Square pricing change could negatively impact your favorite coffee shop
Square, the financial services and mobile payment company whose swiveling white stands are commonly found in hip coffee shops, is making a change to its payment processing rate that could majorly impact small businesses. Starting November 1 for existing clients, and immediately for new ones, Square will charge merchants 2.6 percent plus 10 cents for each tapped, dipped, and swiped credit card transaction, instead of the 2.75 percent it’s been since 2011, the company announced in a recent blog post. While this may not sound like a huge difference, adding a fixed charge of 10 cents means a significant price hike for small businesses with a high volume of transactions, but lower average transaction values — in other words, places like coffee shops.
Per coffee news site Sprudge:
As an example, on a $5 transaction for your favorite cappuccino, Square would take $.14 in their old pricing model. Under the new model, they will take $.23, which is just under a 67% increase. In fact, in order for a business to not see a rate increase, their credit card sales would have to average $66.67 per swipe.
This pricing update will almost certainly help Square increase its margin among smaller merchants, as the Motley Fool writes, but for patrons of independent coffee shops and other small businesses, two possible scenarios are likely: expect either to see the price of your latte go up, or to watch your favorite cafe fight harder to stay afloat.
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