When is an Actual Merchant Account Better Than Square Up
When is an Actual Merchant Account better than Square Up
When is an Actual Merchant Account better than Square Up? The short answer, when your sales total more than $4,300 a month.
The Square Up mobile processing solution is a great deal for very small businesses that are transacting less than $4,300 a month. Square Up advertises no monthly fees with a qualified rate of 2.75% combined with a non-qualified rate of 3.50% and $0.15 per transaction. This account set up is very attractive especially for businesses that are mobile and have relatively small sales volume.
So when does it make sense to set up an actual merchant account? There are a few factors to consider.
- Square Up’s $1,000 weekly cap
- A merchant account is less expensive at a monthly sales volume above $4,300
Square Up’s $1,000 weekly cap – Square Up imposes a weekly cap of $1,000 in card-not-present sales. If the account exceeds the $1,000 cap all monies that exceed the $1,000 cap are held for 30 days.
A merchant account is less expensive at a monthly sales volume above $4,300 – When we look at the percentage of total cost for both an actual merchant account and Square Up account we see that the total cost for a merchant account drops below 2.75% when sales exceed $4,300 for the month.
This analysis assumes the following:
- Average sale amount of $25
- Total monthly service fees for the merchant account total $19.00 a month
- Total monthly service fees for Squared Up total $0.00 a month
- Per transaction fee for the merchant account is $0.20
- Per transaction fee for Squared Up is $0.00
- Qualified rate for the merchant account is 1.49%
- Qualified rate for Squared Up is 2.75%
Another important consideration when considering a switch from Squared Up to a merchant account is to make sure the new solution has the same mobile credit card processing capability.
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