Merchant Indemnification Obligation

What it is

If someone sues Square because of something you did using their service, you are responsible for paying Square's legal costs and any damages.

Why it matters (compliance & governance perspective)

This could expose merchants to significant unexpected financial liability if a customer or third party brings legal action related to the merchant's use of Square.

Consumer impact (what this means for users)

Square's terms grant the company broad discretion to hold, delay, or withhold merchant funds for risk management reasons, which can significantly disrupt business cash flow. Merchants waive their right to participate in class action lawsuits and must resolve disputes through binding arbitration, limiting their legal remedies. You can opt out of the arbitration clause by sending written notice to Square within 30 days of first accepting the terms.

Institutional analysis (Compliance & governance intelligence)

The broad indemnification clause, covering third-party claims arising from merchant use of Square's services, should be reviewed by risk and legal teams; it may create uncapped contingent liability exposure and should be assessed for consistency with the merchant's own insurance coverage.

Applicable regulations

Provision details

Other risks in this policy

• Mandatory Binding Arbitration high
• Class Action Waiver high
• Fund Holds and Reserves high
• Unilateral Amendment of Terms medium
• Account Suspension and Termination high
• Limitation of Liability medium