[mfr]

At a guess, they're trying to make it up in volume.

If you're a merchant bank, the smallest thing you can profitably target is a small business, so even a handful of significant bad accounts will do bad things to your bottom line.

Assuming that the potential customers of this service are not trying to commit fraud, and that each one of those customers is doing a relatively low amount of transactions, Square could put this device in the hands of enough people that the aggregate chargeback percentage would still be low enough to be profitable.