Since the advent of credit cards, the cost of accepting credit cards for your own business has always been considered somewhat ‘premium’. There was a clear line that said “If you take credit cards, you’re a serious business.”
I remember the first time I signed up for a merchant account to accept credit cards at my own business. It was in the early 2000s and the cost to start processing was substantial. I needed to buy a card machine that cost over $500. There was a significant monthly fee just to carry a merchant account. Then, a complicated tiered cost structure based on volume of transactions, type of transactions, and what type of card was used. When Debit cards became popular in the early 2000s, it added even more fees and complications. I finally moved to an entirely computer-based merchant account but it was still expensive.
Many smaller businesses such as family-owned restaurants and convenience stores simply couldn’t afford to get involved with credit cards. How many times have you gone to get ice cream or something and have seen “cash only” signs?
The reality is that nearly every consumer carries a debit or credit card nowadays. If you want to continue doing business, you have to suck it up and buy in to the system.
I recently attended a large tech conference called SXSW (South by Southwest), and while there I received a tiny little white device with a silver audio plug on the end. It came attached to a white piece of cardboard that simply said “Sign up at Squareup.com to start accepting credit cards.”
So I did. And my mind was blown.
Square is a company that gives anybody who signs up a free card reader. The card reader itself is approximately 1″ x 1″ square, and plugs into either an Android phone, iPhone, or iPad through the audio jack. You install the free Square app, create a free account, and you can instantly accept credit cards. The app couldn’t be simpler: You type in a dollar amount, swipe the card, type in an item description (if you want to), and hand your device to the customer to have them sign it with their finger. Done.
The service costs 2.75% of the transaction. If a physical card wasn’t swiped, a $.15 flat fee applies on top of a 3.5% percentage rate. There are no other costs. Deposits are made to your bank account nightly, not weekly or monthly.
It couldn’t possibly get any simpler than this. This technology and service is going to change the small business landscape. Now it is possible for street cart vendors, artists, solo consultants, and other entrepreneurs to accept plastic, at fees that blow away their bigger competitors. That’s smart business.
Square isn’t ideal for large volume transactions. It doesn’t allow you to factor in taxes (you’ll have to do that manually), and it requires a smartphone or iPad. Other than that, it is truly a perfect way to accept credit cards.
Could Square change the way you do business?
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