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

[Houtenscafe901]

Nah, I'm tapping out and side swiping this dip in to my money. First you make me sign a legal agreement that I won't have a card minimum and also can't charge a convenience fee (even if just to cover costs). Now you are discriminating against my business because I complete multiple small transactions? If I was selling a product at $100, my fee would be $2.70 but because I have 100 sales at $1.00, you want to charge me $12.60? Not ONCE in the years I have used Square have you needed to provide support.....no fraud, no charge backs, nothing! The ONLY time I heard from you was when my activity stopped as I went home for my mother's funeral...then you wanted to know if I had found someone else. I'm taking my $160,000 turnover somewhere else, they've been harassing me for years. I'm actually disappointed because I love the dashboard and reports. I guess Halloween will be our last hook up.

[EnjoyParadiso]

Wow!!!!!!  I have started to use square from the beginning when there was monthly fixed price. Had removed that and also started charging for loyalty program.  Now your core value that you were providing, fixed rate, is being taken away.  This is very very very very very bad.  I will have to move to other options.

[The86Coffee]

Square has been a great tool for our coffee shop up until now.  Unfortunately we will now be looking for a new provider to replace Square prior to November 1.

[thefew78]

I was doing some research, has anyone hear anything about this processing company called Sumup. they charge 2.65% per transaction. seems like a good deal. 

[hawriverballroo]

End of year, I will change payroll away from Square, end of year, I will change to Pay Pal for clearing charges.  But right now, I can sell my Square stock.  

this move only helps high end retailers, good luck with only Tiffanys as a customer.

[DebShi]

Can someone please explain to me why I've been paying 2.75% +10cents since December 2017?

How can this new "increase" be LOWER than what I'm already paying?

I've paid square $20000 in fees just this year.

I operate my coffee shop with a square stand, use loyalty, employee timecards etc.

I love the integration and data that comes with using square but will I be receiving a refund for being overcharged for 2 years??

When I go into my account to see:

"This location is not currently affected by the rate change because you are using hardware or software at this location with an unaffected or custom rate. Select another location from the drop-down menu above. You can also learn more about the rate change by reading the FAQ."

I'M USING ALL SQUARE HARDWARE AND SOFTWARE!

I need answers.

Super frustrated over here.

[ExFan]

Think it has something to do with your Hardware. Call them. Wishing you the Best. Look for alternatives. Paypal at 2.6% will save you a lot of money. 

[dongillis]

https://sprudge.com/square-just-increased-their-transaction-rates-and-cafes-are-screwed-151533.html

Here's an article that highlights the coffee shop owners perspective on the rate changes.

[RoasterChica]

Thanks for sharing that article @dongillis.  It's good to know what other coffee colleagues are thinking.

[HeatherM]

A coffee house might be the main cause of the increase. I don't know.

But I found this, and it might shed some light on why the increase is taking place...

https://www.cardfellow.com/blog/square-process-for-free-just-like-starbucks/

That is an article describing what they did and is now archived for informational purposes.

[rcnelson]

This is not a normal and expected price increase. For me it means a 48% increase in fees. Let that sink in. Square built this business on the strength of small businesses, artists, and farmers markets. Now Square wants to squeeze us. There's no other way to explain it unless it's a reflection of management incompetence.

[RoasterChica]

@rcnelson I started a few days ago as frustrated as you are because it IS a dramatic increase.  But I've come to understand after a bit of research that Square is not intentionally trying to "squeeze" us; they are just trying to survive.  

I think most folks on this forum may not be aware that Square has been losing millions of dollars since they began in 2010.  Whatever the cause, it seems like they have to take dramatic action to sustain.  

No business should be expected to incur a decade of losses and continue with the status quo.  

I examined my best alternatives and have decided the competition is no better so i'm staying with Square.  

[pinned31]

RoasterChica,

I completely agree; I am in the group of business owners that understand Square isn't trying to screw anyone and trust me they definitely care about our businesses or else they wouldn't want to be in business. This decision is strictly about meeting their profitability metrics and improving the value of their shareholders which is what they should do. However for us we are going to use this as a great reason to change POS processors and save a lot. 

Currently we pay loyalty = $250/month = $3,000/yr

Increase in fees = $700/monthly = $8,400/yr in NEW fees

Discounts from loyalty = $700/month = $8,400/yr

Between all of these changes and the new fees we are able to negotiate our overall savings will be $25K/year per location. We were looking for a way to remove loyalty and Square just gave us one that will make sense to our customers.

[RoasterChica]

Wow @pinned31  just goes to show there's not a one-size-fits-all answer here.  It all depends on one's circumstances and which components of Square they are using.  

I can't believe how much the loyalty costs!!!!!!  We are really lucky in that regard because when I opened almost 9 years ago, I wanted to promote crossover from bean sales to drinks so we created our own in-house loyalty program and tracked it on our own for years.  As good fortune would have it, a super nice, loyal customer who is very techie offered to create a simple app for us in exchange for some beans.  To this day we track loyalty with our own custom app and I can avoid all those expenses.

Wishing you lots of luck as you look into other options.  Hope you find something more suitable for your biz!

[pinned31]

Wow, I love the idea of using loyalty to promote retail bean sales! Good thinking 🙂

I am sure if we spent some time we could us it more efficiently, thanks for the reply.

[joea16]

A 40% INCREASE IN SQUARE FEES IS HIGHWAY ROBBERY!

WE WILL BE CHANGING TO ANOTHER PROCESSING COMPANY!

[ryanwanner]

Okay, I'm gonna stick my neck out here once more.

Disclaimer: no, I DO NOT work for Square. My Square stock is minimal at best, and I have no sway in company decisions. I'm just a Brand Evangelist that enjoys all that Square has provided to allow me to grow and expand my business since I started with them 8 years ago.

When you look at it in a percentage standpoint when you're a small-ticket merchant, YES, you are "getting screwed."

STOP IT. Look at it in dollars and cents. Can you really tell me that if the price of one of your ingredients goes up you look at it in a percentage? "Stupid milk provider increased our milk by 30%" Or do you look at it as "Ugh. My milk went up 10¢/gallon. That's okay, though, because by the ounce it's negligible."

FACT: Assuming a $7.50 average ticket and 100 transactions a day, where 80% are credit cards, you are looking at a seven cent addition per check to cover the new fees.

For those of you who are saying you are looking at $450-600/month in increased fees, divide that into your total ticket counts for the month. For me, I had 2,935 tickets in August. This works out to an extra 20¢ per ticket for me. My assumption is that those of you looking at this big of a price increase are probably doing double the ticket count at a lower check average, so your additional costs are going to be lower.

Using my numbers, I need to get 20¢ added to each ticket to justify the price increase. In August, I sold 7,621 items, which means 2.5 items per ticket on average. If I wanted to solely pad my figures to make that 20 cents, that means I have to raise my item's prices by 12 cents. As I said in my other rant about this, do you really think your customers are going to notice and/or care about that kind of increase?

If you think they will care and leave in droves, then I present another solution for you:

UPSELL.

As a coffee bar, I have cookies and pastries right next to my register. My cookies go for a dollar each. If I upsell 10 of my guests a cookie I have just added $10 to my till. Continue this with alternative milk upcharges, add avocado to your sandwich, how 'bout getting a large instead of a small, or any of the other tricks you all know and have up your sleeves, and I'll bet all the money in my pocket to all the money in yours that you'll actually come out ahead even with the new fees. But only if you try to grow and sustain your business.

I fully understand and appreciate the fact that this takes us all out of our comfort zones. To me, this is a good thing. If you get comfortable with your business you can get complacent. I always hit every day with my business with the mentality of "It's good, but what can I do to make it better?" To me, the fees just make me look that much harder at making it better so I can increase my ticket average and bring even one more ticket into the front door.

But if you truly feel like your business will keel over because of these additional fees... well.... maybe it's time to sit down in the office and seriously look at all your numbers.

[cmusicshop]

@ryanwanner excellent post and if we cool off and look at it outside of the rate increase, it is good advice regardless.

I would KILL for that traffic per month but my industry doesn't really work that way.  Luckily I have bigger ticket items that make up the difference.  The reason I say I would kill is directly tied to Ryanwanner's post - the opportunities to upsell or raise my bottom line so drastically for such a small amount price increase....sweet.

Directly tying in with his post - what is it that is special about you?  Location, quality, atmosphere, service, price?  If it is price alone, you are dead in the water (see:race to zero).  So, with the traffic some of you are posting I have to believe it is a combination of the other things.  Wring out every drop (get it?  Lots of coffee shops here....).  Don't be scared of add ons or a price bump, they are coming to you for other reasons!

Yeah, it sucks because you do this and 'blammo' another cost increase down the road.  Part of doing business, part of moving forward.  

[RoasterChica]

Yes! Excellent post @ryanwanner .  With my ticket average of about 5,000/mo and increased fees of about $350, I only have to increase each ticket by .07 or so.  At 10¢, I'll be ahead of the game already. 

I haven't done a price increase for two years so I'm overdue and each drink is going to go up by at least 10¢ because we should all be considering minimum wage increases and other rising costs. This is do-able guys!  

[JavaMan]

I do understand you thinking...but one...YOU up-sale 5 dollers... YOUR effort put another 1.3 cents in Square's pocket... No work on their part! Does not sound like much...but how many customers...how many transactions do bbn they process! When I worked at Price Waterhouse I was the Manager on the ADP account...they could process your Payroll for free and sill make money...interest on all the Payroll Taxes they held before they submitted them to the Taxing entity! Dont think pennies don't count!

[Reenie1]

Just wanted to let you know that I’ll be shopping for another credit card processing company. The reason that many small businesses went with square is because there was no PER TRANSACTION CHARGE. That new 10 cent charge will cost me hundreds of dollars a year. I won’t pay it. And I use square pos, and payroll etc. SMALL BUSINESS RUNS AMERICA. You just lost a customer. Many more to follow, I am sure.