Small Businesses Increasingly Look To Square, Other Upstarts To Save On Credit Card Processing
We covered the high costs of credit card processing fees that can take their toll on small business owners. There was good news recently as a landmark settlement was reach between merchants and the credit card companies to allow for some of those costs to be recuperated from the banks with the possibility of charging customers a premium for using plastic. However, a premium for a convenience can likely be viewed by most consumers as a deterrent and therefore such a practice would cause potential business loss. That is why many small businesses are now turning to mobile processors like Square, which has a simple attachment for a mobile phone and can read and process transactions. This is significantly cheaper than the large machines that traditional processors provide and often charge rents on. The Washington Post continues, “In one year of owning K Street Café and Bagel, Eun Hopkins has gone through four different credit card processors. When she first took over the Washington, D.C. business, the previous owner left her a machine from Mercury Payment Systems – since then, Hopkins has tried Axiom Card Services, Merchant Financial Services, and finally Bank of America.
Every few months, representatives from card processing companies drop in or call Hopkins to coax her to use their payment service, she said. Each representative requests to see which system she is using, and then suggests she would save $150 to $200 a month by switching to theirs. “Meanwhile, I’m not saving anything,” Hopkins said. Each time, she said she has been shocked by the hidden costs, leasing fees and contractual agreements required to use the device. Such dissatisfaction has opened the door to a group of upstarts that are trying to undercut the big credit giants on fees with systems that make use of the technology many small business owners already own. Hopkins, for instance, said a representative from a San Francisco-based newcomer called Square, Inc . approached her three weeks ago with an offer to try its technology, the most popular of which is a credit card reader that attaches to the earphone jack of a smart phone or tablet…”
Source - Washington Post