In an email to customers today, September 25, 2019 merchant services company Square announced new pricing for their customers to take effect November 1.
In the email, Square noted that their flat 2.75% pricing for tapped, dipped, and swiped transactions would now be changing to 2.6% +10¢ per payment. Companies with small tickets are going to be hit hardest by this price change.
How Square’s New Pricing Works
Square has commonly been chosen by businesses that run transactions at less than $15, such as coffee shops, quick serve restaurants, and farmer’s market vendors. The flat pricing generally meant that their processing rates were lower.
For instance, on a $5 transaction at 2.75%, the business would be paying Square $0.13. Under the new pricing model, a $5 transaction will cost $0.23.
While 10 cents doesn’t sound like a huge jump, let’s use an example to look at the cost over time:
Old Square Plan
$5 transaction x 2.75% fee x 100 transactions per day x 365 days = $4,745 per year
New Square Plan
$5 transaction x (2.6% + 10¢ fee) x 100 transactions per day x 365 days = $8,395 per year
With Square’s new pricing, that’s a 77% increase in fees.
Who Does Square’s New Pricing Affect?
This pricing update is for card present transactions – swiped, dipped, and tapped. Anyone using physical readers will see this change in their transactions beginning November 1. The biggest impact of this change will be felt by businesses with smaller transactions. Here’s how the processing fees break down for different transaction sizes:
|Old Square Pricing Fee
|New Square Pricing Fee
2.6% + 10¢
|$1 Transaction||$0.03||$0.12||+ $0.09|
|$3 Transaction||$0.08||$0.18||+ $0.10|
|$5 Transaction||$0.13||$0.23||+ $0.10|
|$10 Transaction||$0.28||$0.36||+ $0.08|
|$20 Transaction||$0.55||$0.62||+ $0.07|
|$50 Transaction||$1.38||$1.40||+ $0.02|
As you can see, you will be paying more per transaction until you have average ticket sizes of $75 and above. For card present businesses like restaurants, nail salons, and convenience stores, these fees will add up quickly.
You don’t have to be susceptible to Square’s price hikes on your business. Request a free savings analysis, and we’ll use your past statements to find out how much you’re spending on credit card processing. With the results of this analysis, you can make the best decision for your company.