They have offered the opportunity to pay a monthly rate instead of a per-use fee.
The greatly hyped Square Inc. mobile payments startup has just announced that its services will now be available to small businesses at a monthly rate, providing them with greater flexibility in the way that they pay for transactions that are completed through the use of credit cards.
This boosts the company’s competition with their rival, the PayPal card reader, even further.
Square was founded by Jack Dorsey, who stated that companies that have a revenue of less than $250,000 per year will have the opportunity to choose not to pay the current 2.75 percent fee that is applied for every credit card transaction, in favor of a monthly flat rate of $250 that has no additional fees.
Square provides a mobile payments device that plugs into a smartphone or tablet to accept credit cards.
It is Dorsey’s hope that this type of opportunity will encourage small businesses to choose to work with Square as opposed to PayPal. At the moment, that lead rival’s per swipe rates are less than those at Square. PayPal also has a device that plugs into a smartphone’s headset jack, but its per transaction rate is 2.7 percent.
Both companies offer the devices to their customers for free, and they both accept all four of the major credit card types. Until now, they had both based their revenue from this service on the fees that are charged for every credit card swipe.
Dorsey, who is also the CEO of Square, as well as one of Twitter’s co-founders, explained this latest move by saying that “Sixty-two years ago was the first time a merchant was charged a percentage on a transaction,” and by adding that “The industry really hasn’t reconsidered the pricing.”
At the moment, Square processes an estimated $6 billion in credit card transactions every year through its mobile payments services. PayPal has predicted that its own volume in this area will have reached $10 billion by the end of the year.
The new monthly flat mobile payments rate, explained Dorsey, will give small merchants an additional way to be able to accurately budget through better prediction of costs.
