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Square introduces monthly pricing
- stevencorona 14y agoThere are limits (it's still _revolutionary_ for an industry that loves to nickle & dime, though) Up to $400 per any single transaction and up to $250,000 in total transactions per year—or approximately $21,000 per month. Swiped transactions over these limits simply cost 2.75% per swipe. $21,000 * .0275 = $577.5 in fees. I would love to see more Square adoption. In Charleston, lots of cart vendors (hot dogs, popsicles) use Square, as well as many vendors at the farmers market.
- MIT_Hacker 14y agoI think it's the perfect response to the Starbucks deal. It shows that Square is still keeping small businesses as their top priority.
- jessepollak 14y agoEssentially, a 1.32% transaction fee for all revenue under $250,000, 2.75% on all revenue over. Deal gets worse for the business the further your revenues are from the $250K limit. Definitely a big deal though.
- kennywinker 14y agoIt's definitely targeted at getting more businesses that do $120,000 - $300,000 on credit cards annually. I'm guessing they were having issues with adoption in that sector so they rolled this out to make it a little tastier. They probably have the best penetration in the under $120k/year sector, because of the ease of setup, low overhead, no monthly fees, etc. I have a good friend who runs a small shop (> $50k/year) and she loves square. Got them up and running painlessly, their iPad is their cash register / POS system, and she pays a manageable amount to Square for it. She keeps asking me when Square is going to start doing online payments, because their transactions tend to be small online PayPal's 2.9% + 30¢ is painful in comparison.
- phjohnst 14y agoDon't forget the up-front fee of $275, so max savings are more like $300. Break-even is $10k per month. It's a nice idea, though I don't know how many companies are in the $10k-$21k/month revenue bucket that would see a benefit. All companies processing over $250k per year can save a max of $300 per month by signing up to the fixed rate plan and then paying the normal fee thereafter. The new fee band gives savings to those processing more than ~$10k/month, but provides no savings for smaller users.
- charlesju 14y agoIt's not strictly for the band of $10k to $21k per month. It's anyone that makes more than $10k a month because additional swipes after $21k are the same as the opportunity cost. This is a great deal for any company making more than $10k a day, or about $500 assuming 20 working days a month. It's starting to sound like a decent deal that should appeal to a lot of small businesses.
- sharth 14y agoUnless they can find cheaper than 2.75% elsewhere.
- rdl 14y agoWhich is basically anyone for Visa/MC, and even some people for Amex. Once you're reliably processing $20k/mo, your options for merchant accounts expand a fair bit. I think what this does is retain existing Square merchants a bit longer -- ones who grew from $0 to $8k or so, are now evaluating real merchant accounts. Inertia, other advantages of Square (PWS), etc. might keep those merchants another year or two, getting them up to around $20k/mo revenue, and then Square might come out with something new for them (a Square-specific payment instrument? Pre-loaded cards using ACH per merchant or across Square with 0% fee?)
- jcampbell1 14y agoThese limits are in place to keep people like me from gaming the system. Without these limits I would have an Amex Black card with $1M+ in annual transactions, and enough points to cover the $2500 amex fee, and the $3300 square fee. In college, I financed a spring break trip with credit card points by buying US Savings bonds on a credit card. The US treasury quickly wised up and realized selling bonds without charging a credit card fee was stupid. Even the US treasury got caught up in the first internet craze.
- MIT_Hacker 14y agoPress Release: https://squareup.com/news/releases/2012/square-introduces-one-monthly-price-for-small-businesses https://squareup.com/news/releases/2012/square-introduces-on...
- BryanB55 14y agoThat sounds pretty awesome at first but I guess it would require some math to figure out if you really are saving much compared to normal CC processing.
- idunno246 14y agoBreak even is at $10k / month
- ceejayoz 14y agoBreak even point is $120,000 of transactions per year, if I'm doing my math correctly.
- persona 14y agoMaximum savings for a business is capped at $3,575/yr and if they sell less than $120k/yr, businesses will actually be losing money. It sounds more like a safe customer acquisition strategy for Square (with acquisition cost maxed at that value) then a huge savings for small businesses (min swipe cost would be at 1.32% compared to 2.75%).
- allforJesse 14y agoAnd now, let's watch as Square gets implemented at bars everywhere.
- tehwebguy 14y agoPretty cool, but it's definitely a gamble for a small business that doesn't have proven revenue yet: - At $10k / month $275 is 2.75% - At $5k / month $275 is 5.5% - At $2500 / month $275 is 11% It doesn't say if there's a commitment or if there's a way to switch back and forth depending on volume.
- ConstantineXVI 14y agoQuoth the page: > "we’ll bill you $275 on the first of each month. Change pricing plans at anytime from Square Dashboard." So no commitment. If your volume drops too low, seems you can just drop back to their usual rates. And since their "overage" rate is just the standard rate, there's no reason not to do it if your volume's higher than their cap ($250K/yr, max $400/swipe).
- tehwebguy 14y agoAh thanks, didn't see that!
- rodly 14y agoIs it illegal to chop up payments that exceed $400? If not, I'd say this is a nice way to save a bit of money if you do more than $10,000 in business every month. Not sure if it's worth the hassle to implement though.
- Firehed 14y agoThe pricing only applies to swiped payments, not keyed - so it's not an option. And if it was possible, it's definitely a TOS violation (though not illegal, unless someone thinks you're laundering money)
- deleted 14y ago[deleted]
- otneusnocuh 14y agoIt's utterly obnoxious to see this touted as "Leveling the playing field" and then see all the rules and restrictions make this a gamble and a marginal savings at best. But the swinging price tag is nice.
- Cyranix 14y agoComing back from Portland and pleasantly surprised at the number of cabs using Square. Not an expert in the world of taxi companies, but at first glance the monthly pricing seems like a potential match for them.
- username3 14y agoSquare should automatically wave fees after collecting $275 per month.
- accountoftheday 14y agowhy?
- username3 14y agoEase of use.
- RandallBrown 14y agoThat would be a pretty awesome thing to do from a customer service perspective. It would be like the phone companies charging you for the cheapest phone plan based on your usage for the month.
- sp332 14y agoTing does this. They're a virtual operator that runs on Sprint's network. https://ting.com/plans https://ting.com/plans
- grandalf 14y agoThis is very cool but not a free lunch. The fees have to come from somewhere. How about no fees for chargebacks too?
- BadCRC 14y agolearn to read: https://help.squareup.com/customer/portal/articles/11861-what-are-square-s-fees- https://help.squareup.com/customer/portal/articles/11861-wha...
- grandalf 14y agoAhh upon further investigation I discovered that the catch is that businesses wishing to do over $21K in sales per month are ineligible. So the product is only for businesses who meet all three of the following criteria: 1) small enough to not need over $21K per month of credit card charges 2) low enough chargeback risk that Square accepts/keeps them as a client 3) are currently paying more than $275 in fees per month with their current provider. So bottom line this is a great marketing pitch but not really useful to the vast majority of companies in the real world. The odds of #2 and #3 both being true are basically nil for businesses small enough to meet #1.
- philip1209 14y agoI see a potential for abuse - if the cash back on certain credit cards exceeds the max rate, people could cycle money through for profit. e.g. I had a 2% cash back credit card Cashback: 21k/mo * 2%=$420 Fees: $275 Upside potential: $145/mo Not much profit possible, but with multiple accounts at roughly 2 $400 swipes per day per account, I would watch out for something like this.
- ConstantineXVI 14y agoI'd think loads of $400 transactions from the same card to the same merchant would get both Square and your CC issuer's attention rather quickly.
- benmanns 14y agoIn this case, who makes up the difference? I would assume that it would be on Square's end to make up the 2%-1.32% difference, so it's likely that Square would be the one to terminate your account. However, I do wonder what kind of perks you get from a credit card company if you could spend $250k/year with them.
- wmf 14y agoYou get these perks: http://en.wikipedia.org/wiki/Centurion_Card http://en.wikipedia.org/wiki/Centurion_Card
- RandallBrown 14y agoMy card limits my cash back to something like $300 dollars per year. If there is a card that lets you get close to $5000 dollars cash back a year, I'd LOVE to hear about it.
- chime 14y agoI don't think my CapitalOne credit card has any limit. I've gotten over $1k cash back.
- dangrossman 14y ago
- tibbon 14y agoSo two things that I've never understood. 1) Why is it just now that someone's actually providing competitive service in this space? We've had people selling CC machines and service for years... 2) Where (in general, not just with Square) does the money actually go? It seems that prior to Square announcing this, getting under 2-3% or so was nearly impossible. On the scale of the US economy alone, that's HUGE money. What are the fixed per-transactions costs? Its just pushing around bits in a system right?
- bgentry 14y agoThere are virtually no fixed costs to actually performing the transactions. The fees are levied by the not-so-competitive Visa/Mastercard/AMEX trio that would love to keep their fees artificially high.
- jonknee 14y agoThere are plenty of costs though, operating global real time processing networks is not free.
- vaksel 14y agothere are actually a ton of costs for them. They have to pay for infrastructure, they have to pay for customer support, they have to pay for fraudulent transactions and on and on. I think most credit card companies have something like 10%-15% ROI
- armen52 14y agoTheir fraud costs are not what you make them seem. The credit card companies do not take on the risk for fraud most of the time. They push that risk onto the merchants. This is why large e-commerce companies have giant fraud departments trying to prevent fraudulent orders and charges on their site; because when they occur, they generally just eat the loss.
- Aleran 14y ago
- bluekite2000 14y agoNow I m waiting for Stripe to do the same thing
- Simucal 14y agoSquare is really opening the door for credit processing in a lot of places that it wasn't practical before. I just went to a "Food Truck Friday" event at a local park and every single food truck was accepting credit cards via Square.
- BallinBige 14y agothis is going to cost small - mid cap merchants more money!
- nnnnnnnn 14y agoNo it won't. It's optional. If you prefer to pay 2.75% per swipe and no monthly fee you can. It saves a ton of money for merchants who make over $10,000 per month. Those are the people who will sign up for the new plan.
- ehutch79 14y agoit's opt in. the old pricing scheme is still in effect.
- biot 14y agoThrough the use of elementary arithmetic, Square is charging every company the average expected transaction fees for the month, regardless of whether the actual transaction fees would be higher or lower than this. So half the companies save money while the other half lose money. This is being spun as an innovation when, in reality, it's likely to net Square more revenue as there are probably more merchants between $0 - $10K than there are $10K - $21K.
- eridius 14y agoNo they're not. They're only charging companies that sign up for this fee structure. Anyone who signs up for this when they're not making $10k is bad at math.
- biot 14y agoMost people who sign up for a fixed monthly fee gym membership are bad at math rather than paying a smaller drop-in fee. It makes for good revenue for the gym though. And for those who workout a lot, it is a good deal.
- nnnnnnnn 14y agoThere's no upper bound. Businesses making $30k per month still save money with the monthly pricing. It's a good deal for any business swiping over $10k/month on average.
- kennywinker 14y agoNot sure what traditional payment terminals charge, but presumably when you start doing large volume they bring the cost down. There is going to be a point where square's flat 2.75 between 0-10k/month and 21k/month-infinity is more expensive than a bank terminal (which I'm sure fall to >1.5% at high enough volume).
- Iaks 14y agoIn case anyone from square is reading this - you're page loads absolutely 0 content with JS disabled. Just some feedback, take it or leave it.
- dangrossman 14y agoConsidering the webapp itself doesn't function with JavaScript disabled, that sounds like a feature instead of a bug. It keeps people that will never be their customers out and away from their support queue.
- metellus 14y agoAt the very least it should have a message explaining that Stripe requires js.
- ceejayoz 14y agoStripe?
- Iaks 14y agoI think you are misrepresenting this. I clicked on a news announcement for a product that I currently know very little about and this will be my first engagement with ANYTHING they have published. Would their impression on me be better if I get a giant white screen, or if I get a note saying that their page requires javascript? Regardless of my engagement with the product, it is certainly a bad assumption to say that everyone blocking javascript is not a potential customer.
- deleted 14y ago[deleted]
- ChiperSoft 14y agoI'd love to see a payment gateway offer this, like Stripe. It'd be HUGE for micro-payments.
- lordlarm 14y agoThe next step for Square, in my opinion, is developing a reader for the EMV cards (http://en.wikipedia.org/wiki/EMV http://en.wikipedia.org/wiki/EMV), which is hugely dominant in Europe - and also more secure. See a this useful Quora post, from 12 months ago: http://www.quora.com/How-does-Square-intend-to-translate-their-business-to-UK-Europe-where-the-Chip-and-Pin-process-is-the-standard http://www.quora.com/How-does-Square-intend-to-translate-the... Going international, or making such a reader, opens up an enormous market and the potential is huge. I'm waiting, excited, as I see Square disrupting this business. As tibbon asked earlier in the comments: "why has no one disrupted this market before". I'll think it is a good question, I have no answer, but find it is about time. Ref. http://news.ycombinator.com/item?id=4392763 http://news.ycombinator.com/item?id=4392763 Also, an interesting firm from Sweden, which is worth following now is iZettle (https://www.izettle.com/ https://www.izettle.com/) which has developed an EMV reader. Noticably their, "how much do I pay to use iZettle" page is intresting. http://help.izettle.com/customer/en_us/portal/articles/530952-how-much-do-i-pay-to-use-izettle-# http://help.izettle.com/customer/en_us/portal/articles/53095...
- ricardobeat 14y agoThere are dozens of chip readers on the market all around the world already, they just don't have the software, good design and price structure to match.
- lordlarm 14y agoYou are right, here is an interesting Quora post summing up the competitors: http://www.quora.com/Square-product/Who-are-some-competitors-to-Square http://www.quora.com/Square-product/Who-are-some-competitors... Answer-wiki pasted in for convenience: «US only: - Paypal Here ( https://www.paypal.com/webapps/mpp/credit-card-reader https://www.paypal.com/webapps/mpp/credit-card-reader , US) - Intuit Go Payment (http://gopayment.com/ http://gopayment.com/, US) - Payware Mobile by Verifone ( http://www.paywaremobile.com/en http://www.paywaremobile.com/en , US) - Phone Swipe (http://www.phoneswipe.com/ http://www.phoneswipe.com/, US) Europe only: - iZettle (http://izettle.com/ http://izettle.com/ , Sweden, chipcard reader) - Cellphony (http://www.cellfony.com/ http://www.cellfony.com/, FR, still in beta) - iPay by PrivatBank (http://itunes.apple.com/us/app/ipay/id307368715?mt=8 http://itunes.apple.com/us/app/ipay/id307368715?mt=8 , Ukrainia)»
- deleted 14y ago[deleted]
- tejasmi5 14y agoA business doing $250k in annual business most likely has their own point of sale system. The 1.3% cost would be more attractive if there was an API that businesses could then just integrate into the existing POS system.
- deleted 14y ago[deleted]
- trustfundbaby 14y agoIf Stripe follows suit, I might just wet myself.
- GauntletWizard 14y agoLet's do the math, here: "for small businesses processing up to $250,000 per year". So, the most you're processing is a quarter million/year, and you're paying 275/month = 3300 per year. $3300/$250000 means you're paying an effective processing fee of 1.32%. That's a big savings over their usual 2.75%, but it's still probably more than the big players are paying. And that's assuming that you use it for optimal efficiency. The breakeven point is ($3300 / .0275) = $120,000, which is reasonable, all things considered - I know a couple of small shops that do ~$200,000/year of business. I know a friend stated that his breakeven point for his small shop was $400 in sales a day, and that he was living well on ~$600. It would probably be advantageous for him to move entirely to Square, based on those numbers.
- lwhi 14y agoSo if your (small) business takes $60,000 in a year, you will pay square $3300; effectively a rate of 5.5%. If your business takes $160,000 in a year, you end up paying square a rate of around 2.06%. Is this really that revolutionary? (.. am I oversimplifying the situation?)
- zabraxias 14y agoYes but if your small business only does $60k in CC transactions it's likely on its last legs to begin with. You would need more to cover your expenses also...unless your business is very cash-heavy. At $200k in transactions that $3300 yearly fee is 1.65% which is a lot lower than what most retailers are getting (which is in the area of 3% to my understanding).
- lwhi 14y agoLast legs, or first legs .. it's a matter of opinion ;-) I just get the feeling square are offering a similar deal to a lot of other payment gateways, but packaging the deal differently - i.e. they're not really being that disruptive.
- Aleran 14y agoThis is revolutionary because it is the first time that merchants have been ever been given the option to pay a flat fee per month in lieu of paying a percentage fee on each transaction. While that may not seem like a big deal you, merchants really love the simplicity of it. A business that processes 60K a year is below the size that is targeted by this pricing structure. They are better off continuing to pay 2.75% per transaction.
- lwhi 14y agoIt's a differently packaged variable rate fee IMO.
- conductr 14y agoThis benefits only those processing $15.5K - $30.0K per month. Otherwise, Intuit's Gopayment at $12.95+1.7% is best. https://docs.google.com/spreadsheet/ccc?key=0An_-Z6kZBAXndFF5TE1zSEpUNjRpUHhCLXJEVnUxeHc https://docs.google.com/spreadsheet/ccc?key=0An_-Z6kZBAXndFF... Addition: Gopayment is also better than Square's standard 2.75% for anyone processing more than ~$1,200 per month
- Tortoise 14y agoYou're being naive. Read the fine print on Intuit's offer. Their rate only applies to "qualified" transactions. Rewards cards, among others, aren't "qualified."
- jsherry 14y agoIf a merchant does at least $13,000 per month in credit card revenue, this is a good deal (read on for assumptions). Quick and dirty math here: Stripe charges $275 per month for card revenues up to $21,000 per month. I took a look at http://truecostofcredit.com http://truecostofcredit.com (courtesy of FeeFighters) and the merchant fees per transaction vary widely based on the type of merchant as well as card type. For the sake of argument, let's say the average Visa/MC transactions costs the merchant 1.75%. And let's say that the average AmEx transaction costs the merchant 3.5%. Now let's assume it's an 80%/20% distribution between MC/Visa and AmEx transactions, respectively, bringing a blended rate of 2.1%. Assuming that the merchant is charged 2.1% per transaction by their credit card company, the tipping point is $13,095 of revenue per month. Anything above and beyond that and this is a good deal. Below it, it's not (aside from the fact that's a fixed cost versus a variable one which is worth something).
- rexreed 14y agoThat's a very narrow window of value. If < $10k means you're better off going with the per-transaction rate, >10k but less than $13,095 means you're better off with a regular merchant account and > $13,095 but less than $21k means you're better off with the flat rate, then how many firms would really benefit from this? Looks like they should say "if you're doing more than $10k (or $13k if you want to bring in the competition), but less than $21k, take this deal". But of course, no one would take it.
- abalone 14y agoSquare has value beyond their rate. They also have an interesting/evolving point-of-sale iPad app, and a groundbreaking wallet app. These could help grow business beyond the shavings of a percent that you'd save playing the processor numbers. And there's value in a simple rate, too. Yes maybe you could run the numbers and find some scenarios where you'd save elsewhere, but it's a very confusing and somewhat deceptive landscape, and if you get it wrong you might actually end up paying more. There's value in knowing that you're going to get a pretty fair and understandable rate up to at least $250K/yr of revenue.
- 14y ago
- jdelsman 14y agoI honestly wish they had some kind of affiliate program. I'd make so much money pimping Square out to local businesses, especially the ones I truly care about. I am so sick of being told: "Sorry, we don't accept AMEX" or simply "Sorry, we don't accept credit cards." Are you kidding? It is 2012!
- abalone 14y agoKudos for the "ballsy" simplicity. I don't know if people appreciate how big of a risk this is for Square. Square is placing a big bet on the numbers working out in the long run. If their analysis is just a little bit wrong, they're going to burn through millions of dollars in losses. Why? Because the 1.3% "sweet spot" is almost certainly well below their cost. "Interchange" is the wholesale rate that processors like Square pay to card networks. Visa & Mastercard publish their rates and as far as anyone knows they're not negotiable. According to FeeFighters which did a lot of public research around rates, the average interchange rate for a typical card mix is: 1.58% + $0.13 per transaction Unless they've figured out a way around standard interchange, this is Square's approximate cost. Remix that into a 2.75% flat rate and you'll find that Square already charges less than that cost for purchases below ~$6 (even considering that there's a special, lower small ticket interchange rate). And now for businesses that hit the sweet spot around $17-21K/month, Square's probably also taking a loss. No doubt Square is betting on a mix of merchants that fall in the profitable peaks between those troughs. All in the name of simplicity. Sources: http://feefighters.com/square-calculator http://feefighters.com/square-calculator http://usa.visa.com/merchants/operations/interchange_rates.html http://usa.visa.com/merchants/operations/interchange_rates.h...
- matthew-wegner 14y agoPerhaps the volume behind Starbucks (and upcoming unannounced deals?) have allowed them to negotiate those seemingly nonnegotiable numbers...
- EvanKelly 14y agoAre these numbers truly non-negotiable? If that's the case, what's the incentive for a company like Costco to have exclusivity with American Express (who normally charges a higher than average fee)? I've always assumed (maybe erroneously) that Costco received a lower processing fee in exchange for the exclusivity which pushes more transactions.
- shuzchen 14y agoI don't disagree (in fact, I think it probably is the case that they get a lower rate for being exclusive), but just to add: Costco also has a partnership with amex issuing their Costco branded credit cards (which isn't a store only card, it works out in the wild), and Costco gets some portion of the revenue whenever that card is used. Restricting you to amex also has a benefit of increasing the likely-hood that consumers will sign up for the Costco cc.
- hboon 14y agoOT, but any one knows why square.com redirects to squareup.com instead of the other way round?
- deleted 14y ago[deleted]