3 Reasons It’s Not Hip to Be Square: True Merchant Payment Solution?
Posted on Fri, Jul 22, 2011 @ 12:30 PM
Square is a relatively new payment platform whose unique selling proposition is giving away a square plastic magnetic stripe reader that plugs into the headphone port of an iPhone or iPad depending on which service you utilize. Square is growing in the micro-merchant world and it’s popular with end users because it’s easy to use. Square is great for some very small merchants but this small package has some significant disadvantages. In fact, many experts agree that unless you have a miniscule number of transactions you’ll be paying much higher transaction fees and give up quite a bit just so you can process transactions on your iPhone.
Here are the 3 key reasons why Square may not be the optimal solution for your businesses payment processing:
1. Square Takes a Big Bite Out of Your Pie
The industry standard of credit card transaction fees is approximately 1.75% fee per transaction. Whereas Square charges a 2.75% fee per transaction, which seems small for a $4 girl scout cookie sale, but let’s crunch the numbers: if you process over 10,000 $10 purchases in one year (less than 1000 per month)—Square gets a whopping $2,750 of your revenue as opposed to 1.75% or $1,750 with an actual merchant account through a payment processor or payment gateway.
2. Debit? eChecks? Nope, Back to Square One
Many customers use their debit cards and some cards don’t have the dual ability to run as a credit card. Where Square does not have PIN pad function, your typical Point of Sale (POS) and the Paymentsite virtual terminal do. So if you want to accept less costly PIN-based debit cards—or electronically process checks from your customers, you’re back to square one.
3. More than 10 Cashiers or Users?
Square’s account limits you to having 10 users. For a retail store, catalog call center or fundraising organizations with well over 10 users, this poses a problem. Square’s offerings are limited compared to true merchant accounts via payment gateway and processing products such as Paymentsite that don’t have user maximums.
Although Square is a great solution for ultra-low volume businesses, most other businesses would enjoy a larger profit margin and much more functionality by shopping around for more versatile payment processing solutions such as Paymentsite, before resorting to Square’s iPhone solution. True merchant accounts can provide merchants with more flexibility, usability, and more profitability.
Set on using an iPhone for payment processing?
Business owners who want mobile payment processing on their iPhone but don’t want to be stuck in a Square box might find Paymentsite Mobile “fits the bill.”
Feature
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Square
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Paymentsite Mobile
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Use iPhone for payment processing
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# of users
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10
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Unlimited
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Credit cards
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Checks
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PIN Debit
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*
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Processing fees
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2.75%
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1.75%**
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Full-featured Virtual POS terminal that runs on Mac OS X and Windows
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Integrated payment transaction reports for both iPhone and other payments
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Customers can self-pay online or from their mobile phone without giving you their payment info
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With Link2Payments customer payment portal
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*PIN debit is available through the Paymentsite Virtual terminal
**Fee associated with average retail/swiped merchants. Merchant processing fees naturally vary by type of transaction and type of merchant.
