How Square Charges You for Processing Payments
What Square's Fees Actually Cost You
Square charges you a percentage of every transaction plus a flat per-transaction fee, and the exact amount depends on how your customers pay. If someone swipes a card in person, you pay 2.6% plus 10 cents. If they enter the card number manually or pay online, you pay 3.5% plus 15 cents. If they use a digital wallet like Apple Pay or Google Pay, you pay 2.6% plus 10 cents. ACH bank transfers cost 1% with a minimum of 30 cents and a maximum of $5 per transaction.
These are the standard rates Square publishes. Some businesses may have access to for lower rates through Square's Cash Discount program or by committing to higher monthly volume, but most small businesses pay the standard rate. The fee comes out of your account automatically each time a payment clears, so you never see a separate invoice—it just reduces the deposit you receive.
Key Takeaways
- Card-present transactions (swiped or tapped in person) cost 2.6% plus 10 cents; card-not-present transactions (typed or online) cost 3.6% plus 15 cents.
- ACH transfers cost 1% of the transaction amount, capped at $5 per transfer.
- Square deducts fees automatically from your deposit, so the money you receive is already reduced by the fee amount.
- Invoicing through Square, recurring billing, and virtual terminal payments each have their own fee structures, separate from in-person card processing.
- There are no monthly subscription fees, setup fees, or cancellation fees with Square's basic service.
How In-Person Card Payments Are Charged
When a customer pays with a physical card at your register or with a contactless payment (tap or chip), Square charges 2.6% of the sale plus 10 cents. This applies whether the card is present in your hand or the customer taps their phone. So a $100 sale costs you $2.60 plus $0.10, totaling $2.70 in fees. A $50 sale costs $1.30 plus $0.10, totaling $1.40.
This rate is the same whether the card is a debit card, credit card, or rewards card. Square does not charge different rates based on the card type, which is different from some other processors. The fee is deducted before the money lands in your bank account, so if a customer pays $100, you receive $97.30.
How Online and Manually Entered Card Payments Are Charged
When you type a card number into Square's system yourself, or when a customer enters their card on your website or invoice, Square charges 3.5% plus 15 cents. This higher rate reflects the greater fraud risk when the card is not physically present. A $100 online sale costs you $3.50 plus $0.15, totaling $3.65. A $50 sale costs $1.75 plus $0.15, totaling $1.90.
This rate applies to payments taken through Square's online invoicing tool, Square's virtual terminal (where you manually enter card details), and payments made through your Square Online store. It also applies if you take a payment over the phone and enter the card number yourself. The key factor is whether the physical card was present at the moment of payment, not whether you or the customer entered the information.
ACH Bank Transfer Fees and Limits
Square allows customers to pay directly from their bank account using ACH, which costs 1% of the transaction amount with a minimum charge of 30 cents and a maximum of $5 per transfer. So a $100 ACH payment costs $1.00. A $1,000 ACH payment also costs $5.00 (the maximum), not $10.00. A $20 ACH payment costs 30 cents (the minimum), not 20 cents.
ACH transfers take three to five business days to clear, so the money does not arrive in your account immediately like card payments do. Square shows the pending transfer in your dashboard right away, but the actual deposit happens later. If a customer initiates an ACH payment on a Friday, it may not clear until the following Wednesday or Thursday.
Invoicing, Recurring Billing, and Other Payment Methods
If you send a customer an invoice through Square and they pay it with a card, you pay the card-not-present rate of 3.5% plus 15 cents, not the lower in-person rate. This is true even if the customer is standing in front of you—if the payment goes through an invoice link rather than your physical reader, it is charged at the higher rate.
Recurring billing (subscriptions set up through Square) uses the card-not-present rate of 3.5% plus 15 cents for each charge. Square does not offer a discount for recurring payments. If a customer pays with a digital wallet through an invoice or your online store, you pay 3.5% plus 15 cents, not the 2.6% plus 10 cents rate you would pay if they tapped that same wallet at your in-person reader.
Square also offers a virtual terminal, which is a web-based tool where you manually enter card details. Payments taken through the virtual terminal are charged at the card-not-present rate of 3.5% plus 15 cents, regardless of whether the customer is present or calling in.
When You Might Pay Lower Rates
Square's Cash Discount program lets you pass the processing fee to the customer if they pay with a card, and offer a discount if they pay with cash or ACH instead. This is legal in most states, but you must disclose the surcharge clearly at the point of sale and on receipts. If you use this program, you still pay Square's standard fee, but the customer sees a higher price for card payments and a lower price for cash or bank transfer payments.
Some businesses also negotiate custom rates with Square if they process very high monthly volume, but this is not common for small businesses and requires direct negotiation with Square's sales team. The standard published rates are what most businesses pay. Square does not offer seasonal discounts, promotional rate periods, or loyalty discounts based on how long you have been a customer.
How Fees Affect Your Deposit and Accounting
Square deducts fees from your account in real time as payments clear. If a customer pays $100 with a card in person, Square deposits $97.30 into your bank account and keeps $2.70. You do not receive an invoice for the fee—it is simply subtracted from the deposit. Your Square dashboard shows the gross sale amount and the fee amount separately, so you can see exactly what was charged.
For accounting purposes, you should record the full sale amount as revenue and the fee as a business expense. This way your records match what actually happened: you sold $100 worth of goods or services, and you paid $2.70 to process that payment. Many accounting software packages can be set up to automatically categorize Square fees as a processing expense.
Frequently Asked Questions
Does Square charge a monthly fee or cancellation fee?
No. Square's basic service has no monthly subscription, no setup fee, and no cancellation fee. You only pay when you process a transaction. If you use Square's point-of-sale system or other add-on services, those may have separate monthly costs, but basic payment processing does not.
Why is the online card rate higher than the in-person rate?
Card-not-present transactions have higher fraud risk because Square cannot verify the card is real or that the person using it has permission. In-person payments are lower risk because the card is physically present. Square passes this risk difference on to you through the fee structure.
Can I avoid the fee by asking the customer to pay cash?
Yes, but you would need to handle cash separately from Square. Square only processes digital payments, so cash transactions do not go through Square at all and incur no Square fee. However, you lose the record-keeping and deposit automation that Square provides.
What happens if a customer disputes a charge or requests a refund?
If you refund a customer, Square refunds the fee as well. So if you refund a $100 sale that cost $2.70 in fees, the customer receives $100 and you receive back the $2.70 fee. You are not charged twice—the refund reverses the entire transaction including the fee.
Do I pay fees on tips?
Yes. If a customer adds a tip to their payment, the tip amount is included in the transaction total and the fee is calculated on the full amount including the tip. A $100 sale with a $10 tip costs you fees on $110, not just $100.