Hey there, business owner! Are you currently using Square to process payments, or are you thinking about it? If so, understanding their fee structure, especially for credit cards like American Express, is absolutely crucial for your bottom line. It's not always as straightforward as it seems, and unexpected fees can quickly eat into your profits. But don't worry, we're here to break it down for you. Let's dive in!
Understanding Square's Fee Structure: The American Express Angle
One of the most common questions businesses have about payment processing is how different card brands affect their fees. Historically, American Express (Amex) has sometimes been associated with higher processing rates compared to Visa or Mastercard. This is often due to Amex operating as both the card issuer and the network, giving them more control over their rates. However, Square operates on a different model, which is excellent news for merchants accepting Amex.
The good news? Square's pricing model is generally flat-rate, meaning they charge the same percentage and fixed fee for all major credit cards, including Visa, Mastercard, Discover, and American Express. This simplifies things immensely for businesses, as you don't have to worry about varying rates for different card types.
The core of Square's pricing revolves around how the payment is processed, not which card brand is used.
Step 1: Identify Your Payment Processing Method
Before we get into the exact numbers, think about how your customers typically pay you. Do they tap their cards on a reader in your store? Do they buy online? Or do you key in their details over the phone? This distinction is paramount because Square's fees vary based on the method of transaction.
In-Person Transactions (Tapped, Dipped, Swiped): This is generally the lowest fee category. It applies when a customer physically presents their card and uses a Square reader or terminal.
Online Transactions (eCommerce, Invoices, Payment Links): These transactions typically carry a slightly higher fee due to the increased risk associated with "card-not-present" scenarios.
Manually Entered/Card-on-File Transactions: This is often the highest fee category because the risk of fraud is highest when the card is not physically present and its details are entered manually or stored on file.
Take a moment to consider which of these methods you use most frequently. This will help you pinpoint the relevant fees for your business.
Step 2: Demystifying Square's Transaction Fees
Square's transaction fees consist of two parts: a percentage of the transaction amount and a fixed fee per transaction. While the exact figures can sometimes have slight variations or updates, here are the general rates you can expect for American Express and all other major credit cards:
Sub-heading: In-Person Transactions (Card Present)
When your customer taps, dips, or swipes their American Express card on your Square Reader, Square Terminal, or Square Register, the fee is typically:
2.6% + $0.10 or $0.15 per transaction (depending on the specific Square product or plan you use).
For example, if a customer pays $100 with their American Express card in person, you'd pay approximately $2.60 (2.6% of $100) + $0.10 (fixed fee) = $2.70 in fees.
It's worth noting that some sources mention 1.75% for UK cards for in-person transactions, and there might be slight variations based on your specific Square product (e.g., Square Register, Square Terminal) or if you're on a specialized plan (like Square for Retail or Square for Restaurants). However, the key takeaway is that American Express falls under the same flat rate as other cards for in-person payments.
Sub-heading: Online Transactions (Card Not Present - eCommerce, Invoices, Payment Links)
If you're selling through your Square Online Store, sending invoices, or using Square Payment Links, the fees for American Express (and other cards) are generally higher due to the absence of the physical card:
2.9% + $0.30 per transaction (for online store, eCommerce API).
3.3% + $0.30 per transaction (for Square Invoices and Payment Links).
For example, a $100 online purchase with an American Express card via your Square Online Store would cost you $2.90 (2.9% of $100) + $0.30 (fixed fee) = $3.20 in fees.
Sub-heading: Manually Entered / Card-on-File Transactions
This method, where you manually key in card details or use a customer's card stored on file, carries the highest risk and, consequently, the highest fees:
3.5% + $0.15 per transaction.
If you manually enter a $100 American Express transaction, you'd pay $3.50 (3.5% of $100) + $0.15 (fixed fee) = $3.65 in fees.
Step 3: Beyond Transaction Fees: Other Potential Costs
While Square is known for its transparent, pay-as-you-go model with no monthly fees for basic payment processing, there are other potential costs to be aware of, none of which are specific to American Express but apply broadly to your Square usage:
Sub-heading: Hardware Costs
To accept in-person payments, you'll need Square hardware. While Square offers a free magstripe reader when you sign up, other devices have a cost:
Square Reader for contactless and chip: Around $49.
Square Terminal: Around $299.
Square Register: Around $799.
These are one-time purchases, not recurring fees, but they are a necessary investment for certain types of businesses.
Sub-heading: Optional Software Subscriptions and Add-ons
Square offers a suite of services beyond basic payment processing, some of which come with monthly subscription fees. These are optional and depend on your business needs:
Square for Retail, Square for Restaurants, Square Appointments: These specialized POS systems offer advanced features and can have monthly fees (e.g., $29-$89+ per month for Plus/Premium plans), though free versions are often available with standard transaction rates. Some of these paid plans may offer slightly discounted in-person processing rates.
Square Payroll: Starts around $35/month + per-employee fees.
Square Marketing/Loyalty: Starts at various monthly rates depending on usage.
Afterpay: If you offer "buy now, pay later" through Afterpay via Square, there's a separate fee, typically 6% + $0.30 per transaction. This is an additional fee on top of Square's standard processing.
Important Note: These additional services and their fees are not tied to the card brand (like American Express) but rather to the value-added services you choose to utilize.
Sub-heading: Instant Transfers
While standard transfers to your bank account are free and usually take 1-2 business days, Square offers an "Instant Transfer" option for a fee:
1.75% of the transfer amount.
This allows you to access your funds immediately, which can be useful for managing cash flow.
Step 4: Maximizing Your Profits and Managing Square Fees
Now that you have a clear picture of what Square charges for American Express and other cards, how can you optimize your costs?
Sub-heading: Review Your Sales Mix
Analyze Transaction Types: Look at your Square reports to see the breakdown of your transactions: how many are in-person, online, or manually keyed? If a significant portion are keyed-in, consider strategies to encourage in-person or online payments to reduce your fees.
High-Value Transactions: For very large transactions, even a small percentage difference can be substantial. Understand the fee impact on your biggest sales.
Sub-heading: Consider Volume-Based Pricing (for High-Volume Businesses)
If your business processes more than $250,000 annually and has an average sale of more than $15, you might be eligible for custom processing rates from Square. It's always worth reaching out to Square's sales team to inquire about this if you meet the criteria. Custom rates could potentially offer a lower percentage, especially for American Express transactions, though remember Square's flat-rate model means Amex won't be singled out.
Sub-heading: Evaluate Software Plans
If you're using a lot of Square's add-on services, compare the cost of their "Plus" or "Premium" plans against the standalone costs. Sometimes, these bundled plans offer slightly reduced transaction rates in exchange for a monthly fee, which could be beneficial if your volume is high enough to offset the subscription cost.
Step 5: Transparency and What's NOT Charged
One of Square's biggest selling points is its transparency. This means:
No Hidden Fees: Square doesn't charge setup fees, monthly minimums (unless you choose a paid plan), PCI compliance fees (it's included), or cancellation fees.
No Chargeback Fees: If you receive a chargeback, Square often covers the fee for disputes fought on your behalf, which is a significant advantage over some other processors.
Same Rate for All Major Cards: As discussed, this includes American Express, Visa, Mastercard, and Discover. You won't pay extra just because a customer uses an Amex card.
This straightforward approach allows businesses, especially small and medium-sized ones, to easily understand their processing costs without complex calculations or surprises.
10 Related FAQ Questions
Here are 10 common questions about Square's fees, focusing on the "How to" aspect, with quick answers:
How to calculate Square fees for a specific transaction?
To calculate Square fees, use the formula: (Transaction Amount × Percentage Fee) + Fixed Fee. For example, for a $50 in-person American Express transaction, it would be ($50 * 0.026) + $0.10 = $1.30 + $0.10 = $1.40.
How to see a breakdown of my Square fees?
You can view your processing fees in your Square Dashboard. Go to "Account & Settings" > "Pricing & subscriptions" or "Reports" > "Sales Summary" or "Transactions" to see detailed fee information for various periods and individual transactions.
How to reduce Square processing fees?
To reduce Square fees, encourage customers to use card-present methods (tap, dip, swipe) rather than manual entry. For high-volume businesses (>$250,000 annual revenue), inquire with Square about custom processing rates.
How to avoid Square fees completely?
You can avoid Square transaction fees by accepting cash, checks, or other non-card tenders. Square does not charge fees for these payment types.
How to accept American Express cards with Square?
Square automatically accepts all US-issued and most internationally-issued American Express cards (along with Visa, Mastercard, Discover, JCB, and UnionPay) on all its POS equipment and online platforms without any special setup or additional fees.
How to pass Square fees on to customers?
While some businesses attempt to pass on processing fees (surcharging), this can be complex and is often restricted or regulated by card network rules and local laws. Square generally advises against this practice and their system isn't designed to easily add a separate "credit card fee" line item. Instead, you might consider adjusting your product pricing to absorb the fees.
How to get faster payouts from Square?
You can opt for "Instant Transfer" services from Square for a fee (typically 1.75% of the transfer amount) to receive your funds immediately. Otherwise, standard transfers usually arrive in 1-2 business days for free.
How to get a free Square card reader?
Square typically offers your first magstripe card reader for free when you sign up. You can often request it directly from your Square Dashboard or during the signup process.
How to check if my Square plan offers lower fees?
Log into your Square Dashboard and navigate to "Account & Settings" > "Pricing & subscriptions." This section will clearly outline your current plan and the associated processing rates for different transaction types.
How to contact Square support about my fees?
You can contact Square support through their online help center, phone support (available during business hours), or by logging into your Square Dashboard for specific support options tailored to your account.
