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> the card company keeps the entire fee Not exactly--there are companies taking a bite out of the fees all the way down. I run two retail stores, and after in
by ericabiz 10y ago
> the card company keeps the entire fee
Not exactly--there are companies taking a bite out of the fees all the way down.
I run two retail stores, and after initially using Square (which charges a 2.75% flat fee), we switched to a merchant processor that uses what's called "interchange plus"--where they just charge us the interchange rate plus a small additional fee.
Chase Visa debit cards are the #1 card we process, and our fee went from 2.75% with Square to 0.05%. Yes, you read that right! That is on a signature process, not a PIN.
We do have to pay a monthly fee now, but the savings is ridiculous--some $500+/month over Square's rates.
That $500/mo was Square's profit margin, basically. Our numbers showed that at about $5K-$8K/month in transactions, interchange plus processors will start to beat Square, and by the time you're doing $10K-$15K/mo in sales, it really starts to add up.
- mthoms 10y agoThat makes sense. Square's niche is businesses that are too small to bother getting real merchant accounts. The convenience of not having to go through that process is what you're paying for. After a certain level of sales, it's certainly logical to "go direct" with a merchant account and eliminate Square's cut.
- zenocon 10y agoI build processor integrations and am working on several new ones now for EMV. I can confirm Square's pricing is ridiculous compared to what's out there. Bear in mind there are only like 6 companies in the US that actually process cards, but there are several thousand payment processing companies who are all taking a slice.