Square card readers – Will they work for you?

Square card readers are a simple credit card processing system, that links to your mobile phone, and allows you to accept credit card payments ‘out in the field.’ It is very popular with small businesses and sole traders, such as those running market stalls or mobile hair dressing services, but this article is specifically focussed on its suitability for schools and clubs, and whether it may be a suitable option for a school fete or other fundraising event.

There are other merchant point of sale (POS) systems available, such as Paypal Here and Stripe (none of which are Australian), as well as a huge range of options from the banks (check out the Canstar article here), but this is an unsponsored look at Square and its suitability for school fetes and other similar events*.

What is Square?

Square is a small, portable card reading device that accepts credit card payments and transfers the money to a designated bank account. It plugs into your smart phone or tablet via the headphone jack, and allows customers to make encrypted credit card payments without any of their information ever being stored on your phone or in the device. Square card readers will accept payment from any type of credit card, debit card or prepaid cards. (Note there are two versions – one which is a magstrip reader and cards must be swiped and the newer chip reader device.)

What sort of event would Square be suitable for?

As we move into a cashless society, people are very used to tapping and swiping for everything from their lunch to their impulse buys at Ikea. Besides, how many people actually carry wads of cash around anymore?

While people who are planning to go to a school fete may plan in advance by making sure they have cash on hand, more commonly it is the last minute people who drive past, or families who simply spend more than they thought they would, who don’t have enough money. Simply put, these are lost sales.

There are plenty of solutions, such as creating a cashless fete or hiring a mobile ATM, but allowing people to pay for their items in the manner they are most used to (ie credit cards) will significantly boost your fundraising capacity.

Every event is different, but in most instances, you would not need a credit card processing device at every single stall. They would be most beneficial in stalls with high price points (such as silent auctions), stalls selling vouchers for food or rides*, and second hand goods stalls (books, toys and clothes) where people could easily buy a lot if they were able to put it on their card.

Using Square, each stall can be set up as a different ‘location’ so you can easily monitor how many sales were made at each. A single device can be swapped between phones/devices, as long as each has the Square POS app and they have logged into the account in advance. This means, that if you have different ‘shifts’ of volunteers, they can pass the device between them, and not need to have one generous soul donate the use of their phone for the whole day. An alternative would be to utilise school iPads (if you’re lucky enough to have them.)

*Have a single place where customers buy food and ride vouchers which can be redeemed at multiple sites. For example, a family could buy two sausage sizzle vouchers, a paella voucher, a baked potato vouchers, four drinks vouchers and two drinks vouchers, pay for everything with their credit card, and then just take the vouchers to the respective stalls to redeem at their leisure.

Who can sign up for a Square account?

While individuals (sole traders, small business etc) can easily sign up for a Square account, the process is a lot more complicated for schools. In the first instance, the school itself cannot sign up for an account since they are a government entity. Secondly, the rules controlling access to many P&C bank accounts means that any one individual can (or should) not have unfettered access to the account. In most instances, this results in a requirement for double signatures each time a payment is made from the P&C account, meaning in most instances having an individual sign up for a Square account is unworkable.

However, it is possible for the P&C as an entity to sign up for an account, and although the process is lengthy and probably painful at times, it is doable.

Kurwongbah Primary set up a Square in their school tuckshop in 2017, and now processes around $200 worth of credit card payments a day, as well as creating invoices for parents and opening Tuckshop accounts for teachers. According to Kurwongbah mum Melinda Crowhurst, having the account set up in the name of the P&C, was a time consuming, but ultimately successful process. Because the back account was in the name of the P&C rather than an individual, the school needed to verify who was on the P&C by way of sending the minutes of the most recent AGM. Additionally, since the P&C did not have a credit card, they needed to apply for a Visa Debit card, which was linked to the Square account to pay the fees.

Part of the reason the process took so long (at least two months) is because Square is geared towards individuals signings up for accounts, rather than entities such as a P&C, and the online sign-up process will only take you so far before you will be prompted to contact Square to finalise the process (or the compliance team will reach out to you to finish the set-up after you have indicated your business type).

Please note: You may be encouraged to sign up as an individual with a personal account, and then add ‘authorised’ users to the account, and linking it to the P&C bank account. However, this method is not advisable, and it is strongly recommended you check with the peak body in your state first, as there are strict rules governing anything to do with accessing P&C funds. There are also defined steps that would need to be undertaken by any P&C committee planning on opening a Square account, and it would need to be formally approved and authorised by the committee, following a vote. You would also need to check with the bank that governs your specific P&C account what type of payment system (ie Debit Card or direct debit) it would allow to make the Square fee payments.

For private fundraising groups where the rules governing their bank accounts aren’t as strict, signing up as an individual is definitely still an option, although it could make some people uncomfortable. I was assured that individuals are not liable just because they set up the account. Additionally, since there is no long-term commitment, if you needed to sign up as an individual for a one off event, you could easily close the account after everything has been finalised, and another person could use the Card Readers for a future event, under a different account.

Regardless of which option you take, it is recommended you set up the account well in advance of your event in order to allow enough time for authorising users and ensuring everyone is familiar with how it works.

Each account needs to indicate what type of business it is, and obtain a four digit Merchant Category Code (MCC). For a school or sporting club wishing to use Square readers at a fete or other event, the MCC would be ‘not for profit or charity.’ This is important as there is a long list of businesses that are forbidden (or come under intense scrutiny) and you must also agree not to sell a number of products and services using your Square reader – but on the whole, selling guns and porn at a school fete is generally frowned upon anyway, so probably not an issue for most readers.

How much do the Square units cost?

While you can rent the Square card readers for single or multi-day events, if you live outside Melbourne the shipping costs probably negate any saving made on hiring them. For example a Square Contactless Card and Chip Reader can be hired for $20 for 1-3 days, or a bundle with the Reader and a charging dock is $60 for 1-3 days (you can also hire cash drawers and printers).

However, you can buy the units from places like Officeworks for $59 each (or $299 for the reader and stand). Don’t be confused by the images in the $299 package – it does not include the ipad/screen as part of the package.

What are the fees associated with Square?

It is free to sign up to Square and there are no ongoing or monthly fees. There is also no difference in the fees regardless of whether someone is paying by Visa, Mastercard, Amex or debit card. Using the mobile card readers, the fee is 1.9% per transaction (tap, swipe or insert) and 2.2% if you need to manually enter the payment through the Square Point of Sale app (ie you can actually accept payments via the Square POS app even if you don’t have a reader, simply by manually typing in the credit card details).

For example, if you accept a payment of $25 for a bundle of second-hand books and clothes, when you access the bank account the following day, 47.5 cents will have been taken out as fees, leaving you $24.52.

What else do you need to make Square work?

The Square card readers only work when plugged into a smart phone or iPad and in most instances, you need wifi or access to the internet. This means if you are considering Square for your school fete, each device needs to be attached to someone’s phone/tablet which either has its own data or can connect via wifi to a school account. Keep in mind how far your fete is located from your school buildings and what your wifi range might be.

Each phone/tablet will need the Square Point of Sale app loaded in advance (available for free from any App store).

You also need to make sure both the phones/ipad and the card readers are fully charged prior to the event, unless your sales people will be able to plug into a power supply (the docks/charger costs around $40 and can be used to charge the Reader while still in use).

If some of your volunteers have the brand new iPhone 7, they won’t have the ear phone jack and will need to source an adaptor so they can plug the Reader in.

What if our event is located in a park or we don’t have wifi?

If you don’t have access to the internet, you can use the readers in an offline mode. This comes with an element of risk, as in this instance the data from the payments are encrypted and stored on your device. Later when the devices are connected to the internet, the data is transferred to the Square services and deleted from your device.

What this does mean however, is that if someone pays for an item using an expired or stolen credit card, doesn’t have enough money in their account or it is declined for any other reason, you are responsible for this and any fees associated with it (you will still have to pay the Square fees). You can mitigate the risk by making sure people check credit cards closely, limit the amount of each transaction, and collect a name and/or phone number at the time of sale.

What are people saying about Square?

If you go online there are mixed reviews about Square card readers. One of the major complaints is from businesses who have their money withheld for various reasons. This may be because high volume sales can trigger an internal alarm that requires a real person to monitor the transactions, or perhaps a dodgy card has triggered a review. Customer service has also been noted as an issue in resolving these complaints, mainly because phone support is only 9am-5pm Monday to Friday, and not much help if you run into problems during your weekend event.

However, this doesn’t seem to be the case with small business and sole traders in Australia, such as people running their own clothing businesses or those who operate market stalls, who rate Square very highly.  Rawinia from Little Chicken Handmade is a sole trader, and found Square quick to set up and easy to use. Similarly, now their school Square account is up and running, it is working well as a point of sale system for the Kurwongbah Primary tuckshop.

Summary

While there has been some success by Australian schools setting up a Square account, it is a relatively complicated process, which may be made easier or more difficult depending on who you bank with and whether your P&C has access to a Debit card to pay Square fees.

*This article is not sponsored. I was researching Square card readers as an option for our own school fete which we will be holding later in the year and wanted to share what I learned to save you time.

Author: Shannon Meyerkort


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