Hi there @harleec,
I have the Transaction Type set to “Authorization,” thinking that Square will only authorize, but not actually charge. However, it seems that Square is actually charging and not adhering to authorize and hold.
I tried to replicate the same issue on my test site with Square 2.0.8 and my orders stayed in **On Hold** status. I tested with both virtual and physical products:

Link to image: https://d.pr/i/kROKrM
The first thing that comes to my mind is to check your Square payment gateway settings in WooCommerce > Settings > Payments > Square and make sure that you don’t have Charge Virtual-Only Orders selected and captured orders didn’t have virtual products:

Link to image: https://d.pr/i/l5mRhR
If the issue persists, could you please:
– share a copy of your site’s System Status? You can find it via WooCommerce > Status.
Select “Get system report” and then “Copy for support”.? Once you’ve done that, paste it here in your response in coding brackets
– enable Debug Mode in WooCommerce > Settings > Payments > Square, place another test order and check logs in WooСommerce > Status > choose square
in the drop-down and find logs for your test order. You can use https://pastebin.com/ to paste your logs, but please remove any personal and sensitive data from there (real names, addresses, transaction IDs, etc.
– share a screenshot of your captured order. Again, please remove any sensitive and personal data from the screenshot (or blur it).
Cheers!