Questions about Square Gift Cards Repricing (1/31/24)

[skateman81]

The title of this thread has been edited by a Square Moderator from the original: "Gift Card Load fees?!"

So let me get this straight.  Square now wants to charge a 2.5% fee for loading gift cards, on top of the card processing fee if they use a card to pay with it?  So if someone buys one of my cards and puts $50 on it, pays with a credit/debit card, I have to $5 in fees??  I lose $5 plus the cost of the card.  Is this correct?  If it is, then I might just have to leave square.  I set up a reloadable loyalty card for my customers to pay with to get discounts and now new fee is a big bag over the head and punch in the face to my business.  I thought you were supposed to be helping businesses.  Not screwing them out of even more money!

 

[#2]

Hi @Lovewell , it is true that the 2.5% load fee will apply to both physical and eGift Cards, as they have much of the same functionality and benefits like driving overspend on the balance, customer acquisition, integrated reporting, etc.  

I just wanted to try and clarify one thing. In the example you gave of selling small denomination gift cards at Christmas as gifts for teachers, you mentioned that the sales don't count until the gift card is used, however you are deposited the funds that you received from when the card was originally loaded/bought right away (according to your deposit schedule). Even if the teachers never come back to redeem the cards, you did still make a profit from the sale of the card. 

[#3]

Hi again @dsachs - Looking at your Seller Community profile, I can see you have posted a total of 6 times. All 6 of your posts are still linked to this thread.

The 2.5% gift card load fee will not apply to refunds or store credit issued to Square Gift Cards.

[#4]

Regarding passing the fees onto the customer, every country and state has their own laws on how to enact surcharges. You must make sure you understand local laws before ever passing on any type of transaction or processing fee to a customer. 

[#5]

Hi there @skateman81 and @Jenthom08 - Thank you for sharing your feedback. I can certainly provide some more information to help explain this recent change.

After March 1, 2024, anytime you load a gift card or an eGift card in-store or a customer buys an eGift card online through your eGift card order site, you will be charged an additional 2.5% gift card load fee based on the total amount loaded on the card. For example, if you sell a $100 gift card to a customer, you pay a $2.50 (2.5%) load fee on the transaction plus any other standard Square processing fees (like credit card processing fees). This load fee will be charged for gift cards loaded through any payment method, including credit cards, cash, or other tender payment types.

The load fee will be subtracted from your daily sales (Square balance), similar to how Square credit card processing fees are usually deducted. If your daily sales don’t cover the total fee, the remaining balance will be debited from your linked bank account linked to your Square account.

Square Gift Cards have long been free to use (with the exception of regular Square processing fees and the cost to order physical gift cards). While we have been happy to offer this pricing for quite awhile, as we continue to build more advanced features, we need to make this update so we can continue investing in the product to continue helping sellers like you. 

We believe that by lowering the cost of physical gift cards, it will make it easier for businesses like yours to continue to offer gift cards to your customers. The 2.5% per load fee ensures that you can sell as many or as few gift cards as your customers need without having to pay expensive monthly saas fees to offer gift cards like some other POS systems charge. 

We completely understand that this price change may affect your operations and overall business costs. This is not something we take lightly. As we continue to build more advanced features, we need to make this update so we can continue investing in the product to continue helping sellers like you. 

You can also review this Suppot Article for more details.

I hope this information is helpful but please do let me know if you have any additional questions.

[_Violet · Accepted solution]

Hi there @skateman81 and @Jenthom08 - Thank you for sharing your feedback. I can certainly provide some more information to help explain this recent change.

After March 1, 2024, anytime you load a gift card or an eGift card in-store or a customer buys an eGift card online through your eGift card order site, you will be charged an additional 2.5% gift card load fee based on the total amount loaded on the card. For example, if you sell a $100 gift card to a customer, you pay a $2.50 (2.5%) load fee on the transaction plus any other standard Square processing fees (like credit card processing fees). This load fee will be charged for gift cards loaded through any payment method, including credit cards, cash, or other tender payment types.

The load fee will be subtracted from your daily sales (Square balance), similar to how Square credit card processing fees are usually deducted. If your daily sales don’t cover the total fee, the remaining balance will be debited from your linked bank account linked to your Square account.

Square Gift Cards have long been free to use (with the exception of regular Square processing fees and the cost to order physical gift cards). While we have been happy to offer this pricing for quite awhile, as we continue to build more advanced features, we need to make this update so we can continue investing in the product to continue helping sellers like you. 

We believe that by lowering the cost of physical gift cards, it will make it easier for businesses like yours to continue to offer gift cards to your customers. The 2.5% per load fee ensures that you can sell as many or as few gift cards as your customers need without having to pay expensive monthly saas fees to offer gift cards like some other POS systems charge. 

We completely understand that this price change may affect your operations and overall business costs. This is not something we take lightly. As we continue to build more advanced features, we need to make this update so we can continue investing in the product to continue helping sellers like you. 

You can also review this Suppot Article for more details.

I hope this information is helpful but please do let me know if you have any additional questions.

[_Violet · Accepted solution]

Regarding passing the fees onto the customer, every country and state has their own laws on how to enact surcharges. You must make sure you understand local laws before ever passing on any type of transaction or processing fee to a customer. 

[CColotti]

saw the new email and this new page:  https://squareup.com/us/en/gift-cards/pricing

This sadly is rather crappy...so the customer gets $50 to spend but it costs the merchant $2.65 on the $50 GC sale to sell the card?  I was just working with a local business to by ore loaded cards as a marketing promotion.  Paying the swipe fee makes sense but really what does it cost you to LOAD a card?  $0 that's how much.  And the same load fee on physical and eGift cards too?

Just getting up and running with my business and Square and this is just an unreal surprise that makes no sense as to why this load fee is needed by Square when it's never been there for years looking back through old threads... 

So how many merchants are going to pass that 2.5% load fee on to the customer?

Please correct my math on a $50 GC sales but it was based on the new fee plus 2.6% + $.10c

[skateman81]

I WAS passing the fees to my customers and square emailed me and threatened to cancel my account if I continued to do that.  They are really **bleep**ing me off.

[CColotti]

If you are referring to Credit Card Surcharging that is a whole different deal with lots of regulations...Square has no compliant system to do that it's documented.  In this case you can't legally sell a $50 GC for $52...I am sure that isn't legal in every state.

[_Violet · Accepted solution]

Regarding passing the fees onto the customer, every country and state has their own laws on how to enact surcharges. You must make sure you understand local laws before ever passing on any type of transaction or processing fee to a customer. 

[dsachs]

@_Violet Will square reconsider this position if we just switch back to paper gift cards? Seems like that is the solution for us that don’t want to be held hostage on these fees. 

[CColotti]

I'm very familiar with Surcharging and that's not the same as this fee.  I don't believe in surcharging I never have and even written my own blog posts about it but THAT is specifically related to PROCESSING fees not fees like this either that you are adding on top of the processing fee.  You are just nickel and diming merchants with this.

But you have opened a new can of worms about trying to pass this fee on just by introducing it b/c it is NOT a processing fee (which is what surcharges address) but this COULD be considered a CONVIEiNCE FEE to the customer.  Either way your people have not thought through all the use cases and ramifications of this change....that is clear.

[Lovewell]

@_Violet  According to the square website page that gives the new info on the gift cards these fees are not able to be passed on. Unless I am misreading.

[Donnie-M]

Wally world and the Big A all charge activation fees for visa gift cards, that is nothing new, but they do not charge a fee on merchant gift cards.  In my state it is actually illegal to charge an issuance fee on a gift certificate (or gift card by definition), so square would have to have the same language in their terms of service against charging a fee to buy the gift card.

I don't think it would be against the rules to charge a price for an envelope to put the gift card in.

I wonder would it be against the terms of service to sell an unloaded gift card with no value to a customer?  Since the card wouldn't be actually issued until loaded?  Someone else would have to chime in there.

[tdgjrb]

This post is in response to a recent email from Square linking to this post:

https://squareup.com/help/us/en/article/8185-square-gift-cards-2024-pricing-change-faq

As active as this community is, I am surprised that I haven't see others up in arms about this new fee, so I thought I'd get the ball rolling.

Square charging 2.5% for every gift card load activity seems usurious and gouging. This is ON TOP OF the 3+% that Square charges for any associated credit card payment.

So selling a $100 gift card now only nets the retailer about $94 or so.

My opinion is that gift cards encourage credit card transactions that Square already profits from, and this additional fee is excessive and damaging to small businesses.

When you consider that paying 3+% for credit card transactions comes with significant costs and benefits that do not exist for gift cards, the 2.5% charge is especially galling.

• Credit cards are backed by Visa, Mastercard, etc. and incur their fees
• Credit cards are protected against fraud and loss
• Credit cards have other features like foreign exchange settlement and dispute resolution

While I do not think Square needs to charge anything to get revenue benefits from supporting gift cards, a fee of 0.25% - 0.5% seems much more in line with the cost of providing a service that does not involve funding or guaranteeing the transaction amount.

My business has several use cases where we have opted to use gift cards as a convenience (for instance, pre-payment for future events). We will likely rework these processes to avoid using gift cards and take on some unnecessary process complexity.

Does this bother anyone else?

Please LIKE this post if you want Square to notice and reconsider this policy.

[Donnie-M]

@tdgjrb I get it, and I will probably get grief about taking square's side, but I would rather have a cheaper front end cost to get gift cards than the way it was before.

I have used the quick cards and before 500 quick cards cost $495...now they cost $325 for the same 500.  That is essentially .34c per card cheaper than before.  On a 20$ load to a gift card, it costs me .15c now when I factore in all the costs.  Now where it gets me is on reloads, but in practice I don't see as many reloads.  This coupled with the 18% of activations for me personally that have never been redeemed...I can understand having to support the program.  It is still a win for me, and the tight integration is worth it.  For a small business this is a big bonus to help get into the program and pay as you go, rather than never getting involved.  If you are buying 10k cards, then you might be doing something different anyway.

Just my 2c.

[tdgjrb]

Hi @Donnie-M, 

I'm sorry I didn't look at your fee example closely before my last response.

My math doesn't turn out the same as yours. It looks to me like costs are higher for the new program in your example.

Did I miss something?

[Donnie-M]

@tdgjrb No You are right on the money I was at .15 and you are .16 more per card under the new system

If you go to 13$ or so per card load, then the new system is actually cheaper, but I don't find that realistic where the 20$ is much more likely.  Factoring in the changes is what I was pointing out isn't as big a hit as it might seem.  For a small business, the barrier to entry is much lower under the new system, but you will pay more on the back end.  Much like an investor gives you money up front, but wants more at the end of the deal. 

I factor the new expense as the cost of the benefit of the gift cards, where I have seen other systems that still cost some sort of fee to operate or run.  The good thing imo is the tight easy integration and reporting in square.

So yes, you are correct...new system costs more...but not as much more as it may appear...and on initial investment is much cheaper than before as you only pay when the person loads the card.

[brick]

Wrong. It costs more.  A lot more.  These are recurring, perpetual fees vs. a one-time cost for a physical card.  Adding a 2.5% load fee, on top of a 3% transaction fee, means it takes 5.5 points (minimum) off the bottom line to sell a gift card. That's 5.5 points of margin gone right at the start.  When you consider how many businesses are already running 25 - 30% GM, that now becomes 20 - 25% on a Gift Card. So a $100 GC now yields $94.50.  That is completely ludicrous.  Now consider customers that pay for GCs in cash... there's another way for Square to collect fees on a "free" cash transaction.  Again, these are recurring fees.  FACT: for business leaders that understand the significance, this represents a cheap money-grab and disingenuous justification from Square with a direct impact to margins to any business with any kind of volume in GCs. 

[tdgjrb]

I missed this thread when I recently created this new one. 

https://www.sellercommunity.com/t5/Troubleshooting/Upcoming-new-gift-card-fees/td-p/708561

Hopefully a moderator can merge the two.

I've liked your thread to support it.

[tdgjrb]

Hi @Donnie-M,

Thanks for adding your perspective. I appreciate a diversity of views.

You may also want to check this thread I initially missed.

https://www.sellercommunity.com/t5/Troubleshooting/New-Card-Loading-Fee/td-p/707467

I'm actually a big competition and open source proponent, and imo, the Square gift card specifications should be published so that merchants may buy cards from whatever supplier they choose. Square can and should compete with other gift card producers based upon the quality of their services and their fees.

I agree with you that the total cost of the gift card program, supplies and fees, should be considered.

We had several thousand gift cards from our prior POS that we converted to Square, so I haven't ordered any cards from Square yet. I did think the original Square card prices were out of line with competitors, but figured I would burn that bridge when I got to it.

In case it is helpful to you, we have always collected "empty" physical gift cards from our customers and put them back into circulation, which avoids having to purchase replacement cards as often.

Cheers!

[Donnie-M]

@tdgjrb I tried to impress upon my staff to "recycle" those cards as much as possible, but of course my front line employees do a great job, so missing these does happen, but I agree I think that is the best thing.

I also wish we could use other vendors than just e-cards because I would like some other types of custom designs.

[RobynR]

Thank you for jumping in @Donnie-M!

@tdgjrb I went ahead and merged your post to an existing thread where other Square Sellers have discussed this topic as well. We merge duplicate conversations together to keep like comments in one place, and to make it easier for others to find the thread in the future. 

[CColotti]

This thread has been ongoing since the minute the policy was emailed, plenty are "up in arms" about it but the silence from Square is deafening on retracting the policy at this point.  Coupled with the massive outage yesterday, it's rather laughable.

[brick]

Not only is Square absolutely mute on this, they're also systematically deleting posts and replies to give the appearance of less outrage over this clear abuse of power - which exactly what it is.  It gets exponentially more difficult to unhinge the longer you use the product and more services you add.  And then yes... the outage yesterday.  If that's not karma, I'm not sure what is.  Only we're the ones that suffer. 

[CColotti]

Personally I just added PayPal Zettle on my phone as a tap to pay "backup" option.  I also was considering GoDaddy and Stripe as they both offer simple Tap To Pay options that can accept payments in a bad situation.  I believe the POS side will still work for orders and kitchen tickets in offline or cash only mode but I have to test.

In my wife's business we have used, PayPal, CarConnect, Stripe, and quickbooks payments and I can count on one hand the COMBINED outages of all those processors in the last 10 years of using them.  I am not sure who the CTO, and CISO are over at HQ, but they need to get their house in order.  a $41B company should not have operational issues like a startup company.  Small business, and people's livelihood depend on processing cards.  We keep pushing for a Cashless society and then what?

I am sure the restaurant POS side of things will function but yes everyone needs a "backup" means of processing cards at this point.  Clearly Square has too many Single Points of failure, so as a user and a merchant eliminate your own SPOF by adding a 1-2 other apps.  Yes the rates will vary but during a busy day do you care more about the rates or transacting business?  Zettle, GoDaddy, and Stripe all have phone apps for tap to pay.  Venmo is in a slow roll to release it as well it's not showing for everyone, but there are some "pinch" backup options out there just for the processing part of things.

I certainly prefer the actual square register as I am not keen to using my personal phone, but as a backup option I can't think of another way that is somewhat "easy".  I was looking and I think Zettle and the others you can add "employee" users but then everyone is carrying their personal device around to make charges...

[alexandriak]

After their last big outage I had ordered a PayPal Zettle reader and so yesterday we just pulled that out, opened that app, and kept on moving.