Square is raising its per-transaction fee by 50%, citing the need to cover rising processing costs and reinvest in its payment ecosystem, which may disproportionately impact small-ticket merchants.
Welcome to Today in Payments.
I’m your host, Patti Murphy, here with your daily dose of payments notes.
What’s Going Up at Square?
Today, I want to report on what’s happening with Square—or, in other words, what’s going up at Square. The company is increasing its card-present rates from 2.6% plus 10 cents to 2.6% plus 15 cents per transaction. That’s a 50% increase in the per-transaction fee.
When Does the New Rate Take Effect?
The new rate takes effect later this month—on March 27—Square announced in a statement to users.
Square’s Justification for the Price Hike
In its statement, Square said the change will “bolster” its ability to reinvest in its payment processing ecosystem. Sellers who subscribe to any of Square’s software offerings will be able to keep their current rates through the end of the year, the company added. But what happens after that is anybody’s guess.
“We don’t make these changes lightly,” Square wrote in a post on X. “This change will help us keep up with the rising cost of payment processing so we can continue offering powerful business solutions with clear and transparent pricing.”
Square’s Original Mission: A Cheaper, Simpler Solution
Let’s not forget: Square was created under the premise of being a cheaper, less complex way for small businesses to accept card payments. Initially, merchants paid one flat rate—2.75% per transaction. Then, a few years ago, Square changed things up, lowering its standard card-present fee to 2.6% but adding a 10-cent per-transaction fee. Now, it plans to increase that per-transaction fee by 50%!
Who Will Be Hit the Hardest?
The impact of this price increase depends on the size of each transaction. For example, a coffee shop with an average ticket of $5 will take a bigger hit than a business with higher average tickets.
How Square Has Evolved Over Time
Square has expanded its financial services footprint significantly since its launch in 2010. Back then, the only way to accept card payments with Square was by using a dongle plugged into a smartphone. Today, Square offers full-featured POS options like Square Register, Square Terminal, and online payment acceptance.
The company now has at least 35 products and processes about $210 billion annually in payments across eight countries.
A Word of Advice for ISOs and Agents
I don’t typically give a lot of advice to listeners, but I can’t help it here: ISOs and agents should jump on social media or reach out directly to merchants, offering alternatives to Square’s increasing cost of payment acceptance.
That’s a Wrap
Well, that’s it for Today in Payments. Thanks for listening—I’ll be back tomorrow with more news from the payments space.
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