4 ms·

Jack Shares Some Big, Square Numbers: 341,688 Readers Shipped, $137M Total Flow

9 points by atularora 15y ago

riffer 15y ago
What happens to all these payments startups when credit card fees go from 3% => 0.3%?
- veyron 15y ago
  What happens when they actually start charging credit card fees? Squareup subsidized first-month fees for new accounts
- wmf 15y ago
  Why would that happen?
- mmcconnell1618 15y ago
  That won't happen. The credit card cartel will ensure the transaction fees stay in the 1.5% to 3% range because if they don't they can't meet quarterly profits. Regardless of the technical infrastructure the companies will be fighting an up-hill battle against hundres of years of banking history. Also, why do you think the credit card companies are quickly investing in these startups? A: To ensure control.
  - riffer 15y ago
    >>> That won't happen Better take another look at Dodd Frank
    - seanharper 15y ago
      Did you actually read dodd frank? Because you are completely wrong about what it says. The Durbin amendment to Dodd Frank is a reduction of interchange fees for debit cards issued by large banks. It impacts ~50% of debit cards, which are about ~30% of total cards, so 15% of cards in total. And it reduces those fees by 60-80% (so from around 1.5% to < 1%). As a result, it is a very minimal financial hit to the banks who ultimately receive the interchange revenues. Furthermore, Durbin amendment will not survive. I will bet anyone on this - the banks are running a very aggressive FUD campaign which I suspect will work. It sucks, but that's what is what's happening. Also, keep in mind that the fees being legislated by Dodd Frnak are the interchange fees that are actually the most significant expense for payments companies such as square, so it could improve their profitability a lot. It could also allow them to lower their fees and still make money, which coud increase adoption. Durbin amendment, if it survives, is a positive for Square and every other payments company. It is a negative for the banks that ISSUE debit cards (basically Chase, Citi and BofA).
      - riffer 15y ago
        Good luck Sean
charlesju 15y ago
So at 1% fees, Square is making $1.37 M in revenue?
- veyron 15y ago
  at 0% fees, Square is making $0.00 M in revenue
  - deleted 15y ago
    [deleted]
- pitdesi 15y ago
  It's not 1% fees (or 0% as someone else suggested), they make different amounts depending on the card. This Quora thread has a fantastic analysis of how much they make: http://www.quora.com/Can-Square-make-money-with-its-new-pricing http://www.quora.com/Can-Square-make-money-with-its-new-pric...
pitdesi 15y ago
Interesting numbers: an average of ~$6 worth of transactions per day per reader sent out. I'm sure 95% of the readers are unused. I wonder how they count revenue too - like what does that $59k today mean? So $2 million divided by 23k payments today is $85... A fairly high average transaction size, I'm assuming because they have a number of contractors/art sellers that skew the number much higher. What's interesting is that those guys would probably be better off with a standard merchant account (depending on how much they are transacting per month) http://feefighters.com/square-calculator http://feefighters.com/square-calculator But they probably went with Square because it's easy. This totally flies in the face of what I earlier thought, that square was being used primarily for low dollar transactions.

9 points by atularora 15y ago

riffer 15y ago

What happens to all these payments startups when credit card fees go from 3% => 0.3%?

veyron 15y ago
What happens when they actually start charging credit card fees? Squareup subsidized first-month fees for new accounts
wmf 15y ago
Why would that happen?
mmcconnell1618 15y ago
That won't happen. The credit card cartel will ensure the transaction fees stay in the 1.5% to 3% range because if they don't they can't meet quarterly profits. Regardless of the technical infrastructure the companies will be fighting an up-hill battle against hundres of years of banking history. Also, why do you think the credit card companies are quickly investing in these startups? A: To ensure control.
- riffer 15y ago
  >>> That won't happen Better take another look at Dodd Frank
  - seanharper 15y ago
    Did you actually read dodd frank? Because you are completely wrong about what it says. The Durbin amendment to Dodd Frank is a reduction of interchange fees for debit cards issued by large banks. It impacts ~50% of debit cards, which are about ~30% of total cards, so 15% of cards in total. And it reduces those fees by 60-80% (so from around 1.5% to < 1%). As a result, it is a very minimal financial hit to the banks who ultimately receive the interchange revenues. Furthermore, Durbin amendment will not survive. I will bet anyone on this - the banks are running a very aggressive FUD campaign which I suspect will work. It sucks, but that's what is what's happening. Also, keep in mind that the fees being legislated by Dodd Frnak are the interchange fees that are actually the most significant expense for payments companies such as square, so it could improve their profitability a lot. It could also allow them to lower their fees and still make money, which coud increase adoption. Durbin amendment, if it survives, is a positive for Square and every other payments company. It is a negative for the banks that ISSUE debit cards (basically Chase, Citi and BofA).
    - riffer 15y ago
      Good luck Sean

charlesju 15y ago

So at 1% fees, Square is making $1.37 M in revenue?

veyron 15y ago
at 0% fees, Square is making $0.00 M in revenue
- deleted 15y ago
  [deleted]
pitdesi 15y ago
It's not 1% fees (or 0% as someone else suggested), they make different amounts depending on the card. This Quora thread has a fantastic analysis of how much they make: http://www.quora.com/Can-Square-make-money-with-its-new-pricing http://www.quora.com/Can-Square-make-money-with-its-new-pric...

pitdesi 15y ago

Interesting numbers: an average of ~$6 worth of transactions per day per reader sent out. I'm sure 95% of the readers are unused. I wonder how they count revenue too - like what does that $59k today mean? So $2 million divided by 23k payments today is $85... A fairly high average transaction size, I'm assuming because they have a number of contractors/art sellers that skew the number much higher. What's interesting is that those guys would probably be better off with a standard merchant account (depending on how much they are transacting per month) http://feefighters.com/square-calculator http://feefighters.com/square-calculator But they probably went with Square because it's easy. This totally flies in the face of what I earlier thought, that square was being used primarily for low dollar transactions.