Takeaway: Square is the lowest cost offering available for retailers taking less than £6300 per month on card, and is a strong contender for larger businesses when taking into account their powerful, free POS app.
More than 8 years after the company’s inception, Square – the original mobile payments company, has chosen the UK for their first European expansion. Late to the market, Square has tough competition in established rivals; iZettle, SumUp, PayPal Here and higher-end point of sale software.
So how does Square compare to the rest? Square’s self-described differentiator is “giving sellers their money the next business morning”, but from our experience, I don’t believe this alone will be a key selling point, especially when compared to iZettle’s 2-3 day settlement and instant availability with PayPal Here.
Where Square really stands out among the current free POS or “mPOS” providers is the maturity of their product. If you treat the payment processing aspect of your setup as a commodity, part of a technology stack that exists to help you manage and grow your business (as you should). Square starts to look a lot more attractive, despite the potentially higher transaction costs.
It can be especially hard for SMBs to determine how much payment processing will actually cost you, due to the many variables involved in pricing structures. Luckily, we’ve done the hard work for you, pulling pricing data from each provider, making it easy to see your real monthly and yearly costs for each option.
Let’s first take a look at a direct comparison between iZettle, the current market leader, and Square. Whilst Square charges a flat 1.75% rate on all in-store card transactions, iZettle’s slightly more complex transaction rate decreases as your payment volume rises:
This comparison shows you’re better off using Square to process your card payments up to around £6300 / month (or ~£75,000 / year), after that point iZettle starts to wins out on cost. Plus, you have the additional benefits of next day settlement and a much more feature-rich, free point of sale app, and reporting back office. That’s a strong value proposition for smaller businesses and sole traders. For completeness, let’s add in the other major market players:
As you can see, this doesn’t really change the options much. At any processing volume, either Square or iZettle come out cheaper, with PayPal only becoming competitive at processing volumes above £15,000 / month.
So if we treat payment processing as a commodity product, the data would suggest it makes sense for businesses turning over less than around £6k per month to use Square and any higher turnover business to use iZettle. For example, a business processing £10,000 a month would be over £250 a year better off using iZettle compared to Square, and almost £600
Square’s reader is available for £39 from their online store, Apple Stores and Amazon.com. As with the other mPOS providers, you pay a one-off charge for the reader and are not locked into any contracts. We always encourage businesses to look past the initial cost of mPOS card readers, they’re usually comparably priced, and often heavily subsidised by providers to encourage you to look past higher transaction fees.
Square’s reader is notable for one reason though, without a dedicated PIN pad on the reader, customers will need to enter their PIN on the iPad or Android tablet running the Square app. This will be a first for many UK customers and requires a higher level of trust in the retailer than with traditional card readers. It will be very interesting to see how this is perceived, especially outside major cities where contactless adoption is slower.
Peripheral costs for receipt and kitchen printers, barcode scanners and cash drawers remain the same across the board as Square integrates with the increasingly standard brand names adopted by cloud-based POS vendors. This is great for business owners, who can switch providers without investing into expensive proprietary POS hardware, just buy a new card reader and download the app!