A few weeks ago I read about Square (SquareUp.com) which allows people with iPhones, iPad and Android devices to accept credit cards. The way it works is Square will send you a small swipe extension which you attach to your device’s audio jack.
The service charges a flat fee of 2.75% for all major card types. The fee structure is simple but rather expensive and makes it great for small volume users who will use the device on the rare occasion.
In my test trials with 10 transactions it takes about 2 swipes to get the card to read. Once the charge is authorized the customer can then sign right on the touchscreen using a stylus or their finger. The application also uses your device’s location services to log where the transaction is taking place.
All in all the Square setup is executed pretty well but then I get an e-mail from a Square’s risk/fraud staffer asking me about the nature of my transactions. I explain to them what I’ve been doing and the transactions are 0% risk in terms of chargebacks or fraud.
I then get an e-mail back stating that they are terminating my account and cite a clause in their user agreement that allows them cancels user accounts at their discretion for no reason.
I understand and respect their right to cancel any account at any time for any or no reason at all but doing so without any warning or any real reason means that people who intend to use this for real business purposes should stay far away. They also state the funds in the account will be held for 30 days which is fine by me as the amounts aren’t that much but could have serious implications for anyone doing major sales and counting on the funds.
Square at the moment is too small of a company with very rash risk personnel to take seriously. Up next I’ll be reviewing their competitor ChargeSmart Mobile.