One of the most important things to know when getting started with your payment card processor is what you’ll be charged. I don’t blame you, you deserve to get the best deal in town! When you take your first payment without using Square Reader or Square Stand, this higher fee of 3.4% + 15 cents may cause some confusion. The last thing we want is for you to be confused – which is why we’re explaining Square’s fee structure, and getting into the nitty-gritty details to clarify why the fee is higher for manually entered transactions. Let’s get started.
What are Square’s fees?
Let’s start with the basics: for credit card transactions that are inserted, tapped or swiped, Square fees are 2.65%. For manually keyed-in credit card transactions, fees are 3.4% + 15 cents. Some sellers who have spoken to our sales team have custom pricing, but our standard pricing applies to most sellers.
Note: We’re focusing on credit card fees in this post, but we’re excited to remind you that we’re celebrating the recent launch of our new reader by offering free processing on all contactless debit transactions under $100 until the end of 2017! After that, standard pricing of 10 cents per debit tap will apply.
Why the higher fee for manually entered transactions?
The short answer: manually entered, keyed-in transactions are at higher risk than other kinds of transactions. Therefore, credit card providers charge Square more in order to protect against fraud.
If you insert, tap or swipe a credit card, the cardholder is assumed to be standing in front of you, and you can easily verify their identity by asking to see their ID and checking their signature. With manually entered transactions, you could be entering the card information over the phone or internet, making it harder to verify that you’re accepting payment from the owner of the card. This riskier situation makes credit card networks nervous, so they put measures in place to protect against such transactions, including higher fees.
Let’s cover what goes into that 3.4% + 15 cent fee:
- Fees from credit card networks — These fees are set by credit card networks and vary by card brand. The four main card networks are Visa, Mastercard, Discover, and American Express. These networks charge Square a set amount to process payments through their channels. For more information about network fees, you can take a look at Square’s payment terms available here: Square Payment Terms.
- Processor fees — This is the fee Square charges for the services we provide you, including connecting you to the credit card networks. We do our best to keep this low so that we can pass along savings to you.
From your Square Dashboard you can always check your recent deposits and get a clear outline of the fees included for the transactions associated with your deposit.
I know this is a complicated topic, but hopefully this helps you better understand why Square charges more for manually entered payments. Let me know if you have questions or if I can help clarify any other part of our pricing structure.
