Square should automatically wave fees after collecting $275 per month.
why?
Ease of use.
Square introduces monthly pricing
31–40 of 152 posts
Re: Square introduces monthly pricing
#32this is going to cost small - mid cap merchants more money!
Re: Square introduces monthly pricing
#33So two things that I've never understood. 1) Why is it just now that someone's actually providing competitive service in this space? We've had people selling CC machines and service for years... 2) Where (in general, not just with Square) does the money actually go? It seems that prior to Square announcing this, getting under 2-3% or so was nearly impossible. On the scale of the US economy alone, that's HUGE money. W…
because when you go up and up the ladder, eventually you end up with 5-6 huge companies that control everything...not too surprising when the companies end up with similar pricing.
I mean take credit cards for example. You have Visa and Mastercard with the majority of the market. Then you have American Express and Discover that have a tiny portion.
That's it. And that's more or less worldwide.
You'd think since the coming of the internet, we'd have at least some competition in this space. Just imagine how much money there is, in join Mastercard/Visa as a top 3 credit card.
Square is a little lower down the chain, so the main thing they are giving here is passing through their huge savings down the pipeline. But even then it's not 100%.
Their basic pricing is 2.75%. So essentially you need to sell $10,000 worth of stuff before you start profiting off the $275/mo...and you only have until $20,000 before you go up to the regular 2.75% pricing.
And 2.75% is pretty high...for credit card processing.
Re: Square introduces monthly pricing
#34Through the use of elementary arithmetic, Square is charging every company the average expected transaction fees for the month, regardless of whether the actual transaction fees would be higher or lower than this. So half the companies save money while the other half lose money.
This is being spun as an innovation when, in reality, it's likely to net Square more revenue as there are probably more merchants between $0 - $10K than there are $10K - $21K.
Re: Square introduces monthly pricing
#35In case anyone from square is reading this - you're page loads absolutely 0 content with JS disabled. Just some feedback, take it or leave it.
Re: Square introduces monthly pricing
#36So two things that I've never understood. 1) Why is it just now that someone's actually providing competitive service in this space? We've had people selling CC machines and service for years... 2) Where (in general, not just with Square) does the money actually go? It seems that prior to Square announcing this, getting under 2-3% or so was nearly impossible. On the scale of the US economy alone, that's HUGE money. W…
There are virtually no fixed costs to actually performing the transactions. The fees are levied by the not-so-competitive Visa/Mastercard/AMEX trio that would love to keep their fees artificially high.
there are actually a ton of costs for them.
They have to pay for infrastructure, they have to pay for customer support, they have to pay for fraudulent transactions and on and on. I think most credit card companies have something like 10%-15% ROI
Re: Square introduces monthly pricing
#37I see a potential for abuse - if the cash back on certain credit cards exceeds the max rate, people could cycle money through for profit. e.g. I had a 2% cash back credit card Cashback: 21k/mo * 2%=$420 Fees: $275 Upside potential: $145/mo Not much profit possible, but with multiple accounts at roughly 2 $400 swipes per day per account, I would watch out for something like this.
I'd think loads of $400 transactions from the same card to the same merchant would get both Square and your CC issuer's attention rather quickly.
Re: Square introduces monthly pricing
#38This is very cool but not a free lunch. The fees have to come from somewhere. How about no fees for chargebacks too?
learn to read: https://help.squareup.com/customer/portal/articles/11861-wha...
Ahh upon further investigation I discovered that the catch is that businesses wishing to do over $21K in sales per month are ineligible.
So the product is only for businesses who meet all three of the following criteria:
1) small enough to not need over $21K per month of credit card charges
2) low enough chargeback risk that Square accepts/keeps them as a client
3) are currently paying more than $275 in fees per month with their current provider.
So bottom line this is a great marketing pitch but not really useful to the vast majority of companies in the real world. The odds of #2 and #3 both being true are basically nil for businesses small enough to meet #1.
Re: Square introduces monthly pricing
#39I'd love to see a payment gateway offer this, like Stripe. It'd be HUGE for micro-payments.
Re: Square introduces monthly pricing
#40So two things that I've never understood. 1) Why is it just now that someone's actually providing competitive service in this space? We've had people selling CC machines and service for years... 2) Where (in general, not just with Square) does the money actually go? It seems that prior to Square announcing this, getting under 2-3% or so was nearly impossible. On the scale of the US economy alone, that's HUGE money. W…
Hi tibbon!
To answer 1:
Almost all of the fee structure goes to players much higher up the chain than Square. The networks take a chunk, but in fact most of the fee goes to the originating bank (the bank that issued the card). This is a major source of income for most banks these days and can generally be arbitrarily set by them since merchants not only have no other options except cash, but also cannot tell what their interchange fee would be prior to accepting the charge (except with a flat rate system like Square). So, because processors (Square) do not control the rates, there is no way for entrants to create any real competition around them.
Not to mention that 2.75% is actually kind of high as an overall average and that the rumor is that Square actually operates these fees at a loss currently.
Now, as for 2:
As I said above, most of the fees go to the bank that issued the card (1.5-2.0%), another part goes to the network (VISA/MC), and the rest to the processor (Square). This is indeed HUGE money. It is literally hundreds of billions of dollars of revenue and profit controlled by a handful of banks. A high-ranking employee at a major US bank once told me that if you break down their corporate profits by division, interchange fees alone account for a significant portion of the entire bank's profits!
So, suffice it to say, if we (the entrepreneurial world) can figure out how to create an interchange free system, its inventors could possibly be some of the wealthiest people in history. I happen to have a strong business plan along these lines and would love to share/discuss it with anyone interested. Let me know!
edit: typo