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

[pessosices]

@mhugil So your card not present rate when you run the cards in your office will stay the same, and your men in the field will get the new rate, so they’ll end up saving money on 50% of your transactions, and the other 50% that you do will stay the same. Congrats!

[bobalove]

I'm sorry, but I don't think comparing this situation to the price of Strawberries is a good comparison. Everyone knows that the price of produce will fluctuate at random times, but for the most part will usually stay in a certain price range. That's why it doesn't usually bother customers to pay a higher price that one time because they know the price will eventually go back down the next time they need/want it.

A lot of businesses (myself included), have put all of our eggs into Square's basket. We run Payroll through Square, we are enrolled in their Loyalty Program, and we also had plans of enrolling into their Marketing Program. We also would have liked to have Employee Permissions, but $35.00 a month for that seems like a lot (especially when other companies offer this feature for free). It just feels as though Square knew that a majority of their customers would feel like they didn't have a "choice" but to stay due to having everything integrated with them. Obviously, I know it's technically still our choice to stay with Square after the rate increase.. but given the fact that it would be extremely difficult/stressful to move everything before November 1st, we really do feel like we have no other choice.

It's also frustrating because the Square POS system leaves a lot to be desired. Many of us have been asking for certain features to be implemented for years, but nothing has changed. The ability to see the subtotal? Not there yet. The ability to print sticker labels for drinks? Not there yet. A better way to do modifiers besides having to scroll through one big endless list? Not there yet. Automatic discounts for BOGO? Not there yet either. Their loyalty program doesn't even work properly a lot of times either. However, we overlooked/excused a lot of these things due to Square's processing rates being so low. But now that they're not, Square really needs to step up their game and start implementing/fixing a lot of these features that are messed up/missing.

[HeatherM]

I'm not sure what you would consider a good comparison. Nor am I sure of what you're selling.

But recently one of my vendors raised the cost of an item I sell from $1.00 each to $1.05 each. I have enough of a profit margin to absorb that cost without increasing my price. The next increase, I'll probably raise my price.

Another item went from $4.95 cost to $5.20 cost. Again, I have enough profit margin to absorb that increase, but the next one I'll raise my price.

10 cents is nothing in the big picture and can easily be recouped with minor price increases.

[bobalove]

Oh, I was just talking about why people wouldn't be throwing a "temper tantrum" over the price of strawberries being higher than normal. I think most people know that the price will go back down next time, and that's why it's usually not a big deal.

A lot of people are outraged over this announcement because some of us will be paying $3,000-$5,000 more per year now. That's a big chunk of change out of nowhere. People complaining and voicing their dissatisfaction is to be expected.

[ryanwanner]

@bobalove Yes, produce prices vary widely, but it's been my experience that when the prices go up (especially as dramatically they did) they rarely come back down to the original price, so yeah I do think it's a very valid comparison.

But the other points are very valid. I agree that there are a few things the POS needs to fix. It would be great if Square would actually follow a project to its completion. BOGOs are the best example here. Sticker prints are now available via the Fresh KDS screens FYI.

In all, with all the bundles, Square did "capture" many businesses. But I still stand by my thoughts that you'll be hard-pressed to find a merchant processor with all the feature sets Square has for the same rates once everything is counted. I may be wrong (and probably am), but this is still a good thing we have here...

[bobalove]

@ryanwanner Ah, maybe it's just different depending on where we live then? We usually buy strawberries and bags of avocados from Sam's Club.. and we've seen the avocados go as high as $8.xx. But then it would eventually go back down and stay around the $4-5 range. The strawberries here, I think the highest we've seen was $7.xx, but usually it stays around $3-4 for us.

I did see that we can do sticker prints through Fresh KDS now, but that would end up being another $30 per month and would require another iPad/tablet for the kitchen.

At the end of the day, I just hope that Square will fix and roll out more POS features (and hopefully not charge us monthly to use them) to compete with other companies. We demo'd a lot of different systems a couple of months back, and Square is definitely not the greatest.

[knieuwoudt]

I agree completely! Most businesses do BOGOs. Why hasn’t square introduced this feature yet????  Almost moved over to lightspeed. Much better processing and omnichannel capabilities, free newsletters and up to 5 employees free, but a high monthly fee ($150 for POS and ecom) and more expensive processing fees (2.6%+10 cents) than square’s flat rate 2.75%. Decided to stay with square because of the processing fees on my low ticket business, now this increase by square!! 

Recently increased my prices for another reason, so can’t increase again so soon. Customers don’t like “price creep”. I will be displaying a sign that says “credit cards accepted over $10 purchase” or something like that. Will keep my eye open for better processors over the next few months. So disappointed with square, who were the champions for small business - no more. 

[boostnutrition]

A large number of my transactions are 1, 2, or 3 dollars. Average sale is around 5. My fees based on last years transactions and average sales will will go from ~$5000 to ~$9000 per year. 

[BRCoffee]

Hey Kati, boy $3,600/yr is a painful hit! Especially with the rising minimum-wage and rents in our area this is just another difficult thing to deal with. I’m looking at PayPal and/or other options that accommodate smaller sized transactions like my coffee shop. Does anyone else have any suggestions for merchant card services that are as fast and easy to use as Square?

[VanKalkerFarms]

Just as an FYI Paypal has a section in their terms of service about micropayments being a $10 or less sale average and that it has special pricing of 5% + 5¢. I don't know how that works just something to be aware of. So be sure to read everything thoroughly and don't just jump because they have an advertised fee of 2.7%, they also have other fees like dispute fees.

[dongillis]

Waiting to hear from support on clarity about rates. I can't find anything that pertains to face to face in shop transactions that are dipped, tapped, or swiped that are charged other than 2.7%.

Been using square for 5+ years now in all our shops with a combined daily count of about 600 transactions. Haven't dealt with a single dispute yet, so not worried about that.

[RoadkillGrill]

NEVER put all your eggs in one basket(Square).... I don't bundle cell phones, I dont bundle insurance, I dont bundle TV/phone, etc. Square I will pay for what I use. I don't use or want your POS, I bought my POS software outright. I'm not here to pay for everyone's "FREE" POS software. Charge them for what they use, and leave my fees alone. I've had Square and Paypal since their beginnings. Paypal is actually quicker approval times. Sorry Dorsey, but you've lost my business. I foresee Dorsey increasing revenue to increase the business worth only to turn around and sell Square to another company who will revamp all the prices even higher.... Typical Corporate move.

[alexandriak]

I guess I'm one of the lucky ones here. I'm only going to see about a $6 a month increase because my average sale ranges between $45-$65. 

However as a customer that has been with your company for 7+ years, and have referred A LOT of people, I wish you would have thought about those with you for a decent length of time. 

From this thread it's clear the company is going to be seeing an increase in income, whether that's profit I can't say as I don't know your business numbers, but I do believe you as a company should be looking into how you can support the businesses that will be affected by this the most, while keeping all of your customers in mind.

Is it possible to decrease the cost of other things you offer? Such as the loyalty program, payroll, etc?

[alexandriak]

PS to everyone saying PayPal

They will no longer be refunding fees if you have a return or refund a customer. I'm not sure if this will apply to their credit card reader sales or what but something to keep in mind.

[gariston]

Square has given their rivals a nice gift making them more competitive. It will be interesting to watch what happens to Square's growth next year.

[bobalove]

Indeed.

We have met with other companies prior to the announcement, but only stayed with Square due to their low processing rates. Other companies had better POS Systems that were better tailored to our Tea Shop and included some features that Square makes us pay monthly for. However, no one could beat their rates. Now that Square is raising their rates, they don't really have much of an edge over the competition. Especially when their competitors have a lot of POS features that many of us have been asking for for years.

[cmusicshop]

In some ways, it might be a good thing for those who stay with Square.  With losing the price advantage they'll have to step up getting fixes and updates or run the risk of losing to the competition.  Believe me, even though it seems like I'm defending Square I'm really just trying to bring a less emotional response to the conversation.

[pessosices]

Definitely an interesting point!

Although based on the numbers that are coming out on this thread about some of the other competitions, it looks like even with the rate increase, square is still charging less than the competitors for transactions in these price ranges!

[ExFan]

Is this Blind Faith? What Price Ranges? 

[bobalove]

I have a demo scheduled with Clover next week to go over their POS System. They might actually be the cheaper alternative for our business since we are/will be paying for a lot of subscriptions with Square that is already included with Clover. Their rate would also be lower for us at 2.3% + $0.10 per transaction.

Yes, I would have to buy new equipment with Clover. But I'm calling that a wash since we have been wanting to buy the new Square Register. We decided against it because the rate was more expensive if we used the Square Register. However, since the rate is the same across all devices, if we decided to stay with Square, we would be buying new equipment as well to make our Loyalty Program more efficient. 

Clover:
Monthly - $29.00

Employee Management: FREE
Loyalty: FREE
Marketing: FREE

Payroll: FREE (Online Rep said it's free, but i'm a little skeptical on this one since it would be from a 3rd party App).
Rate: 2.3% + $0.10

Square:
Monthly - No Monthly Fee
Employee Management: $35.00 per Month
Loyalty: $105.00 per Month
Marketing: $35.00 per Month

Payroll: $60.00 per Month
Rate: 2.6% + $0.10

We would be saving $206.00 a month just from the subscriptions that come included with Clover. The rate doesn't make that much of a difference off of $5.00, but Clover still does have the better rate as well. I just hope their included features are on par with Square's. We shall see!

[cmusicshop]

Yours is a good example of sitting down, looking over the options and seeing what works for YOUR business.  Everyone should run the numbers once in a while.  Best of luck no matter who you choose.

One thing I have learned over the years with processing and the like - they add here, take away there.  They reduce the rate but add to the per transaction.  They offer better rates on the machines but charge a monthly fee just to be a customer, etc.

True story: My last processor (Worldpay) I kept while transitioning to Square fully just as a back up.  So for a couple of months they charged me $80 per month just to exist.  And this is after I did everything to reduce the monthly charges knowing I was moving to Square.  Oh, also I couldn't quit til April or they would have charged me an early termination fee.