Received our chip readers from Square a few weeks ago. They were free since we were already with Square and pre-ordered back in July or August IIRC. I did have to purchase the 'mount'. They connect to the iPad/iPhone running the Square App via bluetooth. The only reason to plug in the reader is to charge the battery. Ours is permanently connected so as not to run out of juice and is placed next to our Square Stand on the counter. It works both as a chip reader and an NFC reader. If you need to enter a PIN, you would do so via the iPad. The reader is merely an add on for the Square Stand which houses an iPad and is attached to a counter top for brick and mortar retailers.
An iOS device isn't secure enough to allow PIN entry on it.