A Closer Look at Square’s New Pricing


In case you missed it, Square quietly announced via their blog they will be increasing their rates for thousands of merchants nationwide. Prior to the announcement, merchants with a lower average ticket (under $10) could take advantage of Square’s flat rate pricing at 2.75%. For many coffee shops and quick service eateries, this model was the cheapest payment processing on the streets because Square would actually lose money on those accounts. Due to increased interchange costs associated with small ticket transactions, many merchants exceed a cost of 2.75% when accepting payments causing Square to have to eat the difference.

Unfortunately for the low-ticket Square sellers, those days are over. Now, Square has announced they are doing away with the 2.75% and introducing a new pricing model of 2.60% + $0.10 per transaction. Most merchants don’t understand their credit card fees and Square actually pioneered the flat rate model to bring more transparency to the industry. It seems as if the days of transparency and simplicity are no longer at the forefront of their organization. The introduction of the $0.10 transaction fee is an enormous blow to many of their merchants and it made us question, what else are they doing?

Just to fully understand the magnitude of their decision, we decided to break down the numbers in the below graphic. We used a quick-service restaurant processing $65,000 per month in credit and debit cards with an average ticket of $10. As you can see, the rate increase would actually result in $552.50 in new fees per month or $6,630 per year. As a business owner, I wouldn’t be happy with any vendor that increases my cost of doing business by over $500 per month.


Luckily, Square doesn’t require any long-term commitments, therefore, the merchants being heavily impacted by this decision have the option to look elsewhere. Many of them likely have invested in Square hardware but many companies are now offering financing options, hardware rental programs, or free hardware for new businesses.

It seems as if Square just shot themselves in the foot in search of short-term profits. For many Square competitors, this move presents a ton of opportunity to aggressively pursue those merchants who just got a taste of betrayal from the payments giant. While Square has great technology, many of their competitors are rolling out ecosystems that include Marketing, Payroll, Point of Sale Software, Capital, and all the other benefits of a cloud-based ecosystem.

In light of the news, we keep asking, “Why they would risk losing the trust of hundreds of thousands of merchants nationwide?”. Sure, they will make millions overnight with the rate increases but they should anticipate a lot of churn and overall dissatisfied sellers. Prior to this announcement, Square had secured themselves as a trusted vendor appealing to merchants who were fed up with the abuse from payments processing companies. Now, they just gave those same merchants deja vu when it comes to getting screwed by dishonest payment companies.

Square’s new pricing model actually prompted us to take a closer look at their overall pricing for their different technology solutions. In doing so, we were surprised by some of our findings.


Our overall assessment, Square’s payment processing is expensive. It could be argued that Square offers a lot of technology which allows them to justify the premium a merchant will pay for their payment processing, however, we are finding most additional services come a la carte with more fees.

Square Restaurant POS: 2.60% + $0.10

Square Retail POS: 2.50% + $0.10

Smart Terminal: 2.60% + $0.10

Card Not Present or Virtual Terminal: 3.50% + $0.15 (no Level II or III processing)

eCommerce: 2.90% + $0.30

Invoicing: 2.90% + $0.30



Overall, we think their pricing is competitive when compared to other SaaS POS companies. That said, we need to take into consideration that Square offers very inadequate support for their products and services. Competitors charging similar monthly fees likely provide more training and ongoing support. We also noticed that their pricing isn’t very transparent when it comes to additional services like their loyalty program and marketing. In fact, most of their services start with a small introductory monthly fee and they actually charge you more for number of customers, visits, etc. The below graphic illustrates their incremental cost for their marketing program.


Square for Restaurants: $60/month + $40/month per additional POS

Square for Retail: $60/month = $20/month per additional POS

Square Appointments: $50/month for 2-5 employees, $90/month for 6-10 employees

Team Management: $35/month

Payroll: $29/month + $5 per employee

Loyalty: $45/month 0-500 visits, $75/month 501-1,500 visits, $105/month 1,501-10,000 visits




Square’s marketing is better than most solutions we’ve seen on the market, however, we can’t say for certain whether or not their merchants get any real ROI. The advertised pricing at $15/month, $25/month, and $35/month are good price points to be able to send email campaigns and track their effectiveness or boost posts on Facebook. On the flip side, you would have to be running an incredible small operation to not exceed these price points. As you can see, the $35/month only allows you up to 2,000 customer records. For a high volume retailer, they could exceed that in just a month. Should a restaurant processing 2,000 transaction per month stay on a loyalty program, they could find themselves paying $200 per month by the end of year 1 and a whopping $425 by the end of year 2. This tactic seems very much intentional and is a common theme throughout their website.

  • $15 0-500 Customers
  • $25 5001-1,000 Customers
  • $35 1,001-2,000 Customers
  • $45 2,001-4,000 Customers
  • $75 4,001- 9,000 Customers
  • $125 9,001-15,000 Customers
  • $200 15,001-30,000 Customers
  • $300 30,001-50,000 Customers
  • $425 50,001-75,000 Customers



Overall, Square is a good technology company with a lot of different solutions. Depending on the complexity or size of your business, they may or may not be a good fit for your business. We feel that their recent announcement was a mistake because they are going to lose the trust of the public and their customers whereas before they were considered one of the most trust worthy companies in the industry. The short-term profits likely won’t outweigh the long-term backlash they will receive after making the bold decision to increase their customers fees.