A Change to our Tap, Dip, and Swipe Rate

[Caty]

Hi Seller Community,

Caty here, writing with an important update on Square’s standard card present processing rate (e.g.: swipe/ dip/ tap transactions.)

This morning we began notifying existing sellers that we’ve changed the standard 2.75% processing rate for tapped, dipped, and swiped transactions to 2.6% + 10¢ per card present transaction. For existing sellers — which many of you are — this change will come into effect on November 1, 2019. 

This rate change does not affect the existing processing rate for card not present (manually keyed-in-payments), Card on File/ Virtual Terminal payments, payments taken with Square Register or Square Terminal, payments taken with Square for Retail or Square for Restaurants, or any customers under an existing custom pricing agreement. Additionally, all sellers will still enjoy the following benefits: 

• One rate for all major cards
• No startup fees, statement fees, refund fees, PCI-compliance fees, chargeback fees, or business card fees
• End-to-end encrypted payments
• 24/7 fraud prevention
• Payment dispute management
• Fast deposits, and real-time access to your funds with Square Card

Why are we making this change?

Since our inception we’ve been committed to building accessible, easy to use tools designed to help sellers of all sizes start and grow their businesses. Like any company, we regularly review the market forces and revisit our decisions to ensure we’re best positioned going forward.

The payments landscape has changed significantly since we were first founded, and the flat 2.75% rate simply doesn’t cover all the costs that it used to. Square pays a combination of fixed and variable fees to both banks and card networks on each payment we process. Adding the 10¢ fee helps offset these costs, and is also what enabled us to reduce the variable rate to 2.6% per card-present transaction.

How might this impact you?

As mentioned, this rate change impacts anyone who is currently using our standard, 2.75% processing rate when accepting card present transactions through Square Point of Sale. No other rates are changing, including those currently using custom pricing, or paying 2.6% + 10¢ for card present transactions (e.g.: Square Register or Square Terminal.)

If you’re using the standard 2.75%, our team has worked hard to build a detailed calculator that estimates the differences in fees you might pay based on last year’s card present payment history. Keep in mind, this tool uses historical sales data to estimate what your fees might look like under the new, card-present processing rate. Your actual fees may vary depending on a variety of factors, including: ticket size, number of transactions processed, seasonality, and any growth your business may experience in the future.

Please log into Dashboard to check it out, and don’t forget to read our Pricing FAQ as well.

Final Thoughts

For some sellers, this change will be welcomed. For others, we know it will take more getting used to. We worked diligently to ensure we were able to make the best decision possible for all involved. If you choose to comment on this thread to express your feedback, please keep our Community Guidelines in mind. 

On behalf of all of us at Square, we deeply and sincerely appreciate the opportunity to help you run your business, and we look forward to working with you to grow into the future.

With gratitude,

Caty

Global Head of Scalable Customer Success

Square

[#2]

Hi Seller Community,

Caty here, writing with an important update on Square’s standard card present processing rate (e.g.: swipe/ dip/ tap transactions.)

This morning we began notifying existing sellers that we’ve changed the standard 2.75% processing rate for tapped, dipped, and swiped transactions to 2.6% + 10¢ per card present transaction. For existing sellers — which many of you are — this change will come into effect on November 1, 2019. 

This rate change does not affect the existing processing rate for card not present (manually keyed-in-payments), Card on File/ Virtual Terminal payments, payments taken with Square Register or Square Terminal, payments taken with Square for Retail or Square for Restaurants, or any customers under an existing custom pricing agreement. Additionally, all sellers will still enjoy the following benefits: 

• One rate for all major cards
• No startup fees, statement fees, refund fees, PCI-compliance fees, chargeback fees, or business card fees
• End-to-end encrypted payments
• 24/7 fraud prevention
• Payment dispute management
• Fast deposits, and real-time access to your funds with Square Card

Why are we making this change?

Since our inception we’ve been committed to building accessible, easy to use tools designed to help sellers of all sizes start and grow their businesses. Like any company, we regularly review the market forces and revisit our decisions to ensure we’re best positioned going forward.

The payments landscape has changed significantly since we were first founded, and the flat 2.75% rate simply doesn’t cover all the costs that it used to. Square pays a combination of fixed and variable fees to both banks and card networks on each payment we process. Adding the 10¢ fee helps offset these costs, and is also what enabled us to reduce the variable rate to 2.6% per card-present transaction.

How might this impact you?

As mentioned, this rate change impacts anyone who is currently using our standard, 2.75% processing rate when accepting card present transactions through Square Point of Sale. No other rates are changing, including those currently using custom pricing, or paying 2.6% + 10¢ for card present transactions (e.g.: Square Register or Square Terminal.)

If you’re using the standard 2.75%, our team has worked hard to build a detailed calculator that estimates the differences in fees you might pay based on last year’s card present payment history. Keep in mind, this tool uses historical sales data to estimate what your fees might look like under the new, card-present processing rate. Your actual fees may vary depending on a variety of factors, including: ticket size, number of transactions processed, seasonality, and any growth your business may experience in the future.

Please log into Dashboard to check it out, and don’t forget to read our Pricing FAQ as well.

Final Thoughts

For some sellers, this change will be welcomed. For others, we know it will take more getting used to. We worked diligently to ensure we were able to make the best decision possible for all involved. If you choose to comment on this thread to express your feedback, please keep our Community Guidelines in mind. 

On behalf of all of us at Square, we deeply and sincerely appreciate the opportunity to help you run your business, and we look forward to working with you to grow into the future.

With gratitude,

Caty

Global Head of Scalable Customer Success

Square

[JavaMan]

Will be opening my Coffee Bar in one week...I had heard about this increase from another vendor...as a CPA by trait...I could not believe a Business could be that reckless! Called Square Customer Service one week ago and they stated that they had "heard nothing about this"! I am now feeling...deceived! Glad I did the leg work on some "other" vendors (Shopkeep,Lightspeed,TouchBistro)...and will be looking at PayPal! With a sale of $5.00 this ill thought decision will increase my cost 67%...from .1375 cents to .23 cents...they must have used a Dart Board to make this decisoon!

[LasBrasas]

I do the books for 2 small coffee shops.  I used Square's tool to see the rate increase.  Both places will have an increase of over $300 a month with their new rates.  $0.10 per swipe is killer for small dollar transactions.

[BeerFart]

You're effectively increasing the amount I have to pay you by 1-2% since most of my transactions are $10 or less.

We'll be moving to another system.  Thanks for the push.

[CUPPACUPPA]

Wow. We have been a Square customer since the very beginning. Our business has grown along with Square.  Square changed the way very small and small ticket business were able to grow.  We have sung Square’s praises for almost a decade. It was exciting to be a part of, what was touted as a movement... and alternative to the way the ways banks and credit card processors functioned. Square was so proud of their innovative method to essentially cut out the middle-man that always had it’s hand out to take that swipe fee from the small ticket business. The flat rate with no swipe fee leveled the playing field for small ticket businesses. We are coffee shops. Our average ticket is $8. We rely on the volume of customers. So....now we just got screwed...like by the [REDACTED].  So familiar and trusted that you just don’t see it coming.  I guess YOU SQUARE have sold out just like I was afraid you would.  I say SOLD OUT, because you built and grew a business based on no swipe fees....then you went public. And now your customers have to pay your shareholders.  The saving grace here is ...we bought stock at the beginning...because we believed in your original message.  So as a shareholder... Meh, we did well.  But as an original customer.........YOU! 

[Steamwhistle]

Wow-  how is a small business suppose to take this?  We have been considering a different POS for the functionality but stayed with Square for the rates.  Thank you for removing that stumbling block.  Like many MANY others we will be leaving sooner than later.

[Youngbloodcoffe]

Is Sightglass Coffee, the company Jack Dorsey funded to beta test square, getting a rate increase as well? Square was tested on the small transaction model so you know very well how this affects us. I know your headquarters has the finest chefs as well as beer and wine on tap. A playground for adults. It’s a little hard to understand and sympathize knowing this. 

[LasBrasas]

The impact that this will have on small transaction companies is incredible.  Increase of $100 or more for my business and I spoke with 2 different coffee shops, who live on small dollar transactions and their fees will increase over $300 a month with the $0.10 per swipe charge.  Your pricing structure just help businesses with big ticket items and killed all the coffee shops and small transaction businesses, like myself.  I came to Square just for the fact of no bs with hidden fees and swipe fees.  I thought I wouldn't ever leave Square, but this at least makes me look around now and see what's out there.  I use to use Costco and switched to Square a few years ago just because of the swipe charge.  It's very unfortunate that your decision hurts the smallest of businesses the most. 

[Stans]

I will abandon Square if you keep this structure that penalizes small business/small amount transactions.

[Ron]

Of course no one likes change and no one likes rate increases but I think we can all agree we love Square. We don't shout out our appreciation enough for everything that Square had done for us like giving us a free pos system, no pci compliance fees, no business or awards card fees etc. We need Square to be healthy so we can all be healthy and continue to be successful. I appreciate everything Square had done for our small business throughout the years and hope everyone else does too. 

[ExFan]

I agree and stated how happy I was with Square. The change is too drastic for many as you can tell in this thread. Even though there are many “Ambassadors” here trying to soften things up, most will agree this is not acceptable and many will leave. You “Ambassadors” pay for the increase. I have decided I will not. There are other options out there. Do what is best for your business. 

[GeorgeX]

Any intelligent business owner will understand that Square needs to be profitable in order to fund R&D and continue to enhance their robust platform, not to mention stay in business. All I’m asking for is EQUITABLE TIERED PRICING. This increase is totally lopsided! It all hinges on transaction size and on one extreme the increase is totally insignificant while on the other extreme it’s a royal screwing. What happened to the concept of “win-win”? If Square comes up with what I’m asking for, everybody wins; they spread the increase equitably across their customer base, they get the increased revenue, and they keep all (or nearly all) of their customers!

[pessosices]

@GeorgeX - I agree that in theory, a tiered equitable pricing structure where lower transactions would have lower fees would be great. However, it seems that the reason Square is doing this, and the root of it, is that there are more parties involved than just Square

The Card Issuing Banks (Chase, Capital One, Bank of America, etc.) and the Card Networks (Visa, Mastercard, American Express, Discover) all take fees out of each and every transaction. And for a lot of them, these CC companies charge a fee like X% plus $0.XX for each transaction. And a lot of the time, it's pretty darn close (and even higher) to the 2.6% and $0.10 per transaction. American Express is ridiculously high! Look up interchange fees to see what they are, and then add the other fees:

https://squareup.com/guides/credit-card-processing-fees-and-rates

American Express:

http://blog.unibulmerchantservices.com/how-much-does-it-cost-you-to-accept-american-express-cards/
Mastercard:

https://www.mastercard.us/content/dam/mccom/en-us/documents/merchant-interchange-rates.pdf

Visa:

https://usa.visa.com/content/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees.pdf

So inherently, because of the way the larger credit economy works and the way Card Companies & Banks run and charge fees, there is literally no way to make it equitable and tiered because Square would lose money on all of those smaller transactions. So that's a loss on small transactions, plus a loss on all of the other fees Square covers like PCI compliance, and the services Square offers like POS & Business Management Software.

So square isn't "Targeting" or "Punishing" the small business owners with small transaction sizes, like @mike501 and other companies are suggesting. If anyone is targeting them, it's the Credit Card companies that are doing it. Square is just now passing those fees along.

It's a maximum increase of 10 cents per transaction, it's hard to tier that out or make it any more equitable.

And if you take it to the next step and try to tier it out and charge more for the higher transaction businesses, it would charge them a heck of a lot more than just 10 cents extra per transaction, and then it wouldn't be Equitable at all. And then those sellers would for sure leave Square for another company, and they'd have to raise prices on the smaller transaction sellers since there's no way to recoup the loss.

[GeorgeX]

Pesso, thank you for the thorough explanation of what's going on here. The links are very much appreciated. I fear the grass isn't any greener with the other guys...ShopKeep, Paypal, Touch Bistro, etc, since everyone runs their transactions through the banks & card networks who have us all by the "you-know-whats". Another way to look at it is that the grass has truly been greener for a long time on the Square side, and it's now time to pay the piper. It's a tough pill to swallow, but I do understand now. Thanks again.

[pessosices]

Of course, @GeorgeX ! Thank you for taking the time to read!

Totally. It's a definite downside of the industry and being led by 4 big CC companies that control the game. 

That's definitely a good way to look at it - and fortunately the fee change is pretty easily mitigated by a <10 cent increase in prices, and I believe that staying with Square is definitely worth it for all of the benefits.

I've been using Square at my Ice Cream shop & my other side businesses for 7 years now, and still nothing compares with all of the benefits Square provides. 

Thanks again for reading & listening & posting on here! 

[GeorgeX]

Ice cream shop, huh? Me too! We should connect! [Personal Information Redacted]

[GeorgeX]

Forgot to add that I agree with your comment about raising prices 10 cents. I'm going to do that on my single scoops for sure (the highest volume item I sell).

[pessosices]

@GeorgeX  That's awesome! Email sent, I'd love to connect more!

By the way, I absolutely love your branding, website, and in-store aesthetic! Absolutely beautiful and inspiring - both in look, feel, and philosophy & message!

I'm putting the link to your website & social media here so more people can see it, if that's cool with you:

http://www.andiasicecream.com/

https://www.instagram.com/andiasicecream/

Really masterful job all around with your business!

And raising your 1 scoop is definitely a great idea! I'd love to hear how it goes!

[GeorgeX]

Wow! I'm honored! Thank you so much! It's definitely cool with me for you to post my links. We worked hard on our rebranding a few years ago and it has definitely paid off. Looking forward to connecting!

[pessosices]

Of course! Good hard work deserves praise!

Well y'all did an incredible job and it's absolutely paying off!

[cmusicshop]

@GeorgeX Please post how the increase goes (once you've had time to look at its effects).  It might be a real eye opener for some of the smaller ticket oriented shops.

I see a lot of "raised my fees 40%" or whatever percentage it might be but I keep thinking 'but it's only a dime in actual costs, why not raise your price?'.  I mean a penny more on a 2 cent fee is 50% increase but still only a penny.

Might be good for those afraid that a price increase will negatively impact business.

[mike501]

..