How Square’s new Bitcoin Payments works: fees, Lightning, and merchant setup

This article was first published on The Bit Journal.

Jack Dorsey’s Square, Inc. has launched a new service that allows more than 4 million U.S. merchants to accept Bitcoin (BTC) at checkout. The feature is called “Bitcoin Payments” and allows payments via the Lightning Network with zero fees until 2026, 1% fee in 2027 and beyond.

Merchants can choose to settle in BTC or USD and bypass traditional card networks and chargebacks. This is a huge step in the Bitcoin payments rollout, combining crypto and brick-and-mortar commerce in real time.

What’s in the Bitcoin Payments Rollout

The Bitcoin payments rollout includes:

U.S. merchants, excluding NY State, using Square’s point-of-sale (POS) terminals can now accept Bitcoin via a QR code invoice on the Lightning Network

Zero fees on these transactions until the end of 2026, 1% fee starting January 1, 2027

Merchants can settle in BTC, convert automatically to USD or a mix of both. According to Square; users can expand their customer base by accepting Bitcoin payments and automatically receive them as BTC or USD.

Tightly integrated into the Square dashboard for automatic reconciliation, tax-tracking and visibility alongside traditional card and cash operations.

Square claims this is part of its mission to make Bitcoin everyday money, not just a store of value.

For Merchants and Consumers

For merchants, this means wholesome changes. Accepting crypto means no card-network fees and no chargebacks, a costly pain point for many retailers. 

Instant settlement via Lightning network means faster access to funds and less reliance on legacy payment rails. For consumers, it means the ability to pay with Bitcoin or fiat interchangeably, depending on their wallet and preferences, making Bitcoin a practical option at the counter.

As one pilot merchant said:

“We used Bitcoin Conversions in beta… now with Bitcoin payments we can serve our customers in more ways”. 

Why Now?

The Bitcoin payments rollout comes at a time when commerce and crypto are intersecting more. Square’s move coincides with institutional and infrastructure readiness. The Lightning network is ready for retail, consumer crypto adoption is rising and merchants are looking for cost savings.

The Square press release says:

“The Bitcoin tools we’re building … are making Bitcoin payments as seamless as card payments while giving small businesses access to financial tools that were previously exclusive.”

And no fees until 2027 means no pressure to adopt right away. This gives Square time to build out infrastructure, gather feedback from merchants, and normalize Bitcoin at the point of sale before monetizing the service.

Conclusion

The Square Bitcoin payments rollout is a big deal for crypto in everyday commerce. Starting November 10, 2025, over 4 million US merchants can accept Bitcoin via the Square POS, with no fees until 2026, instant settlement on the Lightning Network and flexible settlement options.

This closes the gap between crypto and traditional payments infrastructure by having wallet, conversion and merchant workflows natively.

Execution and adoption will determine the outcome but the Bitcoin payments rollout makes Bitcoin a payment option not just a store of value.

Glossary

Bitcoin Payments: A commerce feature that lets merchants accept Bitcoin at checkout via POS, with optional settlement in BTC or USD.

Bitcoin Conversions: A feature that lets merchants automatically convert a portion of daily card sales into Bitcoin for diversification or treasury purposes.

Lightning Network: A layer-2 protocol on Bitcoin that enables fast, low-fee transactions.

Point-of-Sale (POS): A terminal or system used by merchants to process customer payments.

Settlement: The process by which merchants receive funds from a transaction.

Frequently Asked Questions About Bitcoin Payments

When was the new Bitcoin payments option announced?

It was announced on November 10, 2025; for U.S. merchants (excluding New York State) using Square’s point-of-sale system.

Are there any transaction fees for merchants?

Yes; but no fees through December 2026; 1% flat fee starting January 1, 2027.

Can merchants settle in Bitcoin or fiat?

Yes. Merchants can receive payments in BTC; convert them to USD, or choose another option.

Do this integration support refunds and chargebacks?

Bitcoin transactions settled via this rollout are irreversible. Refunds, if offered, would be handled via Square’s digital gift card equivalent instead of chargebacks.

Where is this available and are there exclusions?

US merchants using Square (except in New York State); as of the launch date. International expansion coming but not live yet.

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