Although nobody really refers to ‘nerdy’ people as ‘square’ anymore, the title holds true more now than ever. ‘Nerds’ have pretty much taken over the world with all the computer technology out there today.
That’s not a bad thing. The internet and tech have made lives and businesses much easier, even if there are a few disadvantages, such as a loss of privacy and security concerns.
Real estate is no exception when running a business. After all, we wouldn’t be writing these lessons every week if there weren’t so many good tech tools to run your real estate business.
This week, we want to cover something that will help with the most important aspect of your investing business – getting paid. When dealing with customers in any business, you want to make it as easy as possible for them to pay you.
Today one of the easiest ways for them to pay is with a credit card. Trouble is, it’s a lot easier for a renter, a rental property owner for your property management business or a customer for your contracting business to whip out a credit card, than it is for you to process the credit card.
Working with Merchant Processors
That’s where merchant processors come in. Merchant processing is just a fancy way of saying people who handle credit card transactions. They will accept payment from the card, and pay the business where the payment should go. (If you want to read all about the history of credit cards and how merchant processing works, here is a great article.)
If you just want to learn how you can easily accept credit cards for your business, head over to, what else? The ‘Square’ website.
Square is a great site for processing credit card transactions. It is free to join. Their fees come from each transaction. Credit card transaction fees are not dirt cheap, but they get the job done. Square charges 2.75% per transaction if you swipe someone’s credit card. If you key in the credit card number, such as when someone gives you their number over the phone, the fee is 3.5% plus .15¢ per transaction.
The reason it is so much more for typing in the number is that typing has a lot higher chance for fraud. It costs a lot to keep these transactions secure, and the cost must be paid by someone.
Because these fees may add up to large amounts when you are charging big transactions such as a construction job, you may want to add a ‘convenience fee’ to your charges to cover the cost of processing the credit card transaction. Although the credit card companies discourage this practice (because, of course, they want people to use credit cards), they can’t stop you from doing it.
Processing the transactions are simple. When you sign up, Square will send you a small card reader for free. The reader plugs directly into the headphone jack of any device. You can also buy these readers at big box stores like Home Depot and Best Buy for about $10 if you need them right away.
You will also need the Square App. It works on both Android and Apple phones and tablets. Once you have the card reader and the app, you are ready to start processing transactions.
There are two other ways to accept transactions with Square. With the advent of the new chip cards for security, you will need the new Square+ Contactless Chip Reader. It’s a slightly bigger version of the reader you plug into the phone, and is not free ($49 from the Square website). Once you have the chip reader, you will be able to accept payments from:
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Cards with Chip-enabled technology
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Apple Pay
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Android Pay
That should pretty much cover all the kinds of credit cards your customers might pay with. The chip reader also comes with a free smaller card reader, so you don’t have to order the two readers separately. Square has made a video about setting up and using your chip reader.
There is also a ‘Square Stand’ where you can mount an iPad or Android tablet to accept credit cards in over-the-counter types of transactions. This device seems like it’s more at home in a retail business rather than a real estate business where you need to be much more mobile.
Show Me the Money!
Normally, Square puts the money from a charge into your checking account within a day or two of the transaction. During holidays and weekends when banks are closed, it may take a day or two longer. Just plan on not having the money instantly.
You may also see lots of horror stories across the internet of merchant processors holding up payment for months, especially when the customer disputes the charge, also known as a chargeback. Square has a resolution dispute center and does not charge for the service.
Square will cover you for up to $250 in chargebacks each month regardless of the customer’s bank determination, as long as you did everything right with Square. If the amount is over $250, Square may pull money out of your account to cover the transaction while the dispute is underway.
One way to protect yourself is to have at least two checking accounts. The account that is linked to Square can have the money ‘swept’ out of it to the other account each day by your bank. Then if there is a dispute, Square won’t be able to take money out of your account until the dispute is resolved. You may pay some bank fees in overdraft protection if they do that, but it may be less than having the whole charge taken out when you least expect it.
Be Square
Although many real estate investors don’t deal with credit card transactions on a regular basis, it’s good to know there is a service to cover you when you do. By not having monthly fees, it’s easy to sign up for Square and have it sitting there for you just in case.
Speak Up
There are other credit card processors out there. If you’ve found good alternatives to Square, please let everyone know in the comments below.
Make It Easy – For people to pay you. Collections are hard enough. Don’t make it harder.
Become Mobile – Lots of real estate investing is face-to-face, out-in-the-field work. Make sure you can run your business from your car or briefcase. Technology really helps.
Stay Secure – Square has all sorts of encryption technology to prevent fraud and theft. Make sure you are protecting yourself against cyber thieves.
JP Moses
is a real estate investor in Memphis, TN, with experience ranging from land lording to note buying, rehabbing, and wholesaling. However, wholesaling is the area that he enjoys most and where he bring the most experience and expertise to his students.