Square Inc.’s Feb. 22 announcement that it had dropped the 15-cent transaction fee for card-present transactions represents a return to a rate scheme the merchant-services company had last spring.
Until April, Square charged no per-transaction fee for card-present transactions, but the San Francisco-based company added one that month (see story).
Merchants use Square mobile point-of-sale software on smartphones, such as Apple Inc.’s iPhone, with a square-shaped card reader that plugs into an audio jack to accept credit and debit card payments.
Merchants now pay 2.75% of the sale for card-present Square transactions. Unchanged is the 3.5% plus 15 cents they pay for card-not-present transactions. Merchants pay no statement or payment-gateway fees for Square’s service, and the card reader is free.
Square co-founder Jack Dorsey announced yesterday’s elimination of the per-transaction fee via Twitter, the online social-networking site he co-founded. Square did not respond to PaymentsSource inquiries about why it decided to drop the transaction fee.
In Square’s efforts to expand payment card acceptance to merchants that typically would not consider a merchant account, the independent sales organization recently launched an outdoor advertising campaign with billboards in New York City, according to a Twitter post from Dorsey.
Other news outlets, such as Fast Company magazine in a Feb. 15 blog post, have reported that Square is signing up as many as 70,000 merchant accounts per month. So far, Square is not saying how many of these accounts are activated and processing transactions.
Despite the elimination of the per-transaction fee for card-present transactions, Square’s transaction rates remain similar to those of competing services.
Intuit Inc.’s GoPayment service charges merchants 2.7% of the sale for card-present and 3.7% for card-not-present transactions, and for both transaction types it adds a 15-cent fee.
Merchants using North American Bancard Inc.’s Pay Anywhere mobile POS service pay 2.69% of the sale for card-present and 3.49% for card-not-present transactions; both transaction types also come with a 19-cent fee (see story).
Users of VeriFone Systems Inc.’s PayWare Mobile service pay rates set by their merchant service provider, but VeriFone suggests using a two-tier wholesale pricing structure of 2.75% of the sale plus 15 cents for merchants with less than 1,500 monthly transactions and 1.65% plus 20 cents–and a $19.99 monthly fee–for those with more than 1,500 monthly transactions (see story).