The popular mobile payment startup Square will soon begin offering its small business customers the ability to begin paying a 0 percent swipe fee in exchange for a $275 monthly fee, according to a report from the company. Previously, the company charged a swipe fee of 2.75 percent for every transaction.
However, this monthly rate is only available for small businesses that process up to $250,000 in purchases per year, or a little less than $21,000 per month, the report said. But to make it work for them financially, the small business customer would have to process purchases with a value in excess of $10,000 per month (based on the 2.75 percent processing fee option). Users who sign up for the new option will not face any other fees and won’t have to sign a contract.
“For 62 years, merchants have suffered complicated, expensive processing fees,” said Square CEO and co-founder Jack Dorsey. “Square is the first company to rethink electronic payment pricing with the merchant in mind. We are giving merchants affordable, predictable pricing. With one monthly price, merchants know that the sales they’ve processed in a day is the same amount deposited in the bank.”
However, there are restrictions involved, the report said. For instance, any purchase that exceeds the $250,000 per year limit will be subject to that 2.75 percent transaction fee, as will any single purchase of more than $400. Further, though transactions that are manually entered into the app – instead of being swiped – will still be subject to the standard 3.5 percent plus 15 cents fee the company usually charges for manual purchases, they will not count toward the annual limit.
The mobile payments industry is still very much fluid, and even experts are unsure exactly what programs will catch on with consumers and become ubiquitous in the purchasing landscape. However, there is generally agreement that some form of the technology will become popular with consumers, and some estimates project that the industry as a whole could be worth as much as tens of billions of dollars annually by just 2016.
Image: ursonate, via Flickr