Square Instating 1.5% Fee for Instant Transfers
Over the past several years, FinTech Square has become ubiquitous at small businesses across the nation. In addition to its clever mobile credit card readers, the company has continued to expand its offerings to make it easier for business owners to accept payments. However Square has revealed a change to one of their products that might not be so welcome to entrepreneurs who enjoy getting their money fast.
This week Square announced that it will now charge a 1.5% transaction fee for instant and same-day transfers. The policy change is now in effect for new users of the feature and will reach current instant transfer customers starting February 7th.
In a blog post, Square explained that the decision to install the fee came about because the company offers other speedy transfer options for business owners, stating “We now offer a variety of fast and free transfer options, so we felt the timing was right for this change.” To that point, Square will continue to offer standard one to two business day transfers at no charge. Additionally the firm notes that entrepreneurs seeking quicker access to their funds might consider its free Square Card debit card. Not only does that feature give business owners immediate access to their money without fees but also entitles them to a 2.75% instant discount when they use the card at other Square-powered businesses.
The addition of an instant transfer fee comes a few months after Square’s controversial decision to adjust its transactional fee structure. Instead of the flat 2.75% swipe fee, the company lowered the percentage to 2.6% but added a fee 10¢ per swipe on top of that. That change was viewed as being particularly harsh on coffee shops and other merchants who traffic in mostly low-dollar transactions — the very type that helped make Square’s now-iconic points of sale a staple of many small businesses.
As Square points out, it does provide business owners with various options for getting their money quickly, allowing them to better control their cash flow and keep things rolling. Nevertheless this change is sure to raise ire with those who have depended on the instant transfers up to this point and don’t want to sacrifice 1.5% of their profits or wait an extra couple of days. Of course this coming on the heels of Square’s larger fee policy adjustment probably doesn’t help much either. At the same time it may not be enough for small businesses to consider switching services. Thus we’ll have to see what other changes might be in the hopper and how they may impact Square’s popularity among small businesses.