Credit Card Processing

Square’s Transaction Fees and Equipment Leasing


May 16, 2019

Payment processing company Square has built a reputation on offering simple, flat-rate credit card processing for small business. The well-publicized 2.75% rate was a good deal for businesses with small average transactions or low monthly credit card sales. While that pricing is still an option, businesses should be aware that the company can also charge a second rate with a per transaction fee.

You’ll want to avoid that rate if low cost is your priority.

The per-transaction fee is imposed for businesses with an average sale under $10 when using the quote request (called custom pricing) sign up option on Square’s website. Additionally, the company is now offering equipment leases, a practice that we generally advise against here at CardFellow. Read on to see what these Square fees mean, and what the leasing is all about.

Square’s Per-Transaction Fee

“Per-transaction fee” refers to the non-percentage part of a processing rate, usually quoted in cents.

Since 2011, Square has not charged a per-transaction fee on swiped credit cards. Instead, the company offered a flat 2.75% on all swiped transactions. Only manually entered cards were subject to a percentage with a per-transaction fee. (3.5% + 15 cents.)

While this is still the case for Square’s self-signup option (referred to as “self-onboarding”), businesses that choose to sign up for Square through the quote request/more information/custom pricing link may be charged the per-transaction fee. New businesses with average tickets under $10 report that when they sign up with Square through a quote request, Square quoted 2.75% plus a per-transaction fee. One business states that Square quoted 15 cents. To verify, I requested a quote for taking credit cards with an average sale under $10, but sometimes higher. Square quoted me 2.75% + 10 cents. This information clearly shows that Square fees are not just the flat 2.75%, depending on how you sign up.

Variable Business Pricing

The fact that different businesses were quoted different rates is not something that Square publicizes. The company has always pushed its flat rate and not mentioned any possibility of a per-transaction fee for using a different sign up method. While the company stresses that the 2.75% flat rate is still available with self-onboarding, Square’s option to alter pricing for those requesting quotes means that they’re setting pricing and terms on a business-by-business basis.

Additionally, it appears that Square will review pricing and can make adjustments. I was told that my pricing could be re-evaluated in 90 days. While it’s possible that pricing could be adjusted down, it also implies that Square fees could go up as well. Allowing re-evaluation effectively kills the flat-rate.

Square’s Website and Contract

Square appears to be trying to maintain its reputation as a simple, flat-rate processor. As such, there is no mention of the per-transaction fee on its website at this time.

I scoured the legal documents available on the site, and none specifically reference the per-transaction fee. Since the new Square fee only applies to some businesses, it appears that they have simply chosen to omit it from their pricing disclosures.

Why Does Square Charge This Fee?

The reason given for the per-transaction fee is that it covers the costs of premium support and account management. No further details are available as to what the “premium support” entails.

On a purely speculative level, it’s possible that Square is plugging a hole in its pricing model.

The per-transaction fee appears to only be charged to businesses with an average sale under $10. In many cases, for sales under $10, Square actually loses money if it only charges 2.75%. This is exactly what happened when Square processed transactions for Starbucks. Because of the wholesale cost (Square’s cost) to process transactions, the 2.75% didn’t cover expenses and Square lost millions. It appears that Square is testing a possible remedy to the problem of losing money on small transactions.

That particular money leak may also be a problem given that Square went public last year, and now has shareholders to answer to.

Will the Per-Transaction Fee Apply to Current Customers?

Not at this time. So far, the per-transaction fee has not been applied to current customers’ accounts. Additionally, new clients who want to receive the 2.75% flat rate can still do so by using the self-onboarding option instead of requesting a quote or getting more information from Square.

Square Leases Equipment

Another apparently new development is that Square has partnered with POS Portal to lease equipment like cash registers, the Square POS stand, and receipt printers. Leases depend on credit-worthiness, with contracts starting at 24 months. While the monthly pricing for a 24-month contract is similar to the costs to buy outright, a contract any longer would make the equipment much more expensive than purchasing. It’s for that reason that we usually advise against leasing. Note that it is not required that you lease equipment through POS Portal. You still have the option to purchase Square equipment and accessories outright.

Related Article: Why You Shouldn’t Lease Processing Equipment.

Alternatives to Square

The Square fee significantly limits the benefits for businesses with small average sales. To avoid the fee, be sure to use Square’s self-onboarding option to receive the flat 2.75% rate.

Otherwise, you can use a different mobile processing solution. PayPal Here as a smartphone processing option with no per-transaction fee. (PayPal Here currently charges 2.7% per swiped transaction with no additional per-transaction fee. I verbally confirmed this pricing with PayPal for transactions under $10.)

However, almost every processor these days has a smartphone card reader. Here are some options to consider:

Clover Go – The Clover Go is available from processors that use the First Data platform. If you go directly through First Data, pricing is listed at 2.69% + 5 cents per transaction, lower than Square. Pricing may vary if you choose a different processor, and could be more or less depending on your business.

TSYS MobilePASS – Available from processors that use the TSYS platform, the MobilePASS option is a basic smartphone reader that connects through your device’s headphone jack. Pricing will be set by the processor you choose.

AnywhereCommerce – The AnywhereCommerce card readers are universal options that work with many different processors. EMV and NFC (contactless) options are available.

PayPal Here – PayPal Here is PayPal’s mobile processing solution. It costs 2.7% per swiped transaction, with no per-transaction fee.

There are many other readers that work with a variety of processors, including ePN, RoamPay, SwipeSimple, and USAePay. Proprietary solutions like FreshBooks Mobile are also available.

If you’re looking for processing with a mobile device and want to make sure you’re getting a good deal, use our quote comparison tool to easily see pricing. View options.

Ellen Cunningham

BY Ellen Cunningham

Ellen has a degree in English, which she puts to work every day researching and writing articles, processor reviews, and social media posts. She enjoys the challenge of explaining complex topics - making her a perfect fit for credit card processing - and strongly believes in CardFellow's mission of empowering business owners through education. When she's not busy following the latest industry news, Ellen can be found cycling the beautiful trails of southern New England, narrowly losing at pub quizzes, or practicing her trapeze skills in aerial circus class.


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  1. from mike, on June 27, 2016

    Can you tell us what your source is ??

    • from Ellen, on June 28, 2016

      Hi Mike,
      This was through firsthand experience as well as discussions with businesses. However, we’ve received clarification from Square that the per-transaction fee only applies to certain methods of signing up, and have updated the article accordingly.