A number of lawyers have asked me recently about using Square to process credit card transactions. Admittedly, the ads are appealing. If you are an iPhone, iPad, or Android user and want simple, straightforward credit card processing, I understand the temptation. Square advertises:
- Fast set up
- A free credit card reader and free apps
- Next-day payout
- 2.75% merchant fee
If you occasionally accept credit cards for earned fees only and own an iPhone, iPad, or Android, then Square may be a good choice for you. It is not a good choice if you:
- Want to accept credit cards for trust funds (Only one account can be linked at a time.)
- Anticipate taking payments offline (You must have an Internet connection to swipe.)
- Don’t have the app (There is no way to process payments through the Square Web site in lieu of a mobile device.)
- Prefer maximum flexibility in processing refunds. (Refunds are only available for transactions processed less than 60 days ago. Partial refunds are not allowed.)
- Expect to process payments manually. (If you accept more than $1,000 in card-not-present payments during any trailing seven day period, Square will defer depositing the amount in excess of $1,000 for 30 days – but see the tips below.)
The lesson here is simple: always know the Terms of Service for any vendor with whom you do business. It only takes a few minutes to review the content at Square’s Help Center. I found it to be direct, to-the-point, and easy to navigate.
My Experience with Square
As a customer, I used Square for the first time recently. I really liked it! The store owner swiped my card, entered the amount and description, and I used my finger to sign on her iPad. It was easy/breezy. (I chose to have the receipt e-mailed to me.)
Tips for Using Square
A couple of tips that I learned from this retailer and a lawyer I know who uses Square:
- Customer support is friendly, helpful, and knowledgeable. Once you jump through the support hoops on their Web site, I’m told they are very easy to work with.
- Haggle! Terms with Square can be negotiated – just ask! One lawyer I know got Square to change his terms for processing payments manually – see above. I’m sure it didn’t hurt that he had a track record with them.
- Using Square on the iPad is substantially easier than using it on the iPhone or Android (Clients will have a difficult time signing on the small screen of your smartphone.)
- Remind ladies with long fingernails to sign with the pads of their finger, not with their nails – the signature technology is heat-sensitive. Nails won’t work and may scratch the surface of your iPhone, iPad, or Android.
Other Alternatives for Lawyers Who Want to Take Credit Cards
LawPay/Affinipay is my favorite choice by far.
How does LawPay work?
- Lawyers using LawPay save up to 25% on credit card processing fees compared to typical bank charges for the same service.
- Fees are deducted exclusively from the operating account (no client money is ever taken).
- Funds are never commingled between the operating and trust account.
- You are in control of your deposits. If you take a credit card for a retainer, simply direct LawPay to deposit the funds in your trust account. If you accept a credit card for fees you have already earned, direct LawPay to deposit the proceeds into your operating account. Your ability to “direct traffic” ensures that funds are always properly separated.
- Transactions can be processed traditionally or via virtual terminal (i.e., over the Internet).
For a refresher about accepting credit cards (and the ethical constraints), see this blog post.
Copyright 2012 Beverly Michaelis
Oregon Law Practice Management 
Can’t you solve the problem of depositing funds into your IOLTA account simply by setting up a second Square Account that is linked to your IOLTA account?
From my perspective, the real problem with taking IOLTA funds through Square, is that the fee is deducted before the funds are deposited. Thus, instead of your client having $[retainer amount] in trust with you, he has $[retainer amount minus 2.75%].
On the other hand, I do love using the Square. It makes accepting credit cards easy for a number of small businesses (my wife’s Rotary group uses a square to process payments at their annual silent auction).
Hi Bryan, You could set up multiple Square accounts, with a merchant fee of 2.75% as you indicated. However, with Law Pay (and possibly Law Charge), you create one account only, direct where the deposits go with each transaction, and pay a lower merchant fee. (Some attorneys have reported paying as little as 1.78%.) Law Pay offers virtual credit card processing through their Web site, which could be done via any device connected to the Internet (iPhone, iPad, etc). Granted, you can’t “swipe” a credit card through Law Pay…. but managing only one credit card account at a lower rate per transaction may offset that inconvenience for some.
Also, keep in mind, if you go through this process: 1) have $1000 placed in the IOLTA account through a credit card; 2) transfer the $1000 to your business account when the work is completed; and 3) have $1000 removed from your IOLTA account through a chargeback because a client challenges the charge – you’ve just exposed the trust funds of other clients. Now you have a professional liability issue. You do not want to create a situation where the credit card company can withdraw funds from your IOLTA account.
I certainly agree about Law Pay. I use their services and have since I opened my own firm. They are great and I recommend them to any attorney considering a merchant account. My bank wanted that business from me. I sent them my Law Pay statement and my bank told me that there was no way they could beat Law Pay’s fees.
I went with Law Pay based on the recommendation from this site and also talking to other practitioners about their particular merchants. Law Pay by far is the most competitive. Also, the support staff has been wonderful.
Thanks Meghan! Good to hear 😀
Beware of this company! Do not use them. I know it is hard to believe but they hold customers funds indefinitely and have no phone number! A good attorney should jump on this and file a class action. Check out some of the complaints: http://www.cardpaymentoptions.com/credit-card-processors/square-review/
Hi Laura,
Thank you for your comment. The purpose of my post was two-fold: (1) to show the consumer appeal of using Square (As a buyer of merchandise I liked it quite a bit); and (2) to document the limitations of using Square – specifically if the merchant user is a law firm. I agree that Square delays payment of funds in “card not present” transactions. And there are other transaction limitations. A good reminder to always read the Terms of Service and other fine print when selecting a vendor for your business. Beverly
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how do you add a 2cd account to the Square using the same device. Is there some way to decipher between which account you use?
Hi Julie,
As you know, Square does not permit users to send funds to multiple bank accounts from one Square account. The workaround is to set up a unique Square account for each bank account. Square then advises: “log in to your mobile device to the account where you want payments deposited.” See https://squareup.com/help/en-us/article/3896-link-and-edit-your-bank-account#multiple-bank-accounts. This begs your question – how do I tell the two accounts apart? One way may be to take careful note of the account type when making a deposit (Business checking, trust account, savings, etc). See: https://squareup.com/help/en-us/article/3896-link-and-edit-your-bank-account#linking-your-bank-account. Another indicator could be the account holder’s name unless the accounts are identically named. Obviously the two account numbers will be different, but that is a tedious distinction.
I suggest remaining logged in to the account you use the most. In other words, make it your default choice. If you need to make a deposit via Square to your other account log out and log back in to your other attached bank account… Obviously you’ll need to reset the default after you do this… I also suggest going to Square’s site at https://squareup.com/help/en-us. Login to support. Ask if they have any recommendations about easily differentiating between two Square accounts.
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