Percentages are too high

[lennyeiger]

I like Square. I like how easy it was to set up. I appreciate that you are trying to do a lot, adding new features every day. I don't need most of them but I know they are there and could be helpful some day. I appreciate there are costs involved in offering these services, and even in basic credit card processing with all the issues thereof.. However, I just paid around $40 on a $1400 invoice. That's panful, and in my view it isn't right. It's what prompted this post.

This is the internet. Economies of scale are supposed to make things less expensive. When you start with the group you started with, I was hopeful. However, the high percentages for everything just don't make sense. I feel like you are just trying to rip everyone off, get yachts and extra houses for yourselves and everything else that goes with excessive wealth. 

Now that you have gotten this up and running, made back your original investments, why not be a bit more reasonable? How much is enough? Wouldn't it be better to deliver a good service for a reasonable fee, and help everyone out? How do we create a little bit of utopia in our country here and there? We all have plenty of wolves lurking about, healthccare coms to mind, the banks misbehavior. Why be another wolf, why not change some of this....?

[VanKalkerFarms]

That was an interesting way to make your complaint, I like it :-).

Unfortunately, that isn't how Credit card processing works, the fees that Visa, MasterCard, Discover, American Express and the qualification fees and interchange fees are the same no matter the dollar amount of the transaction.  In fact, it is the larger ones that subsidize the small transactions, as many smaller transactions actually lose money for square due to higher fees they pay than they take in for a $5 transaction.  Square gets to keep a fraction of the fees they charge, the rest goes to cover all the fees of the card bank and interchange fees.  Then with the small percent of the percent they get to keep they have to employ thousands of employees and make the software and network that the service runs on.

[lennyeiger]

Thanks for your considered response. What I hear you saying is that the percentages aren't set by Square, but by Visa, MC and the others. If that's the case, then those services have to be ultimately dispensed with. The right percentages ought to be around 1%. There have been numerous attempts to go around these systems, some failures, and some mildly successful. Maybe Square could be the one to do it. I'm sure you've looked at it. I'm also sure you would do a better job than the Visa and MC's of the world, especially if excessive greed was kept out of it...

[purplebutterfly]

I get calls almost weekly from companies that want to take my processing business away from Square and say they can reduce my costs greatly. One key way is that they treat debit cards differently than credit cards. The fee from VISA, Mastercard, etc to process a debit card is much lower, but Square charges the same high rate for debit cards as it does for charge cards. 

I read an interesting article recently that noted that Square even said in its SEC filings that it may well face pressure in the future to lower its processing fees. So they know that they are high.