The great questions just keep rolling in tonight! I get this question 3 or 4 times per week so I am just going to answer it. The short story here is that Square does one thing really, really well. They are cheap. That is it. They have no other competitive advantage, in fact almost everything else about what they do is a competitive disadvantage! I know it is difficult to get off the “Cheapest Processor Wins” bus but, if you want to compete against Square you will have to open up your mind and take some time to read and research the information below.   There are two responses to this question.

First of all, if you are a very small merchant who is choosing between square and phoneswipe, here is my response: Square Verses Phone Swipe (Our comparison is now actually better since they eliminated the swipe transaction fee since this older blog article) For a stand alone business, it just isn’t a practical solution for so many reasons but, here is my top list:

1. For a company doing less than $10,000 or more than $30,000 they will pay less because our effective rate on a standard merchant account would normally be below 2.75% If they process $11,000 to $29,000 it will be about the same or we might be a little higher depending on several factors.

2. There is no support to speak of with Square and this is a big part of their business. I always ask people, “So what are you going to do if your square swiper breaks, stops working or you put in the wrong transactions and realize it 3 days later when an angry customer calls you? The simplest, cheapest solution is not always the best one.” If I told you, “I have a car for you that you can purchase brand new for $1,000 and it only has one pedal so it is really easy to use.”  You would say, “What?!?! … No Thank you!!!” If accepting credit cards is important to you and is an important part of your business, you should have a professional to work with and here are some reports to back up my claims: Article 1 Here are some quotes from this article: Their policy on risk since they don’t approve accounts individually like we do: “the company fails to mention anything about its fund holding and risk mitigation policies in it marketing material and advertising. These policies have been reported to cause significant problems for many merchants and some have even complained of large financial losses. Due to the importance of these policies, and that Square fails to make merchants aware of them prior to account setup and prior to running transactions, many have complained of misleading marketing by the company. Hence, we have lowered Square’s grade in this section to a rating.”

Their Pricing: “The rate is, however, much more expensive than the Interchange Pass-through rate pricing model. Given that most merchants do not have Interchange Pass-through pricing, and the fact that Square has no monthly fees and no time commitment, makes it one of the most affordable credit processing options in the market. Nevertheless, Square does have some drawbacks.”

More on the risk policy issue: “The second method Square uses to limit fraud is much less transparent and the reason for the company’s low score in this section. Merchants are reporting in great numbers that Square has randomly and without explanation, or notification, placed lengthy holds (exceeding 30 days) on their funds, even with swiped transactions. Square appears to rely on undisclosed algorithmic risk factors to place automatic holds on transactions that it deems suspicious”


Square Customer Service, Complaints & Dispute Resolution

Another area that Square comes up short in this review is in its customer service. For a company that has only been around for about two years, Square is racking up a lot of complaints. The majority of the complaints fall into three areas: Practically non-existent merchant phone support, misunderstanding and non-disclosure of the $1,000+ card-not-present deposit hold policy, and complaints of random fund holding with no explanation or communication. The company appears to rely too heavily on customer service provided by email, a Twitter support page, and a support blog. This can pose a big drawback for many merchants, especially for those who are not willing to wait for an email response. The company does, in fact, have a phone number ((415) 375-3176) but it appears to go to a voicemail system for the majority of callers. Additionally, many merchants are reporting wait times of several days before getting a response from Square, regardless of how they contacted the company. For many merchants it seems inexcusable for a financial services company to not have a readily available 800-number helpline. Square could greatly improve its rating in this section by adding a dedicated customer support number and better communicating its hold policies.

Article 2 Here is the best quote from this article about how larger merchant’s simply can’t use square because of their customer support model. “Square’s customer support is built in the Silicon Valley style favored by companies like Google or LinkedIn of using online help tools instead of having dedicated workers sitting by a phone. There is no listed phone number for Square support; users are instead directed to email questions or visit a help center, which has more than 150 pages devoted to answering the most asked questions. Square also recently began rolling out YouTube videos on popular questions and also has a Twitter support feed that can take live questions from users. And in some cases when a phone call is the best channel, Square calls a merchant directly. Competitors argue this approach doesn’t scale, especially as Square looks to acquire bigger merchants. While small time businesses and weekend sellers might not have a problem with online support, they say, everyday businesses expect more hands-on, live help.”

This support model simply isn’t sufficient for a large merchant running $10,000+ in monthly transactions. What good does it do if they save $50.00 per month and end up crediting hundreds back to customers, lose customers, increase down time and / or lose charge backs because they have no support. Here are a few random complaints from customers: “I read a few blogs about a merchant service(squareup.com)on an excusve website. I decided to use the service and accepted over eight hundred dollars in payments through them. The problem is they will not send the funds due to my designated business account and I have no idea how to collect my money from them. They continue not to answer my numerous complaints and requests for assistance. They claim to answer every request personally which is deceptive. On my first complaint, they personally sent me a list of measures for a certain proceedure which was fruitless and had nothing to do with my complaint. If it was not for You Tube, I would have still been stuck on the application complaint.” ————————————————– “The $1000 limit relates to card NOT present transactions. NOTHING is stated that swiped transactions over $1000 will be held. I talked to two reps today ( took two hours between calls since no one answered when “Erik” transferred me…. Go figure ) when I called about $7500 being held for over a week; swiped mind you. The second jerk flat out told me not to call and I was wasting my time. Conversation;

Me; Is there a manager there that I can speak to regarding my account? I’ve emailed to no avail and I’ve called and no one could or would help.

Rep; Yeah, don’t call. It wont do any good. Just keep emailing and answer the questions that they sent you.

Me; I already answered the questions. I’ve emailed about 4 times this week. Im not getting answers and nothing on the website describes the hold on a swiped transaction. I guess Ill just need to keep calling back to find someone that can help me…..

Rep; Seriously, this is the customer service department. We cant help you with your account and it wont do you any good to call here.

Me; Could you give me a direct line to Hannah’s department then? Thats who last emailed me and thats who Erik transferred me to earlier when no one answered.

Rep; I cant give you any numbers.

Me; Can you transfer me to her department then? Thats what Erik did earlier……

Rep; I can transfer you, but it wont do you any good. Most likely they wont even answer the phone over there since they like to document everything by email. But I guess I can transfer you….. Some example of customer service eh? As soon as I stated my name to the second Rep, he obviously knew the account and had his helmet on.” ———————————- “I have tested square… The bad: Horrible customer service (I can’t stress horrible enough) No contact us number High per swipe and no swipe fee Can’t do dual printers (1 for customer and the other would print near the coffee maker) Does not keep track of cash in cash drawer Does not have a way to do shift change Issue with location of one of my cafe’s on square app. It thinks my address is down the street so sometimes people cant open a tab because it says “to far from location” when in reality they are in my cafe.” —————————————–

So, when a merchant says, “I am using Square.” My response is, “Have you had to deal with customer service yet?” If they say “No” I usually say, “Do you have a couple minutes for me to explain some issues other customers had with them?” If they say “Yes” I say, “Ok, let’s imagine that you processed $2,000 through your square one day and you didn’t see it in your bank account for 5 days or so, which happens a lot, or let’s say one of your customers filed a chargeback against you claiming a transaction was unauthorized, or even worse, your swiper breaks and you can’t accept cards at all, what would you do?” They will always say, “I would contact Square” then I say, “Ok, go ahead, I want to experience what that is like. You don’t have to talk to them or anything because you will not be able to anyway but, I just want you to see why there are so many complaints about them online.” They stumble around online for a while, try to find information in their email and get really frustrated. Usually within a couple minutes they say, “Ok, I see your point, so what are you offering?”

James Shepherd

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