Why Have Most Businesses Not Adopted Square's Credit Card Processing System?

The question often arises: with savings in credit card processing as high as 1-1.5%, why haven't more medium and large-sized businesses, as well as small firms, converted to Square's credit card processing system? While Square offers a convenient and user-friendly solution, it's not always the most cost-effective choice, especially for businesses with higher transaction volumes or specific needs. Let's explore the reasons behind this.

Higher Transaction Fees for Many Businesses

Square's 2.75% fees may seem appealing initially, but they often turn out to be higher than those of traditional merchant accounts. Merchant accounts typically include a fixed monthly fee, which is around $100, alongside variable transaction fees of 2%. For businesses with substantial transaction volumes, a dedicated merchant account might be a more cost-effective option. Only for those with smaller transaction volumes does Square offer a more competitive advantage.

Large Chain Stores and Custom Solutions

Bigger retailers such as Macy's, Target, and Walmart have developed their own in-house credit card processing solutions. These companies process a large volume of transactions and thus have complex needs. A custom solution is more efficient and offers greater control over data analytics, which is crucial for tracking various business metrics. Advanced teams of data analysts at these companies require the flexibility and customization that a bespoke solution provides.

Jump to Important Factors

Limited Functionality for Small and Medium Businesses

The Square Register has a limited feature set, which may not meet the specific needs of small and medium-sized businesses. Features such as tip adjustments for restaurants or handling multiple open orders are not well-supported. This limitation makes it unsuitable for many businesses that rely on more complex transaction flows and configurations.

Lack of Hand-Holding for Non-Tech Savvy Merchants

While tech-savvy users may not mind managing their own solutions, a significant number of merchants prefer the hand-holding that comes with traditional merchant accounts. Customer service support is a valuable resource for many businesses. They need immediate assistance, and the ability to call a representative for help is particularly important for those who are not well-versed in technology.

Conclusion

In summary, while Square offers an attractive user-friendly interface, it may not be the right choice for all businesses. Higher transaction fees, limited functionality, and a lack of advanced support are significant factors that prevent many businesses from opting for Square's solution. However, for smaller businesses with low or medium transaction volumes, it remains a competitive and efficient choice.

Important Factors to Consider:

Transaction Volumes: For higher transaction volumes, traditional merchant accounts might offer better value. Business Requirements: Custom solutions are necessary for large businesses with complex billing and tracking needs. Technical Support: Non-tech-savvy merchants appreciate the availability of customer service. Feature Set: The limited feature set of Square's solution is not always sufficient for business-specific needs.

By considering these factors, businesses can make an informed decision about which credit card processing system is best suited to their needs.