How to calculate Square processing fee?

Decoding Square Processing Fees: A Simple Guide

Square’s popularity stems from its user-friendly interface and relatively straightforward pricing structure. However, understanding exactly how their transaction fees are calculated can still be confusing. This guide breaks down the process, helping you accurately predict your costs and manage your Square account effectively.

Square employs a tiered fee system, varying depending on how the payment is processed. The core components are a percentage-based fee and a fixed per-transaction fee. Let’s examine each scenario:

1. In-Person Swipes (Card Present):

This method, using a Square reader to swipe a customer’s physical card, is the most cost-effective. The fee is 2.6% of the transaction amount + $0.10.

Example: A customer pays $50.

• Percentage fee: 2.6% of $50 = $1.30
• Fixed fee: $0.10
• Total fee: $1.30 + $0.10 = $1.40
• Amount you receive: $50 – $1.40 = $48.60

2. Online Payments (Card Not Present):

Processing payments online, through your Square online store or invoices, incurs a higher fee. The rate is 2.9% of the transaction amount + $0.30.

Example: A customer pays $25 online.

• Percentage fee: 2.9% of $25 = $0.725 (rounded up to $0.73)
• Fixed fee: $0.30
• Total fee: $0.73 + $0.30 = $1.03
• Amount you receive: $25 – $1.03 = $23.97

3. Manual Key Entry (Card Not Present):

Entering card details manually, without swiping or using a digital payment method, carries the highest fee: 3.5% of the transaction amount + $0.15. This method should be used sparingly, as it increases your processing costs and poses a higher security risk.

Example: A customer’s card details are keyed in for a $100 purchase.

• Percentage fee: 3.5% of $100 = $3.50
• Fixed fee: $0.15
• Total fee: $3.50 + $0.15 = $3.65
• Amount you receive: $100 – $3.65 = $96.35

Important Considerations:

• Rounding: Square rounds up transaction fees to the nearest cent.
• Other Fees: While these are the primary transaction fees, be aware of potential additional charges for things like refunds or chargebacks. Review Square’s full pricing page for a comprehensive understanding.
• Volume Discounts: For businesses processing a high volume of transactions, Square may offer discounted rates. Contact Square directly to discuss these options.

By understanding this breakdown, you can accurately predict your processing fees and budget accordingly, maximizing your profitability with Square. Remember to always check Square’s official website for the most up-to-date pricing information, as rates can occasionally change.