4 ms·

$5.45 is the tipping point where the 2.75% accounts for a larger portion of the fees than the $0.15. (EDIT: added to original comment) There are merchants who

$5.45 is the tipping point where the 2.75% accounts for a larger portion of the fees than the $0.15. (EDIT: added to original comment) There are merchants who do a small # of transactions a day w/ each transaction being significantly higher than $5.45. For these merchants, dropping the per fee transaction results in negligible savings. A lower % is what matters to them. Basically, Square is great. It'd be even better if they offered another option.

varikin 16y ago
I can't say I speak for Square and I definitely don't know the details of their contacts with the credit card processors, but 2.75% is probably limited by what they get charged to process the credit cards. I would hazard a guess that they got between 2 and 2.5% and are skimming the other .25 - .75% off the top for themselves. My father in law runs a small business and has shopped around for credit card processing in the past. He has a deal around 2% at the moment. If you are diligent about shopping around and being part of merchant groups and such, 2-2.5% is doable. If you are not diligent, a business will probably get 2.5-3% per transaction. If the business is huge (national chains) with lots of negotiating leverage, they can do even better. Mind you, this number off the top of my head are ballparked from anecdotal experience. My guess is Square negotiated a percentage when they started. They have since proven their business and are processing enough transactions that they were able to renegotiate a better deal. Then they passed on the savings. I am sure they would like to drop to 1.75% if they could, they still have to pay the credit card processors and make some money. But that is all conjecture.
- rumpelstiltskin 16y ago
  That makes perfect sense. Thanks.
- modeless 16y ago
  My card has unlimited 2% cash back. If it was possible to get card processing for less than 2% I could make money paying myself.
  - jobenjo 16y ago
    What card is that? (Just curious--sounds like a great deal).
    - modeless 16y ago
      I got this one through Charles Schwab Bank. I'm not sure if they're still offering it, but they definitely still offer a debit card that reimburses 100% of all ATM fees.

varikin 16y ago

I can't say I speak for Square and I definitely don't know the details of their contacts with the credit card processors, but 2.75% is probably limited by what they get charged to process the credit cards. I would hazard a guess that they got between 2 and 2.5% and are skimming the other .25 - .75% off the top for themselves. My father in law runs a small business and has shopped around for credit card processing in the past. He has a deal around 2% at the moment. If you are diligent about shopping around and being part of merchant groups and such, 2-2.5% is doable. If you are not diligent, a business will probably get 2.5-3% per transaction. If the business is huge (national chains) with lots of negotiating leverage, they can do even better. Mind you, this number off the top of my head are ballparked from anecdotal experience. My guess is Square negotiated a percentage when they started. They have since proven their business and are processing enough transactions that they were able to renegotiate a better deal. Then they passed on the savings. I am sure they would like to drop to 1.75% if they could, they still have to pay the credit card processors and make some money. But that is all conjecture.

rumpelstiltskin 16y ago
That makes perfect sense. Thanks.
modeless 16y ago
My card has unlimited 2% cash back. If it was possible to get card processing for less than 2% I could make money paying myself.
- jobenjo 16y ago
  What card is that? (Just curious--sounds like a great deal).
  - modeless 16y ago
    I got this one through Charles Schwab Bank. I'm not sure if they're still offering it, but they definitely still offer a debit card that reimburses 100% of all ATM fees.