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Square Just Changed Their Processing Rates. What Does That Mean for Your Business?

Heard the news yet?

Square, one of the most recognizable processors in the payments space, announced that they’ll be making changes to their processing rates. Rather than charge their signature 2.75% flat rate, they’ll now charge merchants a 2.6% flat rate and an extra $0.10 per transaction.

That math sounds confusing, and it is. If you’re a merchant who uses Square, will these new rates save you money? Or are you better off just switching to another payment processor?

Well, that’s why we’re here! Let’s clear up all the confusion so you can pay as little as possible to process credit card payments.

 

Square’s Old Flat Rate (2.75%)

Advantages: Flat rates are easy to understand. You pay one percentage fee on every transaction you process, period. That simplicity often wins over merchants who are in a rush to secure payment processing/accept credit cards. For example, Square’s flat rate, along with its solid reputation among small business owners, is what convinced tons of merchants to join their program.

Disadvantages: Merchants who don’t mind a little research can easily find a better deal. 2.75% is on the more expensive end of credit card processing rates, yet you might not know that if you don’t survey the market first. Again, though, it takes time to comb through all the payment processing options out there, and time is valuable as an entrepreneur, so it’s easier for many businesses to just settle on a big-name processor and move on.

This begs the question: for card-friendly businesses, is a flat rate worse than a cost-plus pricing model that charges a lower percentage rate, but also adds a fixed fee to every transaction?

 

Square’s New Rate with an Added Per Transaction Fee (2.6% + $0.10)

Advantages: You’re paying a lower percentage rate per transaction. A 0.15% decrease might seem minimal, but per the article linked above, you’ll actually save money once the processed transaction hits/exceeds $67. Merchants that process lots of high-dollar transactions will save money under Square’s new plan.

Disadvantages: According to the article, any transaction under $67 will cost more for the merchant than the old flat rate. This is because the $0.10 fee per transaction carries a lot more weight when the transaction is lower in price, not to mention that the merchant’s cost will continue to rise as they process more of these lower priced transactions. Also, the percentage cost (2.6%) is still higher than many other competing rates.

What does this all mean for you?

 

What You SHOULD Be Paying

The cold hard truth is that you should be paying a lot less than what Square is currently offering. Smaller payment processors compete with companies like Square by offering merchants lower rates and a more personalized experience. For a lot of small business merchants, that’s exactly what they’re looking for — they just have to find an honest processor that won’t sneak any hidden fees past them.

Quantum offers cost-plus rates as low as 0.10% + $0.05. For some merchants, we’ll even recommend our Qrev Cash Discount program, which includes unlimited processing for as low as $20/month. [Click the link below to see if you qualify!]

Here’s a comparison example. Say the current interchange rate is at 1.5% + $0.10. If you process a $25 transaction under Square’s new rate (2.6% + $0.10), you’ll pay $0.75. Under our cost-plus rate [(1.5% +$0.10) + (0.10% + $0.05), which equals 1.6% + $0.15], you’ll pay only $0.55. That’s $0.20 saved after just one transaction. Imagine how much more you could save in a month!

Why do we offer multiple programs? One solution isn’t going to work for every business, so we offer multiple plans to make sure we pair you with the best plan for your business.

Ready to capitalize on these rates and receive personalized service? Click here for a free merchant statement analysis, and come see what you’ve been missing out on!