It’s Hip to Be Square – Accepting Credit Cards Redefined

Guest post by: Shawn Hoefer

Being a craftsperson often means traveling to shows. From rolling Ozark hills of Southern Missouri to a Renaissance Festival in the foothills of the Rocky Mountains to a former Olympic venue in Utah to a city park in the resort town of Taos, NM. As long as the show remains in the United States, there are a couple constants: the US Dollar is the currency of choice, and people will often want to pay with credit cards and debit cards.

But why accept credit or debitcards? After all, it’s a process that can be expensive and fraught with uncertainty: are you PCI compliant; is there a security risk; will the customer’s card clear? In spite of these uncertainties, there are definite advantages to accepting credit cards. Customers will purchase without delay (how many times has a sale been lost when the customer has to go to an ATM or doesn’t have enough cash and didn’t bring a checkbook), they will purchase more items, and they’ll select high priced items.

Knuckle busters – the old slide imprinters with carbons – were slow, insecure, wasteful, and uncertain. There was no way to ensure that the carbons would be destroyed at the proper time creating security risks. There was no way, short of making a call every time someone wanted to make a purchase, to ensure that the credit card was valid or not over the limit.

Then came terminals. Terminals required installation of a phone line which isn’t possible in a field or at a city park, or they required the use of specialized equipment to connect a cell phone. More recently, cellular terminals have shown up combining the cell phone and the terminal.

Regardless of the method used, accepting credit cards at a show required the use of a Merchant Service. These services are expensive, often charging hundreds of dollars per month for the privilege of accepting plastic. One such service charged $25 per month as a monthly minimum (that amount is deducted from the percentage charged), a $10 statement fee, a $15 cellular fee (for the cellular terminal), and taxes. That means before any payments are taken, there’s a $50 minimum fee to be paid. Start taking payments and the numbers go up rapidly as each credit card has a different rate and percentage and fee.

If all your business is online, there’s PayPal and Google Checkout. But if you want to process payments outside of these services – advisable as not everyone, even in this day and age, has a PayPal or Google account – it’s right back to the merchant service. This comes not only with the fees mentioned above, but often there is also some rather complex coding in websites and the purchase of additional software.

Adding insult to injury is the contract. In order to get started many services require that a two or three year contract is signed and the termination fees can be hard on the pocket book and the bottom line.

Enter Square!

Beginning a little over two years ago, a light appeared at the end of the tunnel. Jack Dorsey, co-founder of Twitter, and Jim McKelvey, a glass artist, worked together to create a payment processing system that would allow for the processing of credit cards without the merchant services. With this product, there are no contracts, no monthly fees, no service fees, no sales taxes. Instead, a percentage (currently 2.75% for swiped transactions and 3.25% plus a $.15 transaction fee for keyed in transactions) is charge each and every time a payment is processed. That means if an item is sold for $20,  $19.45 shows up in a bank account in a few days instead of $20 showing up and a bill arriving at the end of the month for $50 or more. No sales means no bills.