Is square the cheapest payment processor? 

Bet you didn't expect to see this here. But Square does win in one specific scenario. If your average sale is $7 or below, square's flat 2.75% often will lose $ on the transaction, and a negative processing fee will always be lower than any payment processor will offer. The following processing fees were pulled from square's website (https://squareup.com/guides/credit-card-processing-fees-and-rates) 

• MC: 1.55% - 2.6%

• Visa: 1.43% - 2.4%

• Disc: 1.56%- 2.3%

• Amex: 2.5% - 3.5%

• Square: 2.75% for all cards

So how does square win? Let me explain. 

Credit cards have two types of fees. A percentage on the total dollar amount of the sale, and an authorization or fixed dollar amount on each swipe. Processors that "simplify" the rates for their consumers simply absorb the flat dollar amount charged. I like to call this deceptive transparency. One flat fee that includes all of the other fees is just a way of justifying an inflated processing fee.  (I'd also like to note at the time of the blog, debit cards for visa/mastercard cost 0.05% and 22 cents, and amex costs for merchants are an average of 2.42%)

For example, a common interchange rate for a restaurant is 1.50% and $0.10. Using a merchant service provider, a low volume business may be charged 0.50% and $0.10 in addition to interchange for a final of 2.00% and $0.20 in total fees paid. 

Square charges a flat 2.75% and no authorization fee. 

On a $5 transaction, the above merchant fees would be (warning: math ahead. Skip to the bolded section if you hate math) 2.00% * $5.00 + $0.20 or $0.30 total. 

On that same $5 transaction, square charges 2.75% * $5.00, or $0.13. 

Now I know what you're thinking. $0.17 per transaction doesn't sound like much. But typical restaurants process over a thousand transactions per month! 

It's perfectly reasonable for a restaurant to accept around 30 credit cards per day or upwards of 1000 in a month. That would lead to at least $1700 in savings! Square wins! 

Here's where square loses: EVERYWHERE ELSE. Change that $5 transaction to a $50 transaction and here's the breakdown: 

Square: $1.375

MSP: $1.20

In terms of dollars and cents, a merchant service provider starts winning at around the $10 average sale amount. 

So square wins in this one specific scenario, but they lose everywhere. 

-Square loses on customer service. Merchant service providers offer a dedicated account rep, and 24/7 support. Square does not. 

-Square loses on account stability. A merchant service provider gets your money to you when you need it. Square has a long history of rushing the underwriting process and asking questions later (read: holding your funds until they get the answers they want) 

-Square loses on flexibility. When using square, you're locked into square register app and their integrations. A merchant service provider gives you more flexibility in what equipment and software you can chose.