Square Slashes Prices To Intensify Its SMB Appeal

What's Next In Payments®
1:44 PM EDT August 16th, 2012

Often depicted as a processor best suited for the nation’s smallest business enterprises, Square’s latest move will only increase its appeal to U.S. SMBs.

Square is offering its small business customers a new pricing option: companies that generate less than $250,000 in sales a year may now pay a fixed monthly fee of $275 to access Square’s processing services, instead of the 2.75 percent swipe fee it currently takes from each transaction.

It’s easy to see the magic revenue number here, which is not $250,000 but rather $120,000, above which point businesses can enjoy processing rates below what Square traditionally charged merchants relative to total revenue. Of course, at $10,000 in revenue per month, Square’s two pricing schema are equivalent. For businesses that choose the monthly option and go over $250,000 in a year, each dollar above that threshold will be charged at the standard 2.75 percent rate, the company says.

“With one monthly price, merchants know that the sales they’ve processed in a day is the same amount deposited in the bank,” said CEO Jack Dorsey in a release announcing the move.

Ninety percent of SMBs in the U.S. generate less than $250,000 in annual revenues, TechCrunch says, although one wonders how many fit snugly between the $250K and $120K marks. At least the tech news outlet reports that a “considerable amount” of Square’s merchant clients stand to gain from the new pricing scheme. Square is now processing payments for two million businesses and individuals, the report says, at a rate of $6 billion in transactions per year.

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