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

[ryanwanner]

While I'm not here to fully stand up for Square and their decision making process, as small business owners we should be respectful of the fact that Square is a company that needs to make money to be viable as well.

Of course the first thing we all are doing is the knee-jerk reaction of "OMG MY COSTS!!!!!!!" and venting and sourcing alternate merchant processors. But let's all take a deep breath here and think about what we can do to overcome this obstacle.

Yes, the costs are going to be quite prohibitive as your business is set up at this moment. It can and should be doable in the long run.

Currently your fee is 2.75%, right? That means that with a $5.00 transaction, you're paying 14¢ in fees. With the new structure, you'd pay 23¢. A difference of 9¢.

Now, let's say you see 100 transactions per day, and 80% of them are credit card. Assuming your average transaction cost is $5.00, you would be looking at a total of $18.40 in fees with the new structure. On the old fees, you would be looking at a total of $11.20. So you're looking at an increase of $7.20 per day. So per total transaction you are looking at a 7¢ increase on average.

Are you really here to tell anyone that if you were to raise your average transaction price by 7¢ your business would suffer? That the majority of people who frequent your store would notice and/or care about a 5¢ bump in the price of their coffee?

This can simply be written off as a cost of doing business. Take it from someone who has been in business 11 years and has seen things like this come and go: if you spend the majority of your time worrying about every penny you'll miss the dollars. Of course you need to track your expenses, but when one of your providers comes at you with an increase in pricing you throw this big of a temper tantrum, or do you figure out what you have to to do make it work???

True story: I just got back from Sams Club for a run for my restaurant. Last week strawberries were $2.98 per pack. Today they were $6.98 for the same size pack. Should I throw a fit in the middle of the produce section because of that big of an increase? Should I spend precious time running around to the other stores to find the better deal or should I spend my time nurturing my business so I can bring in one more sale to offset that cost?

If you do feel Square is out to get you and you want to run away screaming (which I do understand even after everything above), please remember the real costs that will be involved (and things to watch out for when choosing):

• Your time to research merchant services
• Your time to reprogram a Point of Sale
• Training time for your entire staff and the inevitable refunds due to errors
• Hidden fees with various cards (a world card will charge at a different rate than a plan jane card will with the majority of merchant services--remember, the merchants are the ones that pay those freebies the cc companies give their customers!!)
• Amex and Discover are notoriously a LOT more expensive for swipe rates
• Batch settlement fees are a distinct possibility
• Many merchant providers will hold your funds for 48-72 hours
• Do you have to sign a contract that you can't get out of once you realize how much merchant providers can nickel and dime you?
• Does your new merchant provider get you access to an online store, customer database, marketing, and loyalty features that match Square?

I'm not saying that all other merchant providers are bad, but take it from someone who got bit HARD by First Data: do your homework before committing.

Yes, I'm a little salty about this change, as we all should be. But I firmly believe that with a little menu tweak we can all weather this storm.

[pessosices]

A lot of great points here, @ryanwanner - I absolutely agree. A 7cent increase in fees per transaction is easily mitigated by an equally tiny price increase to keep all of the other benefits of Square. Expenses go up, prices change. Great analogy with the strawberries. I'm absolutely staying with Square.

And for those asking for special rates for businesses with small transaction sizes, it seems like the reason Square is changing the rates is because the fees Square pays to Credit Card Processors are higher on these small transactions, and they need to cover those fees by passing it on to us - so they probably can't give a break on them because that seems to be the reason they're changing them in the first place.

[money4205]

I will have to be glad to have new customers

[cmusicshop]

I started a thread https://www.sellercommunity.com/t5/General-Discussion/The-rate-increase-from-one-user-to-another/td-... for the very reason of seeing how the most affected people were impacted.  Trying to stand back and let the others speak but I am wondering the same thing @ryanwanner points out - if it is a dime per transaction tops, could you just raise your price a dime or hell, even a quarter??

Also, having been in business since the knuckle buster imprinter days I have plenty of stories about being screwed by processors - extra fees, different rates, contracts with early termination penalties, longer waits for deposits and such.  Still, I respectfully would love to hear more about alternatives, not just in providers but in solutions like raising your price, expanding margins elsewhere, etc.

Edit to add: Adding to @ryanwanner strawberry story but in the opposite - I raised my string prices 45 cents after taking it on the chin with my suppliers constantly raising their prices year after year.  Keep in mind, strings are sold on the internet for close to my cost, so I was already higher.  Not ONE person mentioned the price change. Not ONE!

[CoffeeShop1]

I’m pretty sure you’re working for Square. There is something call raising rate and something call greed. What Square does is pure evil. Are you serious? Talking about .07 cents? Do you know that if our items cost around $2-$5 a .10 increase is huge?. Imaging you do 300 transactions a day multiple that by .10 cents isn’t that nearly 900 increase? Even if the rate is a little lower and we over 10k a year? What happened if that’s the only profit a business make? As for raising our price? How much more do we need to do it? So we keep on increasing our price whenever someone increased their? By that logic no one can afford anything. Please speak for yourself. 

[pessosices]

None of us work for Square.

I am speaking for myself, based on my own experiences. My items have cost $2-5 from when I opened my store 15 years ago. I refused to raise my prices for 10 years. Finally after years of increasing costs and realizing my profits were sinking and non-existent, I raised my prices every year for the last 4 years by much more than 10 cents. Anywhere from 25 cents to $1 each and every year according to my increase in expenses cost.

And guess what happened.

My profits increased. Sure I lost a few customers and that wasn't fun, but my loyal customers stayed, and I got new customers that never knew my old prices and thought my new ones were just fine. And my profit increased at a higher proportion to the lost revenue from a few customers. I'm not saying raise your prices by $10 and everything will be fine, but a 10 cent increase on $2-5 items should generally not have a ridiculously huge impact.

And yes, I do suggest raising prices almost every time your expenses raise. Or at least raise them with a built in buffer for the next year's future expense increases.

We're all in business to make money, not lose it. If we don't raise prices when expenses go up, we lose money and then we go out of business. 

[ryanwanner]

@CoffeeShop1 no I don't work for Square. In fact, I even said in my post that I don't think this was the right way to go. Something I made clear to my account rep when I found out about the increase myself. I just understand that Square needs to make a profit in order to stay around. Look at their financials: they have yet to make a profit after all these years even with their explosive growth. How long could you keep in business not making a profit? Square's coming up on 10 years without profit yet...

If you look at percentages, then yes, the increase is freaking huge. If you look at actual dollars and cents, then it isn't the end of the world.

Yes, price raises are one way to combat this. The other way to do this is even better: prove to your customers why you want them to come back day after day; wow them with your service and product; generate that much more volume. Using your numbers, this means you need three more transactions a day in order to nullify the increase. Three. That should be quite doable. 

I don't know your business, but I know mine. If I am reliant on my low credit card fees to be my only source of profit, then I know I need to look at my numbers all around and figure out where my disconnect is. I currently do 100-150 transactions a day at a $15 average. So yeah, I'm not looking at a 7¢ fee being disastrous, but I do know it'll impact things.

Like it or not, price increases are the name of the game right now. Prices on our raw ingredients are going up. The labor dollar is rising dramatically--Colorado is seeing a 90¢/hr minimum wage increase for the fifth year in a row this January!. If I don't keep up on my pricing then I'm going to the poorhouse. Simple as that. The fee increase is just another thing to manage. And manage it you can.

[cmusicshop]

Well, you are under my post but are referencing @ryanwanner figures.  I'll throw in just in case.

No, I absolutely do not work for Square nor do I get any considerations from them.  In fact, I have my own complaints regarding invoicing fixes that are needed.  What I am is someone who has been in business for decades and might have a different outlook.

First, I feel very sorry for anyone that works that hard for low margins.  I hope there is some resolution for many of you.  

Should you raise your prices when needed?  Absolutely.  If other businesses raise their prices to you, why wouldn't you?  Yeah, it is a vicious cycle but there is no other way than to cut costs, right?  

Evil?  Maybe but I doubt it was driven by a need to hurt their customers, do you?  So, what provider have you found to replace Square?  The fact that only them and Paypal had fixed rates without a per transaction charge should say something.  They've had to change, just like one of my suppliers decided to ax my territory from 50 miles to less than 5 after 30 years of working together.  You take your lumps and move on.  The question is, who will you move on to that is less 'evil'?

[RoasterChica]

@cmusicshop @ryanwanner @pessosices Hate to admit it but I think you guys may be right.  Square has been losing money and so to stay in business they need to do what their competitors have been doing all along and that is charge the .10 fee.  

It sucks because they did build their business on us and now have to go back on the simple straight-forward rates we've all come to expect.  We've stuck by them through all the growing pains, accepting when things didn't work perfectly or we couldn't call and talk to a live person simply because they were a cool and affordable alternative to the scamming merchant service industry.  We were happy as they added services and grew, and now they answer to shareholders.  That is the reality!

I just spent all day researching and calling around to other providers and by the time we would upgrade components, train and make the switch, we wouldn't be any further ahead.  

I think the solution is to get to work reducing expenses and increasing prices.  Watch out, the $8 latte is coming!  You can't sustain minimum wage hikes, rising costs across the board and something like this without responding in kind.

Loyal customers will understand and hopefully stick around.

[ryanwanner]

@RoasterChica Yes!!!

It's not ideal, no. I started with Square when it was a flat $275/month for no matter the volume of transactions. The switch to 2.75% stung hard. VERY hard. But we made it through it. We will make it through this switch.

For the record, my 20oz latte is sitting at $5.30 right now... probably going to be $5.40 when all is said and done... 🙂

[cmusicshop]

@RoasterChica I want people to understand that, speaking for myself but I suspect Pesso and Ryanwanner might agree, price hikes suck and hurt and feel personal.  Also that I gain nothing from seemingly defending Square.  I just suspect that several of us have weathered these things and got through to the other side and maybe just want to add some alternative to the hate fest.

[RoasterChica]

Just want to say thanks to you guys @cmusicshop @ryanwanner and @pessosices .  As I was working through my frustration today, researching and calling other providers, your comments helped me the most in sorting out this difficult situation.

I'm staying with Square and going to get busy on updating my pricing. 

Cheers 😉

[pessosices]

Absolutely our pleasure! Price changes & expense increases are absolutely never fun, and it’s super easy to get wrapped up in the knee jerk reactions to them - I’m guilty of it all too! Glad we were able to, in whatever small way, help you works through the frustrations, offer some solutions, and put it all into perspective! Glad you found out what you needed and decided to follow whatever is best for your business, and I love square so I’m glad you’re staying here! And if there’s anything else I can do to help, answer any questions or lend any advice, please let me know! That’s what I’m here for!

[ExFan]

I totally agree with you. Safe to say those two are Square employees. Trying to soften the impact. The difference between them and me is that not only have I had several businesses, I was a small business banker for many years and even sold payment processing. The increase for me is over $350.00. Again Not acceptable. Paypal Here = 2.6% Flat. Yes not as robust but for $350 or over $4,000 a year in savings I will do my own Excel table. 

[pessosices]

@ExFan Nope, I don’t work for square, just like you don’t work for PayPal. Unless you do, of course 😁. I’m just a small town ice cream shop owner whose life and business has been made simpler by square and became a huge fan of it. 

[money4205]

Would anybody love to be one of my first customers of the night I sell bitcoin

[mhugil]

do you work for Square Ryanwanner? Because that is not how the numbers work for me buddy. We have worked on this since the announcement. I would not quibble over 7cents.  I have a feeling you either own their stock or you are with the company. All payment processing merchants sucks us dry. Square used to be kinder. Now they have joined the [REDACTED]

[cmusicshop]

Not @ryanwanner  but I ran the numbers too.  The percent drop is barely a plus for sure but it is a tiny bit lower, so good there.  Which means the top extra charge is 10 cents (actually 9.xxxx) which lowers as the ticket price goes up.  I think the point is 10 cents per transaction is easy to make up with a small price raise PER transaction.  Sure the 10 cents adds up but here's something to consider.

I have larger tickets along with the smaller ones and my traffic is a fraction of what some of you are posting.  If I had that traffic per day I would be doing backflips and to think I could bump each transaction up 25 cents to mitigate the rate increase and add thousands to my profits would have my head spinning.  Consider that while this sucks, the solution is really not that hard to implement.

[ryanwanner]

Nope, @mhugil I don't. I was offered stock at the IPO time and bought a bit, but that's not why I'm defending them. Plus with where their stock is right now I would have been better off selling it when it was at $100 anyways......

How do my numbers not work for you? According to your post from earlier in the thread:

my men in the field take customer credit cards via their phones (androids) you will still be giving us the 2.75% + 15 cents.. The only way to get this new 2.6 + 10c is to use a register or terminal which is crazy for our business. (contractor) So instead of helping a small company, we are being squeezed yet again. And it states on this page that if I manually put the customer's card myself on my phone with square app in the office you are charging me 3.5% + 15c.

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If your men in the field take payments via a way to show that the card is physically present (swipe, tap) then your fee would be 2.6% + 10¢.

If you're using Invoices, then your fee is staying the same at 2.9% + 30¢.

If you manually input a card or use the Card on File option your fee stays at 3.5% + 15¢. Fraud is rampant in the credit card field, and every merchant provider will charge more for a card-not-present payment just to cover their butts for the random fraudulent chargebacks.

If you want your men in the field to get the 2.6% + 10¢ fees, give them all a reader, load Square on their phones, and show them how to "ring in" a sale. There's nothing stopping you from doing this! Better yet, you can still create the invoice yourself and show your team how to open the invoice and take the payment via the Point of Sale.

As a contractor, I'm assuming your average transaction isn't sitting at $5. So my bet is your new price structure is beneficial to you. Please educate me if it isn't.

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Look, I agree. Merchant service and credit card providers all have their hands too deep in our pockets. Square is no exception. But, like it or not credit cards are the way almost everyone pays. You as a small business owner have to take the cc fees into consideration when planning your pricing. Or you can not take credit cards at all, but that would make for a challenging environment to keep your business afloat.

[mhugil]

To explain what we do would be too long and difficult but contractors fit the term best. We raised our prices today because what else can we do. We only hope our competitors get this and do the same. The average ticket is less than $400. But 50% are taken by me in the office which is 3.5 + $.15 so that is a bigger issue. I'm screwed because they all _credit card processors) do business like this so the devil I know or the devil I don't know.  I'm done with this thread and just have to move forward. Being screwed every which way we can this year. I just need to win a big lottery and sail off somewhere. 🙂