A little over five years ago, I signed up for a merchant account with my business bank to process credit cards. I had resisted getting one as I had bad memories of fees and rules that turned me off when I first had one over 35 years ago. I had managed to do without it for years by only accepting cash and checks. But, the world changed. I tried PayPal for a while but they were still in their early days and had too many problems. I do believe a lot of that has changed and they are not a bad option these days.
But, there’s a new sheriff in town and I think this one is going to clean up the mess the payments industry has made of itself. It is called the Square. You may have already seen it advertised or even run into it as it has been in the market for a year. Yesterday Square launched a new update to their app that is available on the iPad and comes with new features that makes it easier for customers to buy from small businesses and for small businesses to sell to their customers. You can read more about it here.
Let’s get back to my merchant account experience. My bank happens to be PNC which is no worse than most and better than many of the giants. But, when it comes to merchant accounts all banks act like loan sharks or clueless simpletons dependent upon which role suits them when you try to get answers to questions about your account.
I was paying three different fees each month plus a lease fee for the POS terminal from First Data Global Leasing. First Data Global Leasing seems to be managed by the worst customer centric people on the planet. Don’t ever do business with them unless you want one of the worst experiences possible when it comes to service and communication. Sadly you won’t have a choice if you have a bank merchant account as nearly all of them seem to use First Data (the parent company) as an entity whose name must not be spoken based on the fear they seem to strike into the hearts of bankers. But it is unlikely you’ll ever deal with them directly. They, along with your bank, will take a piece of every dollar you’re paid by your clients that goes through a credit card payment.
With the merchant account, it was almost impossible to determine what rate my total fee would be in any given month including the hated and totally not understood interchange fee. There was even a higher rate fee if I processed a payment without adding in sales tax. However, in PA customers don’t pay sales tax on everything including some of my services. But, that didn’t matter to the bank, Visa, or the company whose name must not be spoken. I got charged more for following the tax laws! If I asked the bank about the fees they blamed Visa or that nebulous entity.
In short the entire experience and payments processing industry is in FAIL mode. Square means to change that. Not only with its square dongle device where you can swipe a card or input the card numbers without the card being present but with a feature called Tab where you can open a virtual tab (like a bar tab) at businesses so you don’t even need to bring your credit card. Your information including your photo can be stored with your permission so future purchases are one touch.
Businesses can enroll for to become a participating merchant. That’s what I just did and it didn’t cost me any fees for enrollment, etc. And, I pay a flat 2.75% transaction fee. I’ll also get great analytics. I’m so happy right now I want to jump up and click my heels but I’d probably break something.
The bottom line is Square wants to transform the entire payments industry to make is friendly and simple. Visa is running to catch-up with their own virtual wallet.