Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Square Offers Flat Monthly Fee for Processing Credit Cards

If there’s one thing that businesses like in their costs, it’s predictability. When there’s a bill to pay every month, it’s easier to plan around it when you know exactly what it’s going to be.

Charges associated with accepting credit cards have always been variable: A heavier month costs more in processing fees than a slower one, and that’s just the way it is.

Square, the mobile payments start-up founded by Twitter inventor Jack Dorsey, is aiming to address that. Today it announced that it is offering its small-business customers a flat monthly fee of $275 to accept payments. The monthly fee is an option to its original plan, under which merchants would pay a fee amounting to 2.75 percent of the charge amount.

Opt for the monthly fee option and there are no fees beyond that, Square COO Keith Rabois told AllThingsD.

Now, there are limits. The option is available only to small businesses, which Square defines as outfits that process less than $250,000 in payments per year. But as with any all-you-can-eat type of arrangement, the more of the service you consume, the lower your cost basis. If you’re swiping $250,000 worth of payments, you end up paying an effective rate of 1.32 percent, which works out to less than half of the cost of the original plan.

It’s also a lot lower than the 3 percent to 4 percent that typical small businesses tend to pay because they’re small and don’t have the heft to negotiate for lower fees with the big payment-processing houses. Then, Rabois says, there’s another 26 million businesses that don’t accept credit cards at all.

It’s just another example of how this start-up is aiming to challenge the conventional thinking of the payments business. No one would have guessed that regular people would want to carry a thumbnail-sized credit card reader around for settling up a restaurant check with friends. And last week year, Square announced a deal that lets businesses accept payments from Square users by name, without even having to dig their phones out of their pockets. And last week Square and Starbucks announced that the global coffee chain will use its Pay by Square mobile app will beginning this fall; it has also invested in Square, and Starbucks CEO Howard Schultz has joined Square’s board.

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The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald