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. 

[dsachs]

Yes. I’ve posted more times than that. But it’s whatever. And you’re also correct in stating that all my posts are linked to this thread. I’ve never had a need to be here before now, as sqaure hasn’t passed policies in the past that hurt my business. I’ll have to watch what I say since I’ve already gotten an “etiquette warning” from Violet, but someone who’s used your platform for years all a sudden jumping on your forums might be something to consider. I suspect you’ll have many more as this rolls out. 

[CColotti]

Things are being removed for sure I just had one removed minutes after it was posted....so it's now a mute point to even try and be helpful which my last reply was providing some information on GC expirations by state and that some states allow it but these cards (which I did not even realize) can't be set to expire even though my state allows it after 2 years.  I was also thanking the user below for pointing out that GC's are a liability on the books (that never expire) even when a state allows it.

This thread is only 4 pages long....Pretty sure there has been a lot more posts than that about this over the last 48 hours.  and pay attention to the message count...it's goes up...then back down..

[homeprogreen]

Well that is good. At least that way I can continue to use the gift cards I have on for refunds. Just won’t sell them

[CColotti]

OK then what’s the process of ringing up that refund and applying it into a gift card and how is it any different than a gift card issued with a loaded amount at 80 transaction and hundred percent discount what’s the process by which that goes down to excluded from the fee

Once again, way more questions than answers

[homeprogreen]

You bring up the original transaction and hit the refund/exchange button. Select the items from that transaction that are being returned and hit next. Then you get the restock screen so you can select the items that are going back into inventory or hit skip. At this point if it’s an exchange you ring up the new items and the exchange total is deducted from the new total and you process the sale. If you still owe them money then it gives you the refund button and you can select Gift Card, original payment card or cash. You select gift card then swipe the gift card to load the amount. If they aren’t exchanging and it’s a straight refund then you just skip the item ring up and hit the refund button. The steps of selecting the refund method option is the same. The system knows the difference between a regular sale and a refund. Changes the button color to orange 

[CColotti]

Okay so they ensured one of the 50 use cases were covered...now how about the other 49, like why is it the same fee on eGC as physical, why are pro paying customers paying the same load fee as free customers...etc etc etc

[homeprogreen]

Valid questions that I don’t have any answers to 

[CColotti]

And so far neither do the moderators after 24 hours of this mess.

[homeprogreen]

Well in their defense the only thing that the moderators can do is pass the comments along to the Square Team in charge of the gift card program and then pass back their replies once they get any. They’ve been doing a good job of that as evidenced by them letting us know that the load fee wouldn’t apply to loading refunds. This decision and implementation is well above the level of moderators. While these kinds of sudden changes are upsetting we should probably temper our responses here in the community and remember that the moderators aren’t the ones that caused the issue and can’t resolve it

[dsachs]

No. They haven’t. I had to get that information from support and post it here. After posting it twice, the third post finally stuck. The moderator then confirmed it, but never offered that up while the issue was initially being discussed. 

[_Violet · Accepted solution]

Hi all, please know that I am continuing to work directly with the Gift Cards Team to get answers to some of the more complicated questions on this thread that our Support Teams and Moderators were not briefed to address for this launch.

I have a limited amount of knowledge on this topic myself, so I appreciate your patience while I work with our experts on our Product Teams to get more detailed information for you.

[HelloLovely]

this is probably a sillier question, i have not figured this out yet and probably just need to call square directly. but if i am gifting store credit to someone. is there a way to do this, via gift card or any other way to show no income was made and if we do use a gift card for that would the 2.5% fee still apply.

[CColotti]

It depends..

If you scan a new card, load it for $20 and use a discount code for 100% discount...then yes the 2.5% load fee will apply b/c it's on the loading process.

If you do a sale...and refund it, then according to other replies...no the load fee won't apply on a refund for store credit.

you can decide how you want to process that gifting of the credit then 🙂

[Lovewell]

 @_Violet why is there also a fee on e gift cards? 
This may stop us from offering gift cards anymore. 
We are next to a school and we have people come in and get gift cards for teachers. Most of the time people will come in and buy 10-20 $5 gift cards. For teacher appreciation week. I think during teacher appreciation and Christmas and the end of the school year we sell about 200 gift cards to teachers alone. Most of those we never see. But we don’t stop people from

getting them because it’s their way of showing appreciation to a teacher and we want to honor that. So already we are paying for the gift card. And now you’re saying we are going to have to pay a fee on those $5 gifts cards? And pay fees on e gift cards? And giftcard sales don’t even count as net sales until the giftcard is used. So we are paying fees on something that we may never get back? 

[CColotti]

I’ve been asking the same question at least four times in the last two days. Zero justification on it

[Wendyct]

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. 

[LSPA]

The gift card sales are liability for small business owner, while profit for Square.  Please research Starbucks' or WalMart SEC filings.  

Gift card sales are not a donation from a customer, i.e. Profit = 100% - 3% (credit fees) - 2.5% (new fees) = 94.5%. This is the wrong math. The business owner still needs to provide service.  There is no expiration date for gift cards in the tri-state NY area. It's akin to float. 

The bigger issue is that business owners like us have purchased thousands of dollars of gift cards based on the current fee structure. As a reference -- we purchased $2,000 of plastic gift cards in December 2023. Why small business owners are being penalized for Block having a bad financial quarter?

When Square introduced gift cards there was a lot of discussion about cost of gift cards vs eCard Systems gift card or YITH WooCommerce Gift Card program. One can use these gift card program for ~$180 per year. Square represented to us that their offering is better because there is no fee and hence charges more upfront for gift cards. Pls search this community board. 

This is a completely 180 degrees turn and a violation of small business owners trust that made Square successful.  

I believe that we should be given a choice instead of forcing things upon us:

Current Customer: keep the current fee structure or move to new fee structure. 

New Customer: new fee structure 

For business owners that sell a lot of gift cards in small denominations -- the new fee structure is attractive! For everyone else -- it is ~80% increase in fees!  

IMHO -- you are alienating small business owners like us because there are a lot of software/payment solutions out there now than there were in 2017.  You are pushing us out from the Square ecosystem! 

Note: 3% to 5.5% fees on gift cards are steep!

[CColotti]

"IMHO -- you are alienating small business owners like us because there are a lot of software/payment solutions out there now than there were in 2017.  You are pushing us out from the Square ecosystem! "

You are not wrong, but most small businesses have no idea the effort it would take to switch while trying to continue transacting business.  There's certainly people that do know how hard that is and that is where the term lock-in came from back in the 90's with IT vendors.  Depending on how invested you are in an eco-system the harder it is to even move away as much as you want to.  This fact is known by service providers I assure you, I worked in SW for 20+ years.  Lock-in is a real things providers try to achieve.  For example, Toast is great but there is no open API's, no way to automate business processes, it's a "closed" system.  Same with Clover too.  I looked at them all as early as 4 months ago.  At least Square has API's and integrations which is why it is so widely used...it gets people into the hotel, and a change like this ends up having to be accepted due to the investment in time and money into the eco system.

[brick]

This is the best response so far - nicely done.  I was raging too much to be as articulate, so thank you. 

Are you listening Square??

Someone in charge over there needs to sit back down, take a deep breathe, and take a moment to reflect on how absolutely absurd this policy is - and then reverse it immediately. 

For me, the cost in time and money to leave Square will be significant, but I also know that this will continue. They count on these "sticky" features that get embedded into our business model.  Every time I want to do something with Square there's now a Subscription Plan attached to it.  It started with Marketing, then Loyalty, then Messaging, and now this.  Next it will be a charge for the size of your Items catalogue, or taking Cash, or depositing your daily receipts, or running reports, or downloading your data.  Just wait... it's coming.  I'd rather quit Square now when I can do it on my terms and protest this ridiculous idea. 

[Lovewell]

@LSPA this is extremely well said. That’s all I can say. 

[majpepper]

Yeah, we’ve been using Square for ten years. I’ve been fairly happy with their all in one solution for most of our needs. I’ve been willing to overlook all the idiosyncrasies and not-quite-the-solution I needed but good enough, because it worked, it was integrated, and the fee structure was transparent.

This is patently a cash grab. If this decision is not reversed, we will be dropping Square in favor of a new provider within 6 months.