Square, a popular credit card processing system, announced last week that it is updating its processing fees from 2.75% to 2.6% + 10c per transaction. While this increase doesn’t sound significant, it has a very significant adverse effect on coffee shops—whose average transaction size is generally smaller but whose total transaction count is generally high.
Take, for example, a coffee shop making $40K a month in card transactions and an average ticket size of $5 (8,000 swipes per month):
|Current pricing (2.75%)||New Pricing (2.6% + 10c)|
|Fee per transaction||13.75c||23c|
|Total monthly fees||$1,100||$1,840|
As you can see, this shop will now pay $740 more in fees PER MONTH. That’s close to $9K a year!
I will say, Square is being very transparent about this new fee and has even provided an easy way for shops to see the impact the change will have on their business. You can see the fee difference by logging onto your online Square dashboard and clicking into Pricing & Subscriptions. From there, you can select a location from the dropdown list and see a breakdown of your rates under Payment Processing Pricing.
What can you do about it?
- Try negotiating with Square. If your average ticket size happens to be around the $10-$15 mark, there’s a decent chance Square will be willing to offer a better deal. It also won’t hurt if most of your customers aren’t AMEX members (Square pays hefty fees on AMEX cards)
- Sign the petition on change.org