Square has revolutionized the payment processing landscape for small businesses and entrepreneurs since its launch in 2009. This user-friendly platform allows merchants to accept payments virtually anywhere, transforming smartphones and tablets into powerful point-of-sale systems. However, understanding the fee structure is crucial for business owners looking to optimize their payment processing costs and maintain healthy profit margins.

For small businesses operating on tight budgets, even small differences in transaction fees can significantly impact the bottom line. This comprehensive guide breaks down Square's transaction fees across different payment methods to help you make informed decisions about your payment processing strategy.

How Much Does Square Charge Per Transaction?

Types of Square Transactions

Square offers versatile payment processing solutions that cater to various business needs. Each transaction type comes with its own fee structure:

In-person Payments

These transactions occur when customers physically present their cards or digital wallets at your location. Cards can be processed by:

• Tapping (contactless payments)
• Swiping (magnetic stripe)
• Dipping (EMV chip)

Online Payments

Square facilitates various remote payment options, including:

• eCommerce transactions through Square Online Store
• Custom payment links that can be shared via email or text
• Professional invoices sent directly to customers

Manual/Keyed-in Payments

These are card-not-present transactions where payment information is manually entered into the Square system, typically when:

• Taking orders over the phone
• Processing payments when the card reader malfunctions
• Billing for services after they've been rendered

Square Transaction Fees Breakdown

Square's pricing structure is transparent with no hidden fees, monthly minimums, or long-term contracts. However, rates vary depending on how you process payments:

In-person Transactions

Fee: 2.6% + $0.10 per transaction

This rate applies to all in-person payments processed through Square readers, including:

• Square Reader for magstripe
• Square Reader for contactless and chip
• Square Stand
• Square Terminal
• Square Register

For example, on a $100 purchase, Square would charge $2.70 ($2.60 + $0.10).

Online Transactions

Basic rate: 2.9% + $0.30 per transaction

This applies to most online payments processed through:

• Square Online Store
• Square Online Checkout
• Square Virtual Terminal (when card information is stored on file)

Invoices and payment links: 3.3% + $0.30 per transaction

Square charges a slightly higher rate for:

• Square Invoices
• Square Online Checkout links
• Some API-based integrations

For a $100 online transaction, the standard fee would be $3.20 ($2.90 + $0.30), while invoice payments would cost $3.60 ($3.30 + $0.30).

Manual/Keyed-in Transactions

Fee: 3.5% + $0.15 per transaction

This higher rate applies when card details are manually entered into:

• Square Point of Sale app
• Square Virtual Terminal (without stored card information)
• Square Dashboard

For a $100 manually entered transaction, Square would charge $3.65 ($3.50 + $0.15).

Other Notable Fees

Beyond standard transaction fees, Square offers additional payment processing options with specialized rates:

ACH Bank Transfers

Fee: 1% (minimum $1)

For invoice payments made directly from a bank account rather than a card. This is often the most economical option for larger transactions.

Subscription and Recurring Payment Rates

Fee: 3.3% + $0.30 per transaction

Applies to businesses using Square's recurring payment tools for subscription services or memberships.

Instant Transfers

Fee: 1.5% of the transfer amount

Optional service for merchants who want immediate access to their funds instead of waiting for the standard 1-2 business day deposit.

How Fees Are Calculated

Square's fee calculation is straightforward:

Formula: (Payment Amount × Percentage Fee) + Fixed Fee

For example, for a $75 in-person transaction:

1. Percentage fee: $75 × 2.6% = $1.95
2. Fixed fee: $0.10
3. Total fee: $1.95 + $0.10 = $2.05

The merchant would receive $72.95 ($75 - $2.05) from this transaction.

Factors Affecting Transaction Fees

Several factors influence the rates you pay:

Payment Method

As detailed above, in-person transactions incur the lowest fees, while manually entered payments cost the most. This pricing reflects the varying risk levels associated with different transaction types.

Square Plan or Subscription Level

While Square's standard processing fees apply to all users, businesses with higher volumes may qualify for custom rates through Square's custom pricing program.

Card Type and Risk Factors

Unlike some processors, Square charges flat rates regardless of card type (debit, credit, rewards, business, etc.). This simplifies accounting but means you won't benefit from potentially lower rates on certain card types.

Comparison to Other Payment Processors

Square's transparent pricing model stands out in the payment processing industry. Here's how it compares to major competitors:

• PayPal: Similar online rates (2.9% + $0.30) but higher in-person rates (2.7% with no fixed fee)
• Stripe: Comparable online rates (2.9% + $0.30) but lacks specialized hardware for in-person payments
• Traditional merchant accounts: Often offer lower percentage rates but include monthly fees, statement fees, and sometimes long-term contracts
• Clover: Similar rates but requires more substantial hardware investment

Square's all-inclusive pricing provides predictability, making it particularly attractive for new and small businesses that want to avoid complex fee structures.

Conclusion

Square offers a transparent fee structure that varies primarily based on how payments are processed. In-person transactions provide the most economical option at 2.6% + $0.10, while online and manually entered payments incur higher fees of 2.9% + $0.30 and 3.5% + $0.15, respectively.

For business owners, understanding these fee differences can inform strategic decisions about payment acceptance. Whenever possible, encouraging in-person payments can result in meaningful savings, especially for high-volume merchants. Additionally, for larger invoice payments, suggesting ACH transfers at 1% can substantially reduce processing costs.

Square's straightforward pricing, combined with its versatile hardware and software ecosystem, makes it an attractive option for businesses seeking an all-in-one payment solution without the complexity of traditional merchant accounts. By strategically managing how you accept payments, you can optimize your processing costs while providing convenient payment options for your customers.