Article | January 2, 2014

Does Square Make Sense?

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By Kevin Kogler, President, MicroBiz

Square permanently changed the payment processing market by offering a quick and easy sign up process, a transparent 2.75% flat rate pricing scheme, and a simple mobile-based card reader and payment application. However, in the past 12 months, the incumbent credit card processors have responded by streamlining their sign-up processes and introducing similar mobile payment solutions – so the key differentiator between the services of Square and the incumbent processors has come down to cost.

It is easy for a retailer to calculate what they would pay with Square (simple: 2.75% times its credit card volume). Traditional processors typically charge retailers a lower percentage fee (in the 1% to 2% range) but then layer on various per transaction and monthly fees. As a result, the overall costs of traditional mercht accounts are much harder to calculate without conducting a detailed statement analysis. However, with appropriate tools (like the interactive pricing calculator recently published by cloud POS software vendor MicroBiz) a VAR, or even a retailer, is able to enter a few business-specific data points (retail business type, average transaction size and amount of monthly credit card transactions) to determine if a Square account would make sense for it - or not.

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