The Square payment-card processing service is a lifesaver for many small and medium-sized companies.
Instead of being forced to set up and maintain complicated, expensive merchant accounts and deal with credit card companies on their own.
Businesses at these scales often find that Square makes things much easier. With transparent pricing and a no-hassle approach to the field.
Square lets businesses focus more on the things that actually make them special. Understanding square processing rates is easy to do and can make it even more rewarding to use the service.
Manual Entry versus Swiped: the Most Important Distinction
Just as with providers of traditional merchant accounts, Square is sensitive to the possibility of fraud, chargebacks, and other problems that can arise when a payment card is used. Compared to the usual arrangements, though, life tends to be simpler for Square users, with the company doing a great job of smoothing over the underlying complexity.
While there are a couple of corner cases, square processing rates can be summarized according to a fairly simple rule of thumb. Cards that are processed directly, whether by swiping a magnetic stripe, tapping an NFC reader, or the “dipping” of an EMV chip, are assessed the company’s lowest current fees.
In cases where the processing of a card does not guarantee its physical presence, whether because of manual entry of the card details or the usage of information on file, a higher fee that accounts for the increased risk of fraud will be imposed.
At the present time, these two most commonly encountered fee levels stand at:
- 2.75% of Purchase Total: Swiped, tapped, or dipped cards are charged at this lower rate.
- 3.5% Plus Fifteen Cents per Transaction: Keying in card details manually or charging a card using information on file triggers this higher tier of fees in order to compensate for a greater probability of fraud and other problems.
Delving Down Into the Few Remaining Details of Square Processing
Probably a majority of Square users will never need to think about much more than this simple division. Obviously enough, trying to charge cards directly wherever possible will help to keep costs down.
At the same time, many Square users will find that the relatively modest added fees of the higher tier will easily be justified by the ability to accept payments over the phone, used stored information for automatic billing, and the like.
Beyond that, only a few other straightforward details really remain:
- Value-Added Uses are Charged at 2.9% Plus 30 Cents Per Transaction: Usage of Square Invoices or the company’s online store service or e-commerce API is charged at this third rate tier.
- Square is Card-Agnostic: In another departure from conventional merchant accounts, Square charges the same fees regardless of card type.
- Square Rates Apply to the Tax-Inclusive Total: Unlike with some merchant accounts, the fees Square charges are applied to the bottom-line total of each transaction, tax included.
- High-Volume Clients are Invited to Negotiate for Even Better Rates: Transaction levels of over $250,000 annually will often qualify Square users for special rates.
Square strives to keep things simple, while still offering attractive rates and the ability to grow in several different ways.
Many Square users will do fine to keep the distinction between manually entered details and physical card presence in mind.
Others will find that making use of Square Invoices, the e-commerce API, or bargaining for lower rates will pay off. In just about every case, though, understanding the relevant rate details will turn out to be just as simple as using Square itself.