A Change to our Tap, Dip, and Swipe Rate - Page 11

Caty · ‎09-24-2019

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

Xxitalia143xx · ‎10-06-2019

This is going to hurt my business and therefore I am going to have no choice but to switch providers.

thefew78 · ‎10-12-2019

I'm going to try the Talech POS system with the paypal processor. 2.7% flat rate with paypal and $69.99 monthly fee for the Talech pos system. Rather pay $69.99 more per month, than $150+ with square.

nthieme · ‎10-14-2019

This was a tough pill to swallow when we first got the news. After mulling our options, unfortunately we are going to have to leave Square, instead of paying hundreds of dollars extra for no reason. We have always had great customer service and reliability, and it's a shame to start over, but what choice do we have?

Ron · ‎10-14-2019

Good luck but I doubt you’ll find another processor with lower total cost than Square. Check very carefully before you leave. We simply raised our prices a mere 10 cents and that more than covers the increase from Square.

straycatbrew · ‎10-17-2019

As a small coffee shop, I am among the many who are now researching alternatives. In addition to changing companies, I’m considering raising my minimum purchase to $2-3 as a result. Mainly, when I sell something for $1, currently, I lose 3¢. Not bad. Next month, it will be 13¢. If it was a candy bar, that’s half of my margin. And yes, dozens of people will whip out their debit card for a candy bar if offered the option, including myself.

Problem with this? Now I lose the customers who would have charged their $1.65 small hot coffee. That’s going to hurt my sales volume.

According to the calculator, my fees will be going up about 40% or more. This is a major impact, and given that I just raised my prices to cover a massive minimum wage increase here in NJ (July went up about 20%, and will be going up annually for the next five years) I don’t know if I can pass another increase to my customers yet without losing them.

my family is in the process of opening another business, a small bakery. Up until this email, I was planning on setting it up with another Square system. Now, I don’t know. We may end up switching providers for both locations, since I haven’t invested anything in POS for the second store yet.

prior to this, the normal square account was attractive because the rates were better than the Square for Retail or Reataurants systems, or the very-expensive Square POS system. Would it be nice to have a customer display? Not at that price.

@Helen or others, I do look forward to talking to someone about options because while Square has priced us out of most add-one (Loyalty, for example, would be $100+ a month!) I’m not ready to immediately count them out. But it’s a viable option right now.

gariston · ‎10-17-2019

Setting the minimum for credit card transactions is the only way to go.

gariston · ‎10-17-2019

Setting the minimum for credit card transactions is the only way to go. Our average is $7/transaction. We will be gently encouraging our customers to pay cash for transactions below $7. Most people understand there are costs associated with credit card use and are more likely to reach for cash then when dealing with Starbucks who has the clout to negotiate their own credit card processing terms.

Square has a lot of small shops that add up to large volume of transactions. If we collectively discourage credit card payments it will show in their transaction volumes which is a metric watched by their investors. It will then also show upstream all the way to Visa, MC, AMEX. The only way these companies will relent is if they get market feedback that their rates are too high for smaller transactions and this starts to affect their transaction volumes. If we sheepishly accept this and absorb it, it will be a profitable win for them on backs of small shop owners.

Also, I don't buy that Square needs to raise rates to be profitable. They can also reduce operating expenses which have been climbing rapidly. As business owners we can all read income statements: https://finance.yahoo.com/quote/SQ/financials/

Square should also use their clout with their providers on behalf of their customers and press them to structure their rates in the way that won't discourage credit card transactions.

karl_f · ‎10-17-2019

This sudden rate change has been a real bummer. Not only have our fees increased substantially, but when reaching out to Square about a custom rate due to our annual gross, were declined there as well because our average ticket sale wasn't large enough. As much as I like Square, I'm struggling to see the overarching benefit to not looking elsewhere.

sodaburst · ‎10-25-2019

This will increase our rates by over 50%, since we are a small soda shop. We will be switching as well. What is everyone's experience with other vendors? I have heard about PayPal. We get hardly any AmEx, or Discover cards so if other vendors limit those that would be no problem for us. I have also heard some banks will have a program as well that they offer as an incentive to bank there. Anyone heard of those?? I unfortunately didn't see previous emails from Square so this is catching me last minute. Thanks for any help and information!

BradleyRefresh · ‎10-25-2019

My coffee shop is going to hurt from this one. Average ticket about $6. It would be painless if Square could just automatically surcharge the customer the correct amount when they pay credit card. My customers paying cash would just pay the advertised price and the price in the Square POS. There was a guy trying to sell me on his merchant processing which worked on the same concept. Have a sign posted that credit card payments will automatically incur a surcharge.

cmusicshop · ‎10-26-2019

@BradleyRefresh I looked at something like that - I think the thing is a customer would see a penalty from doing business with you and choosing to pay by card (plus people don't read signs). Effectively you are raising your prices to them but through the processor and given how reluctant people are to raise their price a dime to cover the change I think this isn't any different, just more subversive. As we are inching towards a cashless society you are just going to **bleep** off the customers when they look at their receipt and see a 'penalty' (that's how they'll see it) charge.

@sodaburst and all - I would certainly talk to your banks and see what they can offer. Before Square my bank was a pretty good deal but it went downhill soon. But, and it's a big BUT be sure to get all the information on other charges like membership fees, PCI compliance fees, do you have to buy or lease a machine, supplies, etc. My rate was better but the extra fees almost doubled the end cost.

And at the risk of sounding like a broken record - raise your prices! I and others have suggested this and yet not one person has come back with a valid reason they couldn't do it. Stop thinking of it as a percentage increase and think of it as a DIME per sale. Two items = a nickel each. Across the board - cash, check or card - new prices. Maybe not the dollar and under items but take your best sellers and bump 'em up. If your business is that price sensitive that it is your main factor I've got news for you, Starbucks, Walmart, Amazon are here to eat your lunch! Without knowing you guys I believe your successes (I would KILL for the traffic some of you have) have to be due to quality, service and other things Starbucks doesn't have. Price is, within reason, the last thing making you successful. Give yourselves a raise **bleep**.

Edit: I've been 'bleeped' twice....oops.

mattramZ · ‎10-26-2019

@cmusicshop Raising prices when necessary is one thing. When there are plenty of options out there at lower rates and flat rates, raising prices is a comparative disadvantage. I don't know the music business. I recognize higher average ticket prices are going to see less impact, but if your bread and butter is a $2.00 cup of coffee and you're competing against $1.00 cups of coffee all around you, then yes, ten cents makes a difference. If you're on here cussing about it like it's a no-brainer to simply raise prices, you clearly are not familiar enough with the industries most affected by this. Price matters. Costs matter. In foodservice, margins aren't trivial things. Every cent stacks up. Something as trivial as food waste can make a break a business. Stop shilling for Square. Coffee shops, ice cream shops, and low ticket quick serve cafes should be looking at other options right now. I've had at least one big competitor in the industry offer the 2.75% flat rate no swipe fees to "eat Square's lunch" as you would put it, because as much of the feedback on here would show, price is part of the thing that made Square successful. Price does matter. I don't understand how that point is even debatable.

I'm upset with Square for altering its fee structure so drastically when it was already making up for some of its costs in the marketing, loyalty, gift card, employee time tracking game. I predict it will make way more money up front for a while, but short term gains will yield to long term losses. The core word-of-mouth businesses like coffee shops which have very high customer interaction numbers and time are the same businesses that helped start things like Fairtrade for the same reasons. I think they are underestimating the value of their low-ticket price clients because the low-ticket clients are the ones with the most interactions.

cmusicshop · ‎10-29-2019

@mattramZ You are right, I do not understand your business, however I sell a lot of items under $10, one of the most common being $6.95 and I'm competing directly against both Amazon, Guitar Center and the internet selling the same item at my cost. So, there are some parallels.

As for shilling for Square - sorry, but no. Square offers me nothing but the rates and services everyone else gets. And if they become to expensive I'll leave in a heartbeat. If you have found a replacement, then great. I've looked around and haven't found any as good but I'm sure they are out there. And certainly, you have every right to be upset, I just find it perplexing that a dime per sale is the deal breaker for so many business yet everything else goes up. You said 'raising prices when necessary' right? How is this not one of those times? If your supplier of cups, coffee, etc. raised their prices, would you? How about your rent? Utilities?

I never said price doesn't matter for all businesses, yet alone Square. In fact, the core processing service price is definitely a factor for Square. It is part of why I joined. What I did say is price is not the factor some business owners think it is. You are already, by your own admission, twice the price as your competitor. So, it isn't price, it must be service, quality, atmosphere, etc. that drives your traffic, right? I'm coming from the place of wrestling over raising my own prices, some of which were almost 10 years old, for fear of losing sales only to find it had no effect on traffic.

I certainly do not want to argue. I only want to offer some other insight over the chest beating in this thread, having been in this place a million times before. If offering another view is 'shilling' then I apologize that you feel that way but having been part of these discussions with my fellow industry people I have found cooler heads prevail. So many have threatened to jump ship - I'd be curious if they have, what they found in other services, if they adapted in some other way.

straycatbrew · ‎10-31-2019

I think the real reason that myself, and many other merchants using Square, are having problems with the massive fee increase is the following:

Supposedly, in order to make up the difference between the low rates we were getting, and their costs, Square was charging extremely high prices on other services, such as the email marketing or loyalty programs.

Now that most of us are experiencing a rate increase of 40% or so, at least the smaller merchants, what are we getting for that extra money?

Perhaps they should make Marketing a free product now -- which would benefit them, as it encourages additional sales, which in turn increases their revenue through fees.

We're not seeing an increase in updates to the POS system, because they have been diverting their attention to the overpriced specialty modules, like Retail and Restaurant.

So, what are we getting for the 40% upcharge?

ashc · ‎11-01-2019

Hey @straycatbrew,

I moved your post to an existing thread in the Community that goes over our pricing change with more resources.

Page 1 has Caty's breakdown of it all and why it's happening plus some resources to see what all is included in our services.

You can also go through other seller's responses on this thread as well.

Ashley C
Community Moderator, Square
Sign in and click Mark as Best Answer if my reply answers your question.

straycatbrew · ‎11-01-2019

@ashc ,

That doesn't answer the question -- the message from @Caty basically says, here's what you're still getting (that you were already getting). But it doesn't say what we're getting in addition for the 40% price increase.

Given that the add-on services were priced ultra high to compensate for the lower transaction fees -- what is happening with those services?

What is being given to the merchants to compensate for the massive price increase? Or was it just intended to be a bait & switch?

I've been a loyal Square merchant, in multiple businesses, for over 6 years. I resisted the urge to shop around in the past, because Square was dependable (and even hinted that their rates wouldn't change). Now, I spend my free time researching options, because I have another family business opening in a few months, and, it will be a small bakery with probably lower ticket sizes, like my coffee shop.

At the beginning of this thread, @Helen was personally reaching out (or having others in Square reach out) to businesses who had these questions, answering them directly. I wonder what the results of these conversations were, because my message went unanswered.

I asked the same question via email support, and got a copy of @Caty 's form letter response, saying "hey, we're not taking anything away (except your money) so be happy and have a nice day."

pessosices · ‎11-01-2019

@straycatbrew - When you raise your prices, do you give your customers more to compensate for the price increase? I would guess that the majority of us would not, because then there would be no reason to raise prices in the first place.

I understand the frustration with vendors & square increasing their rates, but at the same time, we’re all businesses trying to survive and make money, and Square is no exception to that.

Personally, I’m raising my prices to pass the increased cost along to my customers, because I’ll be hard pressed to find another service that is nearly as good as square, let alone substantially cheaper to be worth the costs of switching.

Pesso - he/him
Pesso's Ices & Ice Cream
Square Super Seller - I'm here to help!

straycatbrew · ‎11-01-2019

@pessosices , how often do you raise your prices more than a small percentage? 40% or more is different than a coffee shop going from $1.75 to $1.85 on their cup. That’s the difference in this conversation.

If they had raised it a small percentage (say, from 2.75% flat to 3.75% flat) they would have made money from all of their customers. Instead, they changed the pricing on the same small customers that they were advertising that they wanted — the coffee shops and bakeries and boutiques. So they chose to disproportionately hurt the same segment of the customer base that they claimed to really want. That’s why a lot of people have claimed bait & switch.

pessosices · ‎11-01-2019

@straycatbrew I’ve raised my prices once or twice a year over the last 5 years, and have in fact doubled my prices over that time - due to exponentially increasing labor & ingredients & utilities & rent & vendor costs. So I know a thing or two. Also, I didn’t lose all of my customers. Still a thriving business.

Sure they could have, but that would have lost & upset & alienated every single one of their customers, and not followed what their actual expenses are. Square is charged flat rate fees by banks and credit card processors, look up interchange fees - I have links and sources in an older post of mine on this thread.

They raised their prices by a maximum of 10 cents per transaction on small transactions, which they have been losing money on for 10 years - rather than increasing everyone’s rates by 1 percent. They even lowered the percentage rate overall.

They’re not “targeting” or “bait & switching” small businesses - they decided to no longer lose money on these transactions, and made a change. If businesses don’t make changes to cover expenses, they die. I’m sure you would do the exact same thing if you were in their shoes and analyzed and looked at the big picture.

Pesso - he/him
Pesso's Ices & Ice Cream
Square Super Seller - I'm here to help!

RoasterChica · ‎11-01-2019

I really like your idea @straycatbrew ! Especially for Marketing (and not only because we use it and now pay $45/month 🙂 but you make a great point about making Marketing more affordable or free because it would help out merchants but also be self-serving for Square due to the increased sales.

Some other POS companies I've checked into have Marketing included, although their platforms may not be as elaborate as Square's. I recently met with a Toast POS rep and even he commented about the Marketing feature "Wow, that's really nice!"

@Helen is that something you could bring up with the Square powers that be?

It could help ease some of the disgruntlement people are feeling about the fee increase.

ciderbellyandy · ‎11-01-2019

We've been with Square since day 1 and have enjoyed all aspects of the platform. it is a great system. We have always been the biggest proponents of Square.

Unfortunately, the rate increase has forced us to look for a different system. We are a successful doughnut shop but many of our sales amount to $2.00-$3.00 per transaction. This rate increase on small transactions means our fees have increased by 30%! A 30% increase!! It's, sadly, too much for us. We're not alone. Every other small business that we know if also scrambling to find an alternative, as well. It's a real shame.

We understand the need for an increase, but with competitors who offer the same features and benefits and charge smaller fees, it's hard to imagine why square would make this move.

😞