Square gives away its card reader and charges 2.75 percent per swipe

Square gave its mobile card reader free to anyone who signed up, and sold it in Apple stores for $9.95 with a $10 rebate for new users. It made money on each payment at a flat 2.75 percent. By August 2011 it reported 1 million users and about $4 million processed daily. It later announced 2 million users and over $16 million a day.

By Race to Scale Desk, edited by Lila Odinaev. Published 24 Oct 2026. How we work

What they ran

Square handed its card reader to anyone who signed up on its website, at no charge. To reach more buyers, it initially also sold the reader in Apple stores for $9.95 and gave new users a $10 rebate at signup. Revenue came from transactions, at a flat rate of 2.75 percent. A later version of the idea, described in Square's Tap to Pay announcement, lets sellers take contactless payments on an iPhone with no extra hardware or added cost.

What happened

A SingularityHub profile reports that Square reached 1 million users by August 2011 and processed about $4 million a day. In the month before the profile ran, Square announced 2 million users and $6 billion a year in volume, more than $16 million a day. Staff grew from 80 in 2011 to 300 by mid-2012. Square says the hardware-free option gives new merchants an easy way into its wider set of business products.

What the account does not show

The user and volume figures are company announcements reported by the profile. The source gives no baseline and does not tie the growth to the free reader rather than to other factors. The launch date is also unclear: Square's About page says 2009, while the profile says May 2010. The Tap to Pay page offers no adoption numbers to back its entry point claim.

Questions

Did Square charge for its card reader?

It gave the reader free to people who signed up on its website. In Apple stores it sold for $9.95, offset by a $10 rebate for new users.

How did Square make money if the reader was free?

Square charged a flat 2.75 percent on each transaction it processed.

How fast did Square grow after giving the reader away?

It reported 1 million users and about $4 million a day by August 2011. It later announced 2 million users and over $16 million a day, though the source does not credit the free reader for that growth.