Business Change, Fifteen Pennies At a Time [Square Deal]

I have this little device in my bag of tricks. It’s called a Square, both because that’s its shape and because Square is the name of the company that manufactures The Square.

Oddly, although there’s no web site to be found at square.com, Square the company is at squareup.com.

The Square lets me accept credit cards. In and of itself that isn’t such a big deal; the days when you needed a special merchant account to take credit cards are long passed, with anyone being able get get paid via credit card just by directing people who owe you money to PayPal. What’s great about the Square, though, is that it plugs into the headphone jack on your SmartPhone (Android or iPhone), and with the help of a simple app lets you scan a credit card, anywhere.

The scanning part matters. You capture money from your payees immediately, there’s little to no chance of error, reduced chance of fraud, and best of all you pay a lower fee when someone pays you via a card reader than if you submit credit card information manually (see above information about credit card fraud and data entry errors).

While you may not have heard of it, Square isn’t new; it’s been around for a couple of years, and there’s at least one competitor; Intuit has a service called GoPayment, and as with Square almost anyone qualifies to use the Intuit device. Like Square, GoPayment runs via an app on your SmartPhone, and as with Square Intuit will send you a free GoPayment device. Neither Intuit nor Square charges a monthly fee.

Why am I telling you about a little device like Square now? Because Square the company has just made using Square the device a whopping fifteen cents cheaper.

And fifteen cents turns out to be a major business change.

You know how lots of businesses have a minimum allowable charge to use a credit card (technically, this isn’t allowed by their merchant agreements, by the way)? The reason for that minimum is that besides paying a percentage of the sale amount every time you take a credit card you also pay a transaction fee. Paying 2% to 3% on a $3 sale isn’t the problem. Paying an extra fifteen to forty cents on that $3 sale, though, will destroy your profit margins. Or even cause you to lose money.

Square has eliminated their fifteen cent transaction fee.

The fee, while a nuisance, doesn’t mean very much on an item selling for hundreds or thousands of dollars. But by making the transaction fee go away Square makes it practical to use their device, anywhere, anytime, for anything. This is called a micro-transaction, and it’s the holy grail of credit cards and electronic funds transfer.

More to the point, Square has given your business a reason to start using them to process credit cards. Your bank, PayPal, and as far as I know everybody else who makes credit card acceptance possible for your business is charging a transaction fee. Square isn’t. Whooooosh! That’s the sound of a whole bunch of new customers for Square.

Business change often happens in small ways. Eliminating a fifteen cent charge may seem small, but Square’s latest business change is HUGE.