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Analysis: Is Square The Cheapest Credit Card Processor For Your Business?

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Melissa Johnson

Melissa Johnson

Melissa Johnson has been writing about payment processing and mobile payments since 2014, and has been quoted in articles for Credit Karma and The Next Web, among others. She graduated from The University of Kansas in 2010 with bachelor's degrees in English and journalism.
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    I’m on an interchange plus plan of 0% + 3.5 cents per swipe. My average swipe size is around $10. I’m doing about 30K in total credit card sales per month, and my effective rate is coming out to about 3.23%. I can’t help but think that something is wrong, since this is significantly more expensive than Square’s 2.7%. Am I being tricked somewhere?

      Melissa Johnson

      Hi, Gary!

      Without actually seeing your statement, I can’t give you an exact answer. But generally speaking, merchant accounts with a markup that low tend to come with a monthly fee, which likely plays a big part. It’s also possible that you’re processing a lot of cards with a higher interchange — rewards cards, business/corporate cards, and American Express cards all tend to have higher interchanges. I’d advise you to check your statement for fees other than processing rates, which could explain why the effective rate is higher than Square’s. (Please also keep in mind that Square is playing a numbers game — it charges less for American Express and other high-interchange transactions because it’s balancing out those costs by making money on lower-interchange transactions.) If you aren’t super confident in your current processor, I also suggest you check out our top-rated merchant providers for some alternative options!


        Hi Melissa! Great article. Question… I have an app that charges the customer just $0.10 per transaction. Is there a payment processing company that charges just a percentage instead of a dollar amount? It doesn’t make sense for me to pay a dollar amount if I’m only getting $0.10 per transaction. Does that make sense?

          Melissa Johnson

          Hi, Abner! There’s a LOT that goes into payment processing, rate negotiations, etc. It’s hard to give the perfect answer with so little information, but in your case, I would look at platform payments such as WePay and make sure that your pricing structure is set up so that you can cover the associated processing costs plus turn a profit or otherwise pass them onto the consumer.

            Stephen Connally

            I’m looking at an average ticket of $700 or $1400 per transaction. At this point I have no idea how many of those transactions i’ll run a month. It’s a new business. I’m having trouble understanding who I should go with. I was looking at Square or CDG. I just don’t want to get locked in. BOA is who I do my banking with and they offer merchant services as well as Quickbooks. Not sure where to go from here. I’ve read everything you’ve generously provided several times and just don’t feel any more confident.

              Melissa Johnson

              Hi, Stephen!

              There’s a lot we don’t know about your business, so it’s difficult to say definitively (so many factors come into play!). However, based on the data you’ve given us, I would recommend going with a merchant account of some sort. Bank of America’s merchant services are likely a poor fit for you because they tend to stress expensive hardware leases and multi-year contracts. First and foremost, I would suggest either CDG or Helcim. I think QuickBooks Payments, if you’re planning on using QB for accounting, could also be a potential fit, but look at CDG and Helcim first.

              I hope this helps!

                paul schultz

                Melissa, do you know of any CC processing brokers (like energy and health insurance brokers) that a small company or nonprofit can hire to help it find the best CC processor for the company’s needs? This is a very complicated field and requires great expertise to compare competing CC processors. The broker should be someone who has experience in the field and does not get a commission or finder’s fee from a CC processor or bank to bring in new business. The broker would be paid a flat fee for his/her services. If so, please let me know

                  This comment refers to an earlier version of this post and may be outdated.

                  Amad Ebrahimi


                  I think Phil Hinke might be able to help you. Check out his website:

                  Take care!

                    This comment refers to an earlier version of this post and may be outdated.

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