means that Square can work with more devices than other iPhone card readers can, and will be easy to implement with new devices and platforms.

The Square doesn’t have a receipt printer, barcode scanner or hardware encryption. The Square iPhone card reader is just that: a small square credit card reader. We don’t knock Square for what it doesn’t have, but it is worth mentioning that the swiper isn’t as reliable or as stable as an iPhone credit card swiper with a sleeve or case design. It’s not difficult to use the Square swiper, but as the actual swipe isn't as effortless or consistent of an experience you’ll have with readers that are more robust.

App Features
The physical design of the Square reader gets most of the attention, but the accompanying app deserves some consideration as well. The Square iPhone app is powerful and professional, but it could still use a few improvements.

The Square app is actually pretty versatile. The transaction process can be as basic as entering the charge amount, swiping the card and signing for the charge. And several additional features add flexible customization potential to each transaction. Customers can enter their email address or phone number to receive a digital receipt. The customized receipt will bear your logo and a geo-tagged map of exactly where the transaction took place.

The Square iPhone app also includes the ability to:

  • Prompt for a tip with calculated percentage suggestions
  • Take a picture of the merchandise (or customer) to associate with a transaction and include on the receipt
  • Enter a note for additional details
  • Calculate change, manage and record cash transactions

The iPad Square app is particularly impressive, as it includes the ability to create custom “items” for each product you sell, and then ring up an order. Now you don’t have to type in the price and detailed note for each product sold. Each item is associated with a picture and price, so you can make orders with just a tap of your finger. Merchants can use the items as a digital point-of-sale kiosk for fast orders, or hand it over to customers as a digital shelf they can select their purchase from.

Still, the Square app isn’t perfect and could use some more features. In the future, we’d like to see the option to retain non-sensitive customer data like shipping address and email address for CRM (customer relationship management) opportunities. We’d also appreciate a better implementation of calculated sales tax. The feature that is most noticeably missing however is the ability to issue refunds directly from the app – this capability is currently only possible from the SquareUp website.

Security
The Square iPhone card reader, app and service are all secure. Critics have pointed out that the Square reader doesn’t use hardware encryption and can be manipulated and used as a card skimmer. We tend to agree with Square’s rebuttal however and admit that anytime you give your card to someone who wants to steal your info, the criminal already has everything they need. The payment card industry recognizes these inherent risks and has implemented protection measures across the board.

The Square reader's security isn’t as rock-solid as iPhone card readers that use hardware-based encryption, but merchants and customers are still more than adequately protected from card fraud. The solution does use encryption when transferring sensitive data, and it is 100-percent PCI compliant. Their network and servers are all secure, and cardholder data is never stored on the iPhone or the swiper.

If security is the most important aspect of your mobile credit card processing decision, other vendors offer more. But merchants certainly don’t need to be afraid of increased liability or security holes from Square.

Summary
There are many things to like about Square, including the unique feature set, ultra-portable credit card swiper and pricing structure. The practical benefits are geared toward small-business owners and non-traditional sellers who might not need a dedicated merchant account for their situation (garage sales, fundraisers, newspaper ads, etc.). The distinct differences offer compelling opportunities for certain sellers. And while the decision of which mobile credit card processing solution is best for you is in your hands, we can wholeheartedly recommend Square as an option worthy of your serious consideration.

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