How Can VARs Compete Against Square?
By Kevin Kogler, president, MicroBiz
Even Square’s competitors have to admire what Square has built. In a few years, Square has gone from a small but well funded start-up to one of the best known players in the payment processing industry. Square revolutionized the payment processing market for small businesses by being the first to market with a simple mobile payment solution that was easy to sign up for and simple to use — and came up with a transparent flat rate processing plan with no hidden fees. Further, Square has primarily sold its services directly to businesses, bypassing the established networks of VARs and ISOs.
After initially underestimating the threat of Square, processors and ISOs are now directly competing with Square every day. In selling against Square, VARs need to demonstrate how Square is actually more expensive than a more traditional merchant account. This value proposition is often hard to clearly demonstrate given the opaque nature of the payment market. Rates can vary greatly by retailer — as a merchant’s processing cost is influenced by numerous factors including the types of cards tendered by customers, average transaction size, and volume of transactions. Historically it has been difficult to quantify the differences between processing plans without a detailed statement analysis.
We have taken a broader approach — and have compared the total cost of Square’s offering vs. a traditional merchant account using the interactive processing pricing tool available on the MicroBiz Cloud POS website. This comparison tool is based on actual historical merchant transaction data made available to MicroBiz Cloud POS by one of the largest payment processors in the U.S. The interactive tool allows a user to enter a few pieces of information on a merchant (store type, average transaction size, and projected processing volume) to compare the processing costs of Square to a more traditional merchant account. This comparison tool can help identify what types of merchants benefit from Square’s flat rate pricing model, and what types of businesses should stick with a traditional merchant account.
Sign in to read more.