How does Square make money?

When Square, Inc. first started in 2009, there weren’t any online mobile payment solutions available to users. Through its Square Reader, its first product ever, the company changed the landscape of the mobile payments industry.

The reader introduced a new system of payments for businesses and merchants, allowing them to receive payments remotely. Today, the company dominates the industry, with over 24 million users.

The company, in 2019, generated revenues of $4.70 billion. Through this revenue, the company also made a net income of $375.45 million and operating income of $26.56 million.

Square, through its past performances, has also achieved a strong financial position with total assets of $4.55 billion and total equity of $1.71 billion in 2019.

The company has generated its revenues from its wide portfolio of products and services it provides. These include products such as the Square Stand, Square Register, Square Terminal, etc.

Furthermore, it includes services such as Square Payroll, Square Capital, gift cards, appointment software, and its famous Cash App. The company has tapped into many different markets that have increased its revenues significantly.

Despite all of these products, some users don’t know how Square makes money. The company provides its most famous and commonly used product, the Square Reader, for free.

However, the company still has many other sources of income that allow it to generate revenues in billions. Some of the ways in which Square makes money are below.

How does Square make money?

Before getting into details of how Square makes money, it is crucial to look at the breakup of the revenues it generated in 2019. Below is the extract from the Financial Statement of the company for the year 2019.

Transaction-based revenue3,081,0742,471,451
Subscription and services-based revenue1,031,456519,706
Hardware revenue84,50568,503
Bitcoin revenue516,465166,517

The company generated 65% of its revenues in 2019 from transaction-based revenues, which is the highest percentage from its offered services.

Similarly, it generates 22% revenues from subscription and services-based revenue, 2% from hardware revenue and 11% from Bitcoin revenue.

The proportions are almost the same for 2018 as well. However, in 2019, the Bitcoin-related revenues increased more than 2 times.

1) Transaction fees

The top source of income for the company is through transaction-based revenue. Transaction-based revenue includes the commissions that the company charges on each transaction.

For standard transactions, the rate the company charges is 2.6% and a $0.10 fixed fee. For online transactions, the company charges its users 2.9% and a $0.30 fixed fee.

The transaction-based revenues allow Square to charge users for every transaction they make with their customers. The main moneymaker for transaction-based income is the commissions the company charges.

It helps the company earn higher when the amount of the transaction is also high. Therefore, the company benefits more from commission rates rather than the fixed charges.

2) Plus plan

The platform also offers a Plus plan to its users, which costs $60 per month per location. For restaurants, the fees are $60 per month and an additional $40 per location.

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It has a few perks that users can get. First of all, it allows users to use all the tools that free users get and some other advanced tools.

These include advanced inventory tools, advanced retail reports, shift reports, section sales reports, live sales, Square Team Management tools, etc. The fees for the Plus plan fall under the category of subscription-based revenue.

The Plus plan also decreases the transaction-based commission rates for in-person transactions. As mentioned above, users have to pay 2.6% commissions for every transaction.

However, with the Plus plan, they only have to pay a 2.5% commission. For online transactions, the rates remain the same despite the Plus plan.

3) Premium services

Square also makes money from its premium services. The company offers users that process over $250k per year to use the premium features.

Square negotiates offers with each user individually for premium features. Therefore, there are no details of how much the premium pricings are for customers. Premium users get the Plus plan and some discount from the company.

4) Square Appointments

Square also offers software to users for managing their appointments. For businesses that have only one employee with whom they can book appointments, the charges include only a 2.6% commission and $0.10 fixed fee.

Businesses with more than one employee have to pay 2.5% per transaction and a $0.10 fixed amount. Businesses with 2-5 employees have to pay $50/month to the company, and those with 6-10 employees have to pay $90/month.

5) Other solutions

The company also offers other solutions for which it charges. For example, the Team Management solution can be free but can also go as high as $35/month per location.

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Square also offers Payroll services, for which users have to pay $29 fixed subscription per month and $5 per each employee.

Similarly, the company also offers the Loyalty program for which the users must pay charges starting at $45 per month. Furthermore, the company provides marketing solutions for which it charges users fixed fees starting at $15 per month.

Other solutions also include gift cards the company offers. These charges include 2.9% + $0.30 transaction fees when customers purchase a card. Furthermore, the company offers users to customize their gift cards with different packages.


Square is one of the leading names in the mobile payments solutions industry. The company offers multiple products, for which it earns money.

The company made revenues of above $4 billion in 2019. Given above is a detailed description of how Square makes money.

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