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There is a thread from 2023 about the same thing, most people said it was because they were trying to purchase the domain through a checking account, they said after they switched to a credit card it worked. Hope this helps. below is a link to the thread.
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@rtfulk I have tried the solution posted there, but the dropdown to change or add a new payment method is grayed out. Do you know how I can add a new Credit Card to use for this transaction?
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You can go to accounts&settings, then tap on pricing and subscriptions to update your credit card.
Are you trying to purchase a domain name to use with Square or renewing one you already own?
If you are purchasing a domain name you could always purchase it through godaddy, name silo or any other domain name site and then transfer it over to Square.
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