Square quietly increased its processing rates in early 2026. If you’re a small business owner using Square for payment processing, you may have noticed higher fees on your statement without any explanation.
Here’s what changed, why it matters, and why thousands of merchants are switching to processors with transparent, locked-in pricing.
The 2026 Square Fee Hike: What Changed?
Starting January 13, 2026, Square implemented pricing changes hitting merchants across the board:
Online Processing Fee Increases:
- Free plan users: Rates jumped from 2.9% + $0.30 to 3.3% + $0.30 per transaction
- Premium plan users: Rates increased from 2.6% + $0.30 to 2.9% + $0.30
That’s a 14% increase for free tier users on every online sale. For a business processing $10,000/month online, that’s an extra $40/month in fees — money that goes straight to Square’s bottom line, not yours.
In-person rates also adjusted based on subscription tier:
- Free plan: 2.6% + $0.15 (tap, dip, swipe)
- Plus plan ($49/mo): 2.5% + $0.15
- Premium plan ($149/mo): 2.4% + $0.15
Manually keyed transactions remain at a steep 3.5% + $0.15 across all plans.
The “Free” Plan Isn’t Free Anymore
Square’s original appeal was simple: no monthly fees, pay-as-you-go. But at 3.3% per online transaction, you’re paying one of the highest rates in the industry. With interchange-plus pricing through AGMS, you only pay the actual network fees plus a small, transparent markup — typically saving 30-40%.
Square’s Perfect Storm: Fees + Outages + Fund Holds
The price hike alone would be bad enough. But 2026 has brought a triple threat for Square merchants:
1. Service Outages Are Increasing
On March 17, 2026, Square experienced a global outage causing intermittent connectivity, elevated error rates at checkout, and slower transaction response times. This follows multiple incidents in February 2026.
For a restaurant during lunch rush, a food truck at a weekend market, or a retail store on a busy Saturday — an outage means lost sales that never come back.
2. Fund Holds Are Creating Cash Flow Nightmares
The most damaging pattern involves 90-day holds on merchant funds with little explanation. Recent BBB and Consumer Affairs reports from early 2026 document:
- A March 2026 complaint: $47,000 held past the promised release date
- Funds held since 2024 in an endless “compliance loop” with no resolution
- $11,200 ACH transfer frozen for 90 days after account deactivation — despite zero chargeback history
- Multiple January-February 2026 reports of 180-day holds citing “unspecified security concerns”
The pattern is consistent: Square deactivates accounts with vague explanations (“unable to support your business needs”) and holds funds for 90-180 days. For small businesses, this can mean missed payroll, unpurchased inventory, and sometimes business failure — before they ever get access to their own money.
We covered this in depth in our complete guide to avoiding payment processor freezes.
3. Regulatory Gaps Leave U.S. Merchants Exposed
Starting May 2026, new UK regulations require payment processors to give 90 days’ notice before terminating accounts. But these protections don’t automatically extend to U.S.-based merchants. American business owners remain vulnerable to sudden deactivations with minimal notice and frozen funds.
The Real Cost: Square vs. Interchange-Plus Pricing
Here’s what you’d actually pay on $20,000/month in card sales:
- Square (Free plan): ~$660-740/month in processing fees
- Square (Premium at $149/mo): ~$480 processing + $149 subscription = $629/month
- AGMS (interchange-plus): ~$380-450/month — with locked rates that don’t change
Annual savings by switching: $2,000-3,600. And that’s before you factor in the risk of a fund freeze.
The difference comes down to pricing transparency. Square charges a flat rate that includes a hidden markup. With AGMS interchange-plus pricing, you see every fee on your statement — interchange, assessment, and processor markup — all separate, all transparent.
What Square Doesn’t Tell You About Flat-Rate Pricing
Flat-rate processors make money on the interchange spread:
- Customer swipes a card → card network charges interchange (say, 2.3% + $0.10)
- Square charges you 3.3% + $0.30
- Square keeps the difference: 1.0% + $0.20 per transaction
They never show you the real interchange rate. They never disclose how much of your payment is their markup. You just pay 3.3% and hope it’s fair. (It’s not.)
With interchange-plus, every line item is visible. You pay what the card networks charge — at cost — plus a small, fixed markup from AGMS. No hidden spreads. No surprise increases.
Better Alternatives to Square in 2026
If Square’s fee hikes and fund holds have you looking for alternatives, here’s what AGMS offers that Square can’t:
Locked-In Pricing That Doesn’t Change
Your rate is set when you sign up. No annual increases. No “we’re adjusting the fee structure” emails. What you agreed to is what you pay — period.
Your Money, When You Need It
AGMS provides next-day funding and doesn’t hold your funds without cause. If there’s ever a compliance question, we talk to you first — we don’t freeze your account and make you submit tickets to a chatbot.
Real Human Support in the U.S.
When you call AGMS, you reach a real person in Dallas who knows your account. Not a bot. Not a 3-hour queue. A dedicated account manager who can actually solve your problem.
Hardware That Fits Your Business
Unlike Square’s locked ecosystem, AGMS lets you choose from every major terminal brand:
- PAX A80 ($199-$299) — countertop terminal for retail, salons, restaurants
- SwipeSimple ($10/month) — mobile card reader for startups and on-the-go
- Clover — full POS with inventory, employee management, and app marketplace
- Quantic POS — restaurant POS without Toast’s $69-165/month fees
- PAX A920 — fully portable terminal with 4G for food trucks and delivery
Zero Processing Fees Option
Want to eliminate processing costs entirely? AGMS offers a cash discount program at $30/month flat — $0 in processing fees. The service fee is passed to card-paying customers, and you keep 100% of every sale.
How to Switch From Square (It’s Easier Than You Think)
Week 1: Apply for an AGMS merchant account — most approved in 24-48 hours. Choose your hardware.
Week 2: We program your terminal, set up your gateway, and run test transactions. Train your team.
Week 3: Go live. Process real transactions with locked-in rates and next-day funding.
No forced contracts. No exit fees. No 90-day fund holds. And we handle the entire migration — you don’t have to figure anything out alone.
For a detailed comparison, see our full AGMS vs Square breakdown.
Frequently Asked Questions
Did Square really increase fees in 2026?
Yes. Starting January 13, 2026, Square raised online processing rates for free plan users from 2.9% + $0.30 to 3.3% + $0.30 — a 14% increase. Premium plan users saw rates go from 2.6% to 2.9%.
Can Square legally freeze my funds?
Yes — their terms of service allow holds of 90+ days after account deactivation. While legal, many merchants report holds extending to 180 days with vague explanations and no clear resolution path.
How much can I save by switching from Square?
Most merchants save 20-40% on processing fees by switching to interchange-plus pricing. On $20,000/month in sales, that’s $2,000-3,600/year back in your pocket.
Is it hard to switch from Square to another processor?
Not at all. AGMS handles the full migration — account setup, terminal programming, and testing. Most merchants are live within 2-3 weeks. You can run both processors during the transition so there’s zero downtime.
What if Square is holding my funds right now?
Document everything, request a written explanation, and apply for an AGMS merchant account immediately so you can keep accepting payments while Square resolves the hold. We can have you processing within days.