Before Square and other mobile payments companies came along, merchants had to fork over hefty fees to accept credit cards.
With Square, small businesses fill out a form, download the app and plug a reader into a smartphone or tablet. There are no long-term commitments or monthly fees, just a flat rate of 2.75% for swiped transactions and 3.5% plus 15 cents for each transaction that is manually entered.
That has been a stroke of good fortune for Ruth Jenkins, who runs a shopping service in Oxford, Pa. She says Square has helped her small business stay afloat.
Her credit card fees used to add up to about 30% of her annual sales. With Square, she estimates she saves an average of $300 a month.
Jenkins says she has seen the online complaints about Square's customer service, and says Square may not be for every business. But, she says, it suits her.
"I always get a response when I contact them via email," she said. "They always have responded quickly."
Square decided to respond to customers electronically whenever possible in large part because of the high costs associated with fielding customer inquiries over the phone, said Rick Oglesby, senior analyst with Aite Group.
An average small-business owner rings up just $3,000 to $4,000 in sales on Square each year, he estimated.
"When you deal with very small merchants, and particularly with the pricing paradigm Square has — pay as you go, no monthly fees — it's not a very profitable segment," Oglesby said. "You can't afford a lot of additional costs."
Square has good reason to keep a lid on its costs. As it prepares for an IPO, Square is facing rising competition from established companies such as PayPal, part of EBay Inc., and a slew of start-ups including IZettle in Europe.
"Square is doing everything it can to get to profitability to enhance its market value when it goes public," Oglesby said. "So I can certainly understand where the company is coming from and why they are doing it this way."
It's unlikely complaints from small businesses will cast much of a shadow over an IPO unless Square has a high rate of customer attrition, Oglesby said.
Should Square offer small businesses more hand-holding? Perhaps in some situations, Solomon said.
"Google and Facebook do not consider us, the public, their customers. Their customers are the advertisers, and their product is free. With Square, I think of the merchants as being the customers," Solomon said. "There need to be escape hatches for when one needs human intervention."
Ann Harris, who has a farm outside Boston and also stores cars in the winter, says she happily used Square for more than two years.
"It worked great and customers were happy that I could scan credit cards easily. I was definitely pleased with the ease and cost of the service versus a traditional credit card processing service," she said.
But then a transaction for $360 to store a customer's car didn't go through.
"When I poked around the site for support, I was shocked to find no phone number for customer service and had to hunt for some time to find their email form for issues," Harris said.
She says she wrote Square an email and got a reply that the company was looking into the situation "with no information on when I might expect a response or how we might resolve this."
"It seems very strange to me that a company that deals with financial transactions can be so bare-bones when it comes to customer service," she said.