How Does Square Make Money?

Square is a popular payment processing company that enables businesses to accept credit and debit cards. It’s no surprise that the company has become so successful – but how exactly does it make money? In this article, we’ll explore Square’s business model and explain how it generates profits.

Square makes money by charging merchants a fee when they process payments with its services. This fee typically ranges from 2.6% to 3.5% of the total transaction, plus an additional fixed fee of $0.10 or $0.30 per transaction. The company also offers subscription-based services such as payroll, invoicing, and other business tools, which generate additional revenue for them. We’ll look at these sources of income in more detail below.

Payment Processing Fees

Square makes money through payment processing fees. It charges a standard rate for swiped and keyed-in transactions, as well as a fee for partially refunded payments. The amount of the fee is determined by the type of card used and what kind of plan the user has subscribed to. Square also collects revenue from its other services, such as Cash App, Caviar, and Square Capital.

Square offers merchants access to several features that make it easier to run their businesses. This includes things like analytics tools, customer engagement tools, and marketing materials. Through these services, merchants can monitor their sales and customer data in real time and customize their marketing campaigns accordingly. Additionally, merchants can accept payments from customers using any major credit or debit card without having to pay additional transaction fees.

The company also generates revenue from subscriptions to its software products like Square Register and Square Online Storefronts. These products provide users with access to powerful tools for managing inventory, tracking orders, setting up product listings, creating invoices and more. By signing up for these services, users gain access to features that help them run their businesses more effectively while saving time and money in the process.

Subscription Services

Square makes money by offering a variety of subscription services. These subscription services provide customers with access to a suite of products and features that can help them run their businesses more efficiently. From payment processing to inventory management, Square offers a range of tools that business owners can use to optimize their operations:

  1. Customizable invoices
  2. Instant deposits
  3. Automated bookkeeping

By offering these services, Square helps save business owners time and effort so they can focus on the day-to-day running of their businesses. With an intuitive interface and easy setup, customers have the ability to access reliable tools that help them manage their finances quickly and effectively. All these features make Square an attractive choice for business owners looking for an efficient way to manage their operations.


Square makes money through subscriptions services, as well as other sources. In addition to subscription services, Square also brings in revenue through capital investments.

Source of Revenue Description
Subscription Services Square charges merchants a fee for payment processing and access to other features like analytics and employee management.
Capital Investments Square has invested in various companies and technologies such as Food Delivery, Cash App, and Caviar.
Advertising Revenue Square also earns money by selling ad space on its blog and website.
Selling Hardware & Software Solutions Square sells hardware such as point-of-sale terminals, card readers, and mobile devices; plus software solutions designed to help businesses manage their finances.
Other Sources of Income The company also generates income from interest earned on merchant funds held in escrow accounts and fees for currency conversion.

Square’s streams of revenue have enabled the company to become profitable over the years. Additionally, the company’s diversified portfolio of products allows it to cater to a large variety of customers which contributes to its success. To further enhance its reputation in financial services industry, the company has actively pursued strategic partnerships with key players like Apple Inc., Starbucks Corporation, Walgreens Boots Alliance Inc., among others. All these factors combined have allowed Square to remain successful even during difficult market conditions.

Point-Of-Sale Hardware

Square makes money primarily through three main sources: Point-of-Sale (POS) hardware, subscription and services, and merchant transaction fees. POS hardware consists of card readers, stands, and other items that can be used by merchants to accept credit card payments in physical stores or online. They also offer subscription and services such as Square Capital, which provides loans to small businesses; Square Cash, a peer-to-peer payment service; and marketing services.

The third way Square makes money is by charging merchants a fee for each transaction they process through the platform. This is done either through a flat rate or percentage of the sale depending on the type of business being processed. The fee typically ranges from 2.6% – 3.5% + $0.15 per transaction for swiped cards and 3.5% + $0.15 for manually entered transactions.

Square also offers additional products and services to its customers such as payroll software, which allows employers to easily manage employee payments; analytics tools that provide insights into customer behavior; and invoicing capabilities that enable merchants to send bills directly from their mobile devices or computer systems. All of these features come at an additional cost but are necessary for businesses who want to maximize their profits while keeping their costs low.

Cash Advances

Square makes money by providing businesses with point-of-sale hardware and cash advances. Point-of-sale hardware includes products such as the Square Stand, which allows businesses to accept payments via credit cards, as well as other tools for tracking inventory and sales. Businesses also have the option to take out cash advances against future sales, allowing them to access capital quickly and easily.

The cost of these services varies depending on the type of product purchased or the amount borrowed. For example, Square Stand can cost up to $299 for a single device, plus a 2.6% fee for each transaction processed through it. Cash advances range from $500-$250,000, with an interest rate of 4.99%-13.99%, depending on the loan size and the length of repayment period.

Square’s services are designed to make it easier for businesses to manage their day-to-day operations while also providing access to capital when needed:

  • Square Stand provides secure payment processing and easy set up
  • Cash advances are available in amounts up to $250,000
  • Repayment terms range from 3 months – 18 months With a variety of options that are tailored to meet the needs of small businesses, Square is able to help their customers grow by providing reliable financial solutions.

Business Loans

Square makes money by offering business loans to its customers. These loans are tailored to small businesses, providing them with quick access to financing that they may not be able to get from traditional lenders. By providing this service, Square is able to make a profit while helping its customers grow and succeed.

Advantages Disadvantages
Quick Access
Low Requirements
Low Interest Rates

The advantages of taking out a loan from Square are numerous. Perhaps the most significant benefit is the speed of the process; businesses can get approved for loans in just a few clicks and have access to funds almost immediately. Additionally, the requirements for getting a loan from Square are relatively low, so more businesses can qualify than if they were applying for a loan from a traditional lender. Finally, Square offers competitive interest rates on its loans, allowing businesses to save money in the long run.

However, there are some drawbacks associated with taking out a loan through Square. For one, repayment terms may be shorter than what traditional lenders offer, which can put additional strain on businesses’ cash flow if they are unable to quickly generate enough revenue to cover their payments. Additionally, because there is no physical collateral required as part of the loan agreement, it can be difficult for business owners to prove creditworthiness and secure higher amounts of funding.

Square provides an invaluable service for small business owners who need quick access to financing without having to navigate a lengthy application process or costly interest rates. With its convenient online platform and competitive rates, Square helps small businesses take the next step towards success with confidence and ease.

Merchant Cash Advances

Square makes money by offering businesses a variety of financial services. These include business loans, merchant cash advances, and other payment processing services.

Business loans provide businesses with access to capital and can be used to finance operations, purchase inventory, hire new employees, and more. With a business loan through Square, businesses can receive up to $100K in funding with no origination fees or prepayment penalties:

  • Repayment terms are flexible ranging from 6 to 16 months
  • No collateral is required
  • Funds are typically available within 1-2 business days

Merchant cash advances offer quick access to capital without the need for repayment over an extended period of time. By advancing a lump sum of money based on expected future sales volume, Square provides immediate access to funds for businesses that would otherwise have trouble getting approved for financing. Benefits of merchant cash advances include:

  • Quick access to capital – advance is typically received within 1-2 business days
  • Fixed fee structure – no variable interest rates or hidden charges
  • Minimal paperwork – no personal guarantee required
  • No repayment term – payments are made as a percentage of daily credit card sales

Square also offers tools that help merchants make decisions about pricing and inventory management so that they can maximize their profits. They also provide analytics on customer behavior which helps merchants understand how their customers interact with their products and services in order to make informed decisions about how best to serve them.

Business Credit Cards

The sun rises on a new day, and the Square offices buzz with a renewed energy. Employees in crisp suits stride purposefully through the lobby, each one ready to tackle the task of making money for the company. Business credit cards are just one of many ways Square earns its income.

Square’s business credit card is designed to appeal to small businesses across the country. With no annual fee and competitive rates, it makes sense for entrepreneurs who need extra capital in order to fund their projects or increase their cash flow. Additionally, they offer rewards points to encourage customers to use their card regularly.

The benefits don’t stop there; Square also offers merchants access to exclusive deals, discounts, and promotions on products and services that can help them save money while running their businesses. By using Square’s business credit card, merchants can make more money as well as save some along the way. It’s a win-win for everyone involved!

Business Insurance

Square makes money through a variety of different services and products. One of these services is business insurance, which allows businesses to protect themselves against potential risks and liabilities.

Business insurance is tailored to each individual business, taking into account their unique needs and circumstances. Square offers a range of policies that cover everything from property damage to employee injuries. Some of the features included in Square’s policies are:

  • Liability coverage for financial losses due to negligence or wrongdoing
  • Coverage for legal fees incurred by the business in defending itself
  • Property damage coverage in the event of theft or natural disasters
  • Coverage for medical expenses related to employee injuries or illnesses
  • Business interruption insurance which covers lost income due to unforeseen circumstances

In addition to providing protection for businesses, Square also helps them save money on their premiums. Their online platform allows customers to compare quotes from top-rated insurers and get customized advice on what type of policy best fits their needs. This makes it easy for businesses to find the most cost-effective solution for their specific situation. Business owners can rest easy knowing they have the right coverage at an affordable price.

Data Analytics

Square has found success by leveraging data analytics to create innovative products and services. In doing so, they have crafted a business model that generates revenue from multiple sources. From merchant services to cash advances, Square is able to monetize their platform through charging fees and collecting interest payments. This diversified approach has allowed them to become a major player in the FinTech industry.

The company takes the data it collects from its users’ activities and develops insights that are used to create new value in the form of products and services. For example, Square’s Cash App allows individuals to send money quickly and securely with just a few clicks. This type of service was only possible with the use of sophisticated data analytics algorithms that enable transactions to be processed accurately and securely. Additionally, Square also offers merchant services such as its Point of Sale system which helps businesses manage sales and track inventory in real time.

By utilizing data-driven insights, Square is able to generate income from these products and services while simultaneously providing value for their customers. It is this combination of technology and customer service that has helped make Square one of the most successful FinTech companies in the world today.


Square makes money in multiple ways. They charge fees for payment processing, subscription services, point-of-sale hardware and cash advances. They also offer merchant cash advances, business credit cards and business insurance. Finally, they make money from data analytics. All these revenue streams have allowed Square to become an industry leader in the payments space. I’m impressed by their ability to generate revenue from multiple sources – it’s no wonder why they’ve been so successful!