Block, Inc. (formerly Square) announced at the Bitcoin 2025 conference that starting in late 2025, its Square point of sale (POS) system will allow merchants across the U.S. to accept Bitcoin payments. This feature is expected to become widely available by 2026, pending regulatory approval.
Customers will pay by scanning a QR code, and transactions will be processed almost instantly using the Bitcoin Lightning Network, a second-layer protocol built on top of the Bitcoin blockchain. Square will handle currency conversion and transaction confirmation behind the scenes, making the experience seamless for both merchants and customers.
Why Are Bitcoin Payments on Square So Cheap?
Traditional credit card payments typically charge merchants fees of 2-3% per transaction. In contrast, Bitcoin payments over the Lightning Network cost only a few cents, which might sound too good to be true.
Here’s how this is possible:
1. Off-Chain Transactions:
The Lightning Network enables payments to be made off the main Bitcoin blockchain. Instead of every transaction being recorded on-chain (which requires costly miner fees), users open payment channels between each other. Within these channels, they can transact instantly and repeatedly without broadcasting every payment to the blockchain. Only opening and closing the channels are recorded on-chain, greatly reducing fees.
2. Fee Structure on Lightning:
Fees on the Lightning Network are set by operators of payment channels (nodes). These fees typically include:
– A base fee, a small fixed amount per transaction (often just 1 satoshi, or 0.00000001 BTC, roughly a few cents).
– A liquidity fee, a tiny percentage of the payment amount (fractions of a percent).
Because payments route through multiple nodes, the total fee is the sum of fees charged along the path. The network finds the cheapest route to keep fees minimal.
3. Competition and Efficiency:
As more nodes join the network, competition drives fees down. Merchants and service providers can run their own nodes and set fees that cover costs but remain far lower than credit card fees.
4. Channel Management:
Businesses can manage channels by batching transactions and rebalancing liquidity, minimizing the need for expensive on-chain transactions.
Is This a Scam?
No. The Lightning Network is a well-established, open-source technology used worldwide by millions. It is supported by many wallets and infrastructure providers. Block, Inc. is a reputable company with a history of Bitcoin integration, and this rollout aligns with broader industry trends.
While Lightning fees are not zero and can vary depending on network conditions and routing complexity, they are typically much lower than traditional payment processing fees. For example, routing fees generally range around 0.1% or less, with minimum fees just a few satoshis (fractions of a cent).
What Does This Mean for Merchants?
– Lower Costs: Merchants save on transaction fees, paying just pennies instead of percentage-based fees.
– Faster Payments: Lightning payments settle almost instantly, improving cash flow.
– More Payment Options: Accepting Bitcoin attracts customers who prefer cryptocurrency.
– Protection Against Inflation: Bitcoin offers an alternative store of value amid concerns about fiat currency inflation.
How Does the Lightning Network Work?
The Lightning Network is a network of payment channels between users. To send a payment, a route is found through connected channels with enough liquidity. Each node along the route charges a small fee for forwarding the payment. If liquidity is insufficient, payments may fail or need to be split.
Because fees depend on channel operators’ settings and network liquidity, they can vary, but the system incentivizes low fees to attract users. Payments can be as small as a few satoshis, enabling micropayments impossible on the main Bitcoin blockchain.
Summary
Block’s Square POS system will soon allow merchants to accept Bitcoin payments with fees just a few cents per transaction thanks to the Lightning Network’s off-chain, low-cost payment channels. This is a legitimate, secure technology already used worldwide, offering merchants faster payments and lower fees compared to traditional credit cards.
Sources for Further Reading
– Trust Machines: What is the Lightning Network?
– Kryptografen: Lightning Network Fees Explained
– Bitsacard: Bitcoin Lightning Network Overview
– Reddit r/Bitcoin: Lightning Network Fees Discussion
– Investopedia: Bitcoin’s Lightning Network Problems
– Payments Cards & Mobile: Block’s Square to launch native Bitcoin payments in 2025
Read More
[1] https://trustmachines.co/learn/what-is-lightning-network/
[2] https://kryptografen.no/lightning-101/lightning-101-lightning-network-fees/
[3] https://bitsacard.com/blog/en/what-is-the-bitcoin-lightning-network/
[4] https://www.reddit.com/r/Bitcoin/comments/x7q7kg/fees_on_lightning_network_payments/
[5] https://river.com/learn/how-bitcoin-fees-work/
[6] https://www.investopedia.com/tech/bitcoin-lightning-network-problems/
[7] https://101blockchains.com/bitcoin-transaction-fees-explained/
[8] https://www.blockrise.com/en/education/bitcoin/how-does-the-bitcoin-lightning-network-work