Can you charge the customer the Square processing fee?

The Transparency Truth: Should You Pass Square Processing Fees to Your Customers?

The question of whether to pass Square processing fees onto customers is a common one for small businesses. While some might shy away from it to appear more competitive, transparency is often the better policy. This article will explore the pros and cons and ultimately argue for clearly itemizing these fees on your invoices.

Understanding Square Processing Fees:

Before deciding whether to pass the cost on, it’s crucial to understand what exactly you’re paying. Square’s fees are generally a percentage of the transaction total plus a per-transaction fee. These amounts vary depending on your payment processing plan and the type of payment (credit card, debit card, etc.). There may also be additional fees for certain services, such as Square Invoices or Square Online. To find your precise fee structure, log into your Square account and review your pricing details. It’s crucial to understand this breakdown to accurately pass the cost along to your customer if you choose to do so.

The Argument for Transparency (and Itemized Fees):

Passing on Square processing fees directly, with complete transparency, offers several key advantages:

• Honest and Ethical Business Practice: Openly disclosing these fees builds trust with your customers. It shows you’re not trying to hide costs, which is crucial for long-term client relationships.

• Clear Pricing: Customers know exactly what they’re paying upfront. This avoids any surprises or potential disputes later on. It prevents misunderstandings and contributes to a smoother transaction process.

• Profitability: This is arguably the most important aspect. By passing on the processing fee, you maintain your profit margins. Without it, you’re essentially subsidizing the cost of accepting credit card payments, which can significantly impact your bottom line, particularly with higher-value transactions.

• Improved Cash Flow: You recover the processing fees immediately, improving your cash flow and reducing the financial burden of processing payments.

How to Itemize Square Processing Fees on Your Invoice:

Clearly labeling the fee is crucial. Avoid vague terms. Instead of just adding it to the total, create a line item like:

• Subtotal: [Amount]
• Square Processing Fee (2.9% + $0.30): [Calculated Fee]
• Total: [Subtotal + Processing Fee]

This method is transparent and readily understandable. Alternatively, you can specify the percentage and per-transaction fee separately, offering even greater detail:

• Subtotal: [Amount]
• Square Processing Fee (2.9%): [Calculated Percentage Fee]
• Square Processing Fee (per transaction): $0.30
• Total: [Subtotal + Processing Fee]

The Argument Against Passing On Fees (and the Rebuttal):

Some businesses worry that passing on fees will deter customers. While this is a valid concern, the benefits of transparency often outweigh this risk. Hidden fees are far more likely to damage customer trust than upfront honesty. Furthermore, in competitive markets, clearly displaying your pricing, including all costs, can actually be advantageous, showcasing your commitment to fairness.

Conclusion:

While there’s no universally “right” answer, clearly itemizing Square processing fees on your invoices offers the most ethical, transparent, and ultimately, profitable approach. It’s a simple step that fosters trust, clarity, and ultimately contributes to the long-term success of your business. By being upfront about costs, you empower your customers to make informed decisions and build a stronger, more sustainable business relationship.