NEW YORK (AP) — Mobile payments service Square has changed the way it is charging fees to its small businesses.
Square, which processes payments made using square credit-card readers attached to mobile devices, has ended the monthly $275 flat fee it charged small companies and instituted a lower fee per transaction for businesses that qualify.
The flat fee was available to businesses with monthly debit and credit card transactions of about $20,833, said Aaron Zamost, a spokesman for Square. The company discontinued the fee after businesses complained that they were charged additional transaction fees of 2.75 percent after they had exceeded $20,833 in transactions in a month. They were charged the flat fee up to that amount, and 2.75 percent on anything beyond it.
The company's standard fee per transaction is 2.75 percent, but companies can apply for a lower rate, Zamost says. Rates are calculated based on the type of business, its average transaction size and how much business it has done with Square.
The standard fee applies to transactions that are swiped. If a merchant manually enters a card number — for it takes an order over the phone — the charge is 3.5 percent plus 15 cents per transaction.
Square also ended what are called holds on money paid through manual transactions. Under a hold, a payment service does not release money for a specified amount of time after a transaction as insurance in case there is fraud involving the credit or debit card used. Square said money from all transactions would be available within two business days.