Square: Accept Credit Cards via Smartphone


One of the most daunting tasks I encountered when setting up my law practice (other than getting clients) was figuring out how to accept credit cards and pay for all the equipment, services, and fees. Running a new solo practice already provides a pretty slim profit margin, and the idea of finding the capital to buy the equipment and pay the monthly service fees and percentages seemed unlikely at best.

Which is why I was so excited when I read about a new credit card system called Square.

Square provides a free credit card reader to use with any mobile device that uses Android or iOS. After you have successfully signed up for an account and downloaded the software to your phone or iPad, Square processes your request and sends out the credit card reader (which is quite small and plugs in via the headphone jack). Once my reader shipped it arrived in about 3 days, but the processing period took weeks.

Square undercuts the competition for credit card processing as well. No merchant account is required, there are no monthly fees, there is no contract, and the percentage of the charge is far lower than other processors. With the card, the fee is only 2.75% + $0.15 per transaction.

And it’s fast too. I charged $1.00 to myself a few times just to test it out, and within 15 seconds of completion of the the transaction appeared on my account page on Square’s website, and within 60 seconds I had received the email receipt in my inbox. By the following day the money had been sent to my account. Keep in mind, though, that the timing on the receipt of the funds will be determined by the banks, so it still may take a few days for the money to actually appear in your account.

Currently I am only using this for flat fee transactions. There is a potential problem with using this for trust accounts in that it pulls the fee from the transaction rather than from a separate account, meaning that you would technically be misusing client funds every time you accepted a credit card payment for a retainer. I have yet to delve into that situation and see if there is any way to work with Square to set up a separate account that will work for trust accounts. For the time being, I have heard that Law Charge works well for that sort of situation.


  1. Avatar Andrew Flusche says:

    Hey Graham,

    I was really intrigued when Square first came out, but I was disappointed when I read their TOS:


    Basically, you’re correct about the trust account issue. I don’t see any way the service could be used for money that belongs in trust. For Virginia lawyers, that even includes flat fees that are paid in advance.

    The way I understand it, Square holds your money in its own pooled customer account. Then you have to affirmatively ask them to disburse your funds via ACH or a physical check. I think using this for trust money would be a serious violation of trust accounting rules, at least in Virginia. And that’s aside from the issue of how they take out their cut.

    But I’m glad to hear it works. It’s an incredible concept!

  2. Avatar Graham M. says:

    Hi Andrew,

    I agree that the trust account issue will be problematic for Square users, and that unless they set up a special service for that sort of use, it will not be available for retainer payments.

    As for the pooled funds and fund requests, though, I did look at that initially when I was learning about the service, and so far I have actually had the test funds sent to me the day following the transaction (which then takes 1 to 3 days to hit the account). I don’t know if that changes as the dollar amount gets higher (I was only charging $1 for testing purposes), but I didn’t request that money and it just showed up.

    I will report back as I have more experience with it.

  3. This issue came up on a list-serv recently in relation to Square and Minnesota attorneys. At least in Minnesota, accepting retainer payments by credit card, even if a portion of it is unearned, “can be done” but is “discouraged.” Here’s how the Minnesota OLPR asks and answers the question in its FAQ about trust accounts:

    Some of my clients want to pay advance fee retainers by credit card. Those transactions should go through my trust account, right?

    Credit card payments present a problem because credit card issuers usually require the lawyer to authorize the issuer to reverse transactions or unilaterally debit the trust account for transaction fees, charges which exceed balance limits, and other costs. This gives a non-lawyer the power to withdraw client funds from a trust account, which is prohibited by Rule 1.15(j), MRPC. While the use of credit cards for payment of funds that are to be held in trust is discouraged, it can be done. Unless the credit card company can credit the funds to the trust account, while debiting all fees exclusively from a business or other non-trust account, all credit card transactions should be processed through the lawyer’s business account and any unearned portion immediately transferred to the lawyer’s trust account. The lawyer must transfer the full amount of the unearned funds to his/her trust account and may not deduct any credit card fees from those funds.

  4. Avatar Graham Martin says:


    Thanks for the insight on this. That response makes Square significantly more useful generally, although I expect that this will be different state-to-state. I think it is still something that everyone should check on before assuming it can be done appropriately, just to make sure that there aren’t any concerns about misappropriation of client funds.

    Thanks again.

  5. Sam Glover Sam G. says:

    Square would be awesome if it would approve me to receive credit cards. No idea why they have turned me down; nobody else seems to have a problem with it.

  6. Avatar J.G. says:

    Square is a great story and its founder is a great entrepreneur, but merchants need to look beyond the hype and into the numbers. The question you should be asking yourself is “Does it make sense for me to accept credit card with Square?” For some the answer will be “yes” (as for the cupcake baker in our story: http://blog.unibulmerchantservices.com/cupcakes-credit-card-processing-and-square)/, but for quite a few the answer will be “no.”

    Simply put, Square is a good match for merchants with low monthly processing volumes (because it comes with no monthly or any other fixed fees) and for merchants whose average transaction amount is very low (because Square charges no fixed transaction fee). However, for everyone else its 2.75% per-transaction rate is simply way too high, as the industry average hovers around 1.70% plus $0.20 per transaction.

    • I don’t know where you get that the industry is average is 1.7%. That’s pretty accurate for Visa/Mastercard, but most standard credit card readers charge nearly 5% for Amex and well above 3% for Discover. But, overall, the average is going to be solidly above 1.7% for credit cards.

      The problem with Square, to the extent there is one, is that Square charges the same 2.75% on check card transactions, which run about $1 for a standard credit card terminal.

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