Music Teacher's Helper Blog

Square vs Paypal…Square gets a solid win

R&B vocalist Kira Small and her husband, bassist Bryan Beller, was in our area this summer to perform at a house concert that I was hosting. After the concert, Kira was selling CDs at the merch table. She was taking credit card purchases with this tiny white box that plugs into to her iPhone.

She told me about Square, and I decided I would test it out and see how it worked for my teaching studio. At this point all my credit card transactions were happening through PayPal, so it seemed wise to develop some alternatives.

Square has been fantastic so far, a huge step up from Paypal in many respects. The transaction fees are lower (we will look at data shortly), I have the ability to take payments anywhere quickly, I can provide receipts on the spot, and all the money is automatically deposited overnight in my bank account.

So here’s a great example of Square in action. I played a concert Sunday. Afterwards, I went to dinner with one of my adult guitar students. During dinner, she realized she hadn’t made a payment towards her tuition this month. She asked to use Square to make a payment. She handed me her credit card, I plugged the card reader into my phone and swiped her card. She signed for the transaction on the touch screen of my Droid, and then I emailed her a receipt. (You can also text a receipt.)

So she made a $94 payment on Sunday towards her tuition. I’m going to use that as a baseline to generate data. Normally, I would I pay $3.03 to Paypal in transaction fees on that. Through Square, only $2.59 was deducted. .44 cents difference. If we take that number as a sample across 65 students per month, that’s $28.60 in my favor. Over a year, that’s $343.20 more.

With Paypal, I have to wait 3 to 4 days for the money to transfer to my bank account or use my Paypal credit/debit card. Now, all of the money processed by Square is deposited automatically overnight into my bank account. Instant. Cheaper. Faster.

I’m going to keep accepting Paypal payments, but I am definitely now a fan of Square. I plan on encouraging my students and their families to switch to paying via Square in 2012.

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  1. Stephanie

    The Square doesn’t sync up via MTH. But it sounds handy it someone wants to pay you via credit card on the spot?

  2. Brittany

    Hi Steph,

    No Square does not currently sync with MTH, however I think the benefits still justify it’s use.

    I can take payments at any studio I travel to, whether or not the studio has a credit card machine. I can teach a lesson at someone’s home, and they can pay me on the spot. I can even take credit card payments for performances…say like a house concert.

    I’ve also had issues with Paypal “holding” at least 3 payments from students in 2011 alone, which has been frustrating for both students and myself. Those payments usually do not get processed for a month once a hold has been placed.

    So I believe there are a lot of good reasons to give Square a try, even if it does not sync with MTH.

  3. Ed Pearlman

    Very interesting. It means that a student who didn’t bring cash for a lesson can pay you directly with a credit card. It also sounds excellent for selling CDs, etc., at gigs.

    They say you can use it with iPod Touch, but I presume you have to have a Wifi connection in order to actually take a payment. Do you know about this, Brittany? Since the iPod Touch requires Wifi, it might be very limited in using Square. Or am I missing something on this?

  4. Brittany

    @Ed – Yes, WiFi is needed. With my Droid this isn’t an issue. Not sure how the iTouch would handle it the transaction if it wasn’t immediately in the presence of a WiFi connection. Good question to ask the folks over at Square.

  5. Christine Gasch

    I also recently started using Square, and I LOVE the ease of it! I do wish that Square linked up with MTH, but as you stated, it is definitely a lower cost convenience. I used to have so many parents who do not like to use PayPal ask if I can take a credit card in person, and until I got Square, I always had to say “no.” Now, I can gladly say “yes!” Also, with PayPal, I’ve had issues with transferring the payments to my business bank account exceeding the monthly allowance. Hard to give my teachers their paychecks when the money is locked up in PayPal until the end of the month! With Square, there is no transferring needed.

  6. Jennifer

    I’ve heard of Square and really like the idea especially since the cut they take is lower then PayPal. But my parents really like the convenience of just paying online. With Square I physically have to have a card correct? vs. just having the CC number on file or something?

  7. Jen

    At the present moment, it looks like you can key in a card number with square for a larger fee than 2.75% – it would be 3.5%+$0.15 then.

    Also, there’s a “Card Case” feature – if your students set up a card case account on their phone (or ipad?) – then they can pay you without swiping a card, at the 2.75% rate.

    Doesn’t look like parents can just pay online via sqaure.

    Swiping or Card Case paying with square is always lower than paypal, but keying in with square is lower than paypal for payments up to about $24 each. for $25 and up, paypal is lower than keying in with square.

    If you happen to be part of a non-profit (or if you have large monthly income), paypal has lower rates which beat square swiping for payments over $50 each.

  8. Jennifer

    Thanks for the info, that was helpful!

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