Everyone seems to be talking about Square this week between their partnership with Starbucks and the recent announcement of a new flat-rate pricing plan. While we definitely love our lattes here at Mocapay, lets talk about the latter. The plan allows small businesses to pay a flat rate of $275 a month as long at they remain in the limit of $250,000 annual charge volume. This is an alternative to the current pricing of 2.75% of each sale transaction. If the business exceeds $250,000 per year in credit card sales volume or has a single transaction in excess of $400, then Square’s traditional pricing kicks in.
Marcus Wohlsen, a writer for Wired.com, published an article (link the article here: http://www.wired.com/business/2012/08/square-gets-even-simpler-with-flat-fees/) in the business section of the publication on Thursday that drew a lot of interesting and agreeable conclusions. One topic that warrants some elaboration is acquisition costs.
For traditional ISOs and Acquirers, the cost of signing a new merchant is very expensive. Square signs merchants using non-traditional means for a payment processor. The small business owner simply signs up online and Square send them the device. It is simple and completely eliminates “feet on the street” sales representatives employed by the majority of traditional payment processors. This provides Square with yet another advantage in the market. The new flat rate pricing will allow Square to take the market by storm. Small business owners are accustomed to paying flat fees for their business services. Consider Internet services, communications, and utilities (for the most part).
In their news release, Square claimed that they wanted to offer prices to small businesses that had previously only been available for large businesses. Small businesses will gain a sense of security in knowing exactly what they will pay month after month for credit card processing. Simple with no surprises. After all, small business owners have much to think about and taking the worries out of credit card processing fees will no doubt be welcomed.