I have a bricks and mortar liquor store. We have used traditional credit card merchant processing for five years, and we just switched over to Square. I’ll tell you why we converted and how we did it.
Our Old “Traditional” Merchant Processing
|Yes, I really do have a liquor store.
Our traditional merchant was Retriever Payment Systems, “powered by” NPC (National Processing Company). We’d been with them for just over five years. When I opened my October statement, there was another new fee on my account. It was one fee too far. I called and talked to customer service at NPC, and on that call, I decided to find a new processor.
Our qualified rate was 1.55%. (I see that their website is offering rates as low as 1.35% today.) Sounds fine, but it doesn’t take into account the other fees we paid. So I added up all the fees, and divided by the total amount processed. That gave me a total effective cost of 3.1% to 3.3% for my processing. (It varies, depending on the transactions for the month.)
We also leased a credit card terminal, arranged by the Retriever salesman, through Lease Finance Group, LLC., paying $35.67 per month. I was more than ready to eliminate that lease and put that money towards acquiring some new equipment.
I have been familiar with Square for three years, through another of my businesses. Not too long ago, they changed their rate structure to be just a straight percentage, with no other fees. The fee is 2.75% for card-swiped transactions. That’s all we do at the store, so that fit perfectly. And it was a lower total cost than the old traditional merchant account. Make sure you look at total costs, no matter what solution you investigate!
|The iPad with the Square
reader and Square App.
I spent a lot of time reading through the FAQs at the Square site to be sure I understood their processes. I signed up for an account. They sent me a Square reader, and we converted. The 3-year-old Square reader I had laying around was inconsistent and hard to scan with on the iPad, but worked very well on my Android phone. The new Square reader they sent me was much, much, much easier and more reliable on the iPad.
So far, we have had the iPad app crash three times, out of an estimated 700 transactions. In each case, it happened before the transaction was complete, so we had to re-run those transactions. I completely re-set my iPad, and it has not happened since then.
Because I have those two readers, during our busy days we can have both running at the same time, one on the iPad and one on my phone. Now that is kinda cool.
Customers like it, except for one grumpy guy. The iPad seems high-tech, and the process is easy for customers. There are no more paper receipts because Square will text or email their receipt. A few customers have still asked for a paper receipt, usually just to record the amount. We’ve been able to offer them a piece of adding machine tape with their total, and our stamp on it. So far, no complaints.
The payments are processed quickly, with next day transfer. Payments actually arrive about one day quicker than they did with our old traditional processor. Square is also inching into point-of-sale territory, with the ability to “ring up” cash payments and the ability to connect a printer and cash drawer.
Mobile Payments – Pay With Your Phone
Square offers a mobile payment option, called Card Case. Customers create their own account with Square, then only need to bring their compatible phone with them to complete their payment at the store. I signed us up, and we’ve had one customer pay this way. (Cool!) I did have to experiment a bit to get our address right on the map. Instead of 916 Oklahoma Blvd, I had to put in 916 Okla Blvd to get the map pin in the right place. That matters, because Card Case wants to see that the customer really is at the store before allowing a transaction.
I also looked into a few of the other new payment systems. Google Wallet requires NFC (Near Field Communications) built into the customer’s phone and an NFC receiver at my store. I might have one customer who has an NFC-enabled phone. So that wouldn’t solve my every-day credit card processing needs.
I looked at Intuit GoPayment, but they still have a more complex fee structure than Square. Most cards are 2.70% with no transaction fee. American Express cards are treated differently, and there are “non-qualified rates” in the fine print. That deserves careful reading and understanding before making any commitment.
I give big credit to Intuit for improving. Their fee structure is now much less complex than it used to be, and their offer of a better rate for high-volume merchants might make a big difference. It’s clear they are working hard to be as easy as Square, but they need to keep streamlining. Make it easy for people to compare total costs, Intuit.
GoPayment’s hardware choices have also improved since their introduction. The iPad is listed as a compatible device, however, my particular HTC phone was not. I also found the sales pages lacking in detail and the FAQs harder to navigate, compared to Square. Still, I have to say that GoPayment looks much better than my old traditional merchant account.
Dwolla Isn’t for Credit Cards
A new mobile payment system, Dwolla, is based on cash instead of credit cards. I applaud that. It does require both the customer and the merchant to have an account. Then the customer initiates the transaction, instead of the vendor. It is going to take time for this to reach critical mass in my small town, but I would bet on this ahead of NFC. So I’ll probably set up an account for us soon, out of support for the project more than out of business practicality.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.