Signs you've outgrown Square (and what to do about it) 

A message from Wissota Payments™, the Chippewa Valley’s Payment Consultant

Square is a “payment aggregator” that manages one merchant account, and bundles up all of their clients under one umbrella account. Many start-ups and micro-business begin their payment processing with Square due to its simple account setup that doesn’t involve the application process and underwriting required to obtain a traditional merchant account. Square has its advantages, but in many cases it is the least cost-effective option for established small businesses. Here are some considerations on Square’s flat-fee pricing model and account terms:

For those businesses processing a high-volume of transactions, Square's flat 2.6% + 10 cents fee can eat into profits significantly. The more transactions you have, the less attractive flat fees become. You could be paying substantially less for in-person Debit Card transactions through the Interchange Plus pricing model offered by traditional processors such as Wissota Payments.

Square's per-transaction fee might not be optimal for businesses with a low “average ticket” amount. For example, a coffee shop selling a latte for $5 would lose 4.6% on each sale, which can erode margins quickly.

Merchants can save up to 90% of their processing fees by surcharging CREDIT cards at 3%, however, Square does not support a Visa-compliant credit surcharge program. Many Square merchants have implemented their own “workaround" to charge fees to offset their processing costs, but these merchants may not understand that this method is not compliant with Visa core rules and they are at risk of fines from Visa up to $25,000.

B2B Manufacturing Suppliers that process payments manually or through Card on File incur a higher 3.5% + 15 cents fee per transaction through Square. This can significantly impact businesses that invoice or have recurring billing accounts. Unlike traditional processors, Square does not offer Level 2 & 3 reduced rate processing that saves businesses money. 

Your business has less control over the terms and conditions of your Square merchant account compared to an account through a traditional processor. Square has the right to hold your processed transactions and can terminate your account for any reason which can disrupt your business operations and sever your cash flow.

Since Square primarily focuses on micro-businesses and startups offering basic account options, larger businesses with complex needs might require more customization and support offered by a traditional merchant account. Compared to products offered by Wissota Payments, Square might lack advanced features like fraud prevention tools, custom reporting, or integrations with specific business software. 

The best payment processing solution depends on your specific business needs, transaction volume, and average ticket amount. Comparing rates, features, and fees among different payment providers is crucial for finding the most cost-effective option for your business. 

Remember, Square can be a great starting point for small businesses or those with low transaction volume. As your business grows, moving to a traditional merchant account will be a financially sound decision offering enhanced payment integrations for your growing business. 

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