As we discussed yesterday Square’s “simple” flat-rate pricing is a common hook, but let’s be real: it’s not always the best deal for your prospects. As experts, we know how to break down these fees and show businesses where they’re losing money. Let’s dissect Square’s processing fees and use that knowledge to our advantage.
Understanding Square’s Fee Structure:
Here’s the breakdown of Square’s processing fees, which we’ll use to illustrate their potential drawbacks:
- In-Person (Tap, Dip, Swipe): 2.6% + 15¢ per transaction
- Online Store/eCommerce API: 2.9% + 30¢ per transaction
- Manually Entered/Card on File: 3.5% + 15¢ per transaction
- Invoices: 3.3% + 30¢ per transaction
Why These Rates Can Be a Problem:
- High-Volume Businesses Get Hammered:
- While the flat rate seems convenient, businesses with significant monthly sales volumes will find that these percentages add up quickly. Interchange-plus pricing, which we offer, can provide substantial savings for these businesses.
- Your Pitch: “Let’s analyze your monthly transaction volume. You might be surprised how much you’re overpaying with Square’s flat-rate model. We can offer you a transparent, interchange-plus pricing structure or dual pricing program that scales with your success, saving you money on every transaction.”
- Online and Manual Transactions are Expensive:
- The higher fees for online and manually entered transactions (2.9% + 30¢ and 3.5% + 15¢, respectively) can significantly impact businesses with a large online or mail/phone order presence.
- Your Pitch: “If a large percentage of your business comes from online or manually entered transactions, Square’s rates can eat into your profits. Our solutions offer more competitive rates for these types of transactions.”
- Invoice Payments: Hidden Costs:
- 3.3% + 30¢ for invoices is also expensive. Many businesses that invoice other businesses, can see a large cost here.
- Your Pitch: “For businesses that send a lot of invoices, that 3.3% + 30c per transaction can add up quick. Let’s look at how much you are currently spending, and how much we can save you.”
Addressing Square’s Non-Compliant Surcharges and Ineffective Dual Pricing
One area where Square often falls short is in its handling of surcharges and dual pricing. While they offer features that appear to address these concepts, they frequently lead to non-compliance and customer dissatisfaction. This presents a significant opportunity for you to demonstrate your expertise and offer superior, compliant solutions.
Square’s Surcharge Pitfalls:
- Lack of Transparency:
- Square’s surcharge implementations often lack the required transparency, leading to customer confusion and potential chargeback disputes. Many businesses using Square’s surcharge functions, unknowingly break the rules of Visa and Mastercard.
- Non-Compliance Risks:
- Many businesses using Square’s solutions find themselves unintentionally violating card network rules regarding surcharges, potentially leading to fines and account issues.
- Customer Friction:
- The way Square handles surcharges can create friction at the point of sale, damaging customer relationships.
Square’s Ineffective Dual Pricing (Cash Discounting):
- Hidden Fees and Awkward Presentations:
- Square’s cash discounting often results in businesses effectively penalizing cash customers with hidden fees or awkward “surcharges” disguised as discounts. This is not true dual pricing.
- Lack of True Discounting:
- True dual pricing involves offering a genuine discount for cash payments, clearly displayed and understood by the customer. Square’s approach often fails to achieve this.
- Compliance Issues:
- Many of the ways that Square allows for cash discounting, are not compliant with card brand rules.
Your Compliant and Customer-Friendly Solutions:
- Transparent Surcharging:
- Offer solutions that ensure full transparency, adhering to all card network regulations. Educate your clients on compliant surcharging practices.
- True Dual Pricing Implementation:
- Provide solutions that enable genuine cash discounts, clearly displayed and communicated to customers. Emphasize the benefits of boosting customer satisfaction and loyalty.
- Education and Guidance:
- Position yourself as an expert, guiding your clients through the complexities of surcharges and dual pricing. Help them avoid costly compliance mistakes.
- Highlighting your compliance:
- Stress the importance of working with a partner that understands, and can implement a compliant dual pricing, or surcharge program.
By offering compliant and transparent surcharge and dual pricing solutions, you can differentiate yourself from Square and build trust with your clients. Emphasize the importance of avoiding compliance pitfalls, potential fines and creating a positive customer experience.
How to Use This Information to Your Advantage:
- Educate Your Prospects:
- Don’t just criticize Square; educate your prospects on the nuances of their fees. Explain how interchange-plus pricing works and how it can save them money.
- Highlight Transparency:
- Emphasize the transparency of your pricing structure compared to Square’s seemingly simple but potentially costly flat rates.
- Offer a Free Cost Analysis:
- Provide a free cost analysis to show potential clients exactly how much they could save by switching to your services. This tangible proof of savings is a powerful selling tool.
- Focus on Value, Not Just Price:
- While price is important, emphasize the value of your services, including personalized support, advanced features, and tailored solutions.
By understanding Square’s fee structure and communicating its potential drawbacks effectively, you can position yourself as a trusted advisor and win more deals. Remember, it’s not just about undercutting Square’s rates; it’s about providing a better, more cost-effective solution for your clients’ long-term success.
Tomorrow we wrap up with part 3 – Beyond the Square Ecosystem: Offering Real Solutions, Not Just Bundled Tools
Happy Selling,
David
Payment Lynx Daily 