Time To Rethink Your Mobile Payments Processor? Here’s 6 Options

When merchants pay around $50 billion annually in swipe fees, according to the National Retail Federation, it might come as a shock (and delight) for entrepreneurs to learn...

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February 1, 2009 an innovative payments startup came on the scene and revolutionized card payment processing for small businesses during a time in which the payments industry was ripe with inefficiency. For many small businesses, “credit card processing fees rank among the top monthly expenses. The worst part isn’t that the fees are high, but that they’re mysterious and unpredictable.” (Source: Slate)

Square was anything but. “Not only [was] the price super low, but it is extremely simple to understand… ‘We priced it like your rent,’ Keith Rabois, the chief operating officer says. ‘We made it predictable so you don’t have to deal with that shifting level of exposure.’”

Famous for its white plastic card reader, Square let small businesses use phones and tablets to accept credit cards. Advancements have been made across the payments industry over the last six years. Yet, for many small business owners it’s still hip to be Square. Walk into your favorite local coffee shop, restaurant, or farmer’s market and you’re bound to find at least a few square readers plugged into phones and tablets. Maybe you use one too.

The problem is: Square’s marketing efforts have been so effective, the mobile payments company has managed to overshadow the competition—which is large, varied, and sometimes significantly less expensive.


Mobile Payments Options for Small Business

When merchants pay around $50 billion annually in swipe fees, according to the National Retail Federation, it might come as a shock (and delight) for entrepreneurs and business owners to learn of other, more affordable, mobile payment processing options.

Let’s take a brief look at what’s out there.



Square is a merchant services aggregator and mobile payment company that aims to simplify commerce through technology. Entrepreneurs loved Square at first because it was one of the cheapest payment processors on the market, previously offering a flat-rate fee of $275 for businesses with monthly debit and credit card transactions of roughly $21,000.

Fees: Square’s flat rate credit card processing only applied to swiped transactions less than $400. Transactions of $400 or more were billed at 2.75 percent, in addition to the $275 flat rate. Earlier this year, the company’s roughly four million customers experienced a costly switch: Square now charges a swipe fee of 2.75 percent, or 3.5 percent plus 15 cents for each manually entered transaction.


PayPal Here

The PayPal Here mobile credit card reader, a part of PayPal’s overall payment processor and merchant account package, accepts payments that connect with the PayPal debit card and online account. While PayPal has received much criticism in recent years, the stylish app comes with reporting tools and a GPS signal that can be used to attract buyers who search for local businesses accepting PayPal.

Fees: When you use PayPal you can accept credit cards, PayPal funds, and checks. For credit cards, it’s a flat fee of just 2.7 percent, no matter the type of card. Accepting checks is free, but you have to wait a few days for the money to clear, and keying in a transaction will cost 3.5 percent plus 15 cents. Non-US cards have an additional fee of 1 percent.

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