The Real Cost Of Accepting Credit Cards Unless You Use Square

There will be 2 posts tonight!  I thought this would be an opportunity to provide hard numbers to small business men and women everywhere to see how much Square really does save you.  What many of you do not know is that I am a big math and science nerd.  I went through Cal II my freshman year of college (there was no Calculus way back when in my high school)  and wanted to be a neurosurgeon, before I discovered psychology and hopped majors.

I had happily used Square for over a year.  Then, I started using a great therapy program  (ask me, ask me!) and they had an integrated clearinghouse that was supposed to have worked some magical rates for them. I interviewed the company, got some numbers and thought I would give it a go.  I intensely dislike paperwork and the last program I used had such a horrible accounting section, I did not want to have another experience like that. I thought this might be a couple of dollars more, but it would be worth it.  I really thought it would save me time and money, since it integrated with my program.  I started using it.  It seemed okay, at first, but I noticed the charges kept getting higher.  I would call, get some explanation that never sat quite right with me.  I stay pretty busy, so I would forget it until the next bill.  This time, I sat and really worked the numbers, and spent quite a bit of time on the phone with their customer service verifying fees.  They may be burning me in effigy in their offices after that phone call.

This is the breakdown on how all of this really works and what we small business people are really being charged to use this clearinghouse.  When you calculate your charges – qual or nqual, data usage fees, network fees, NABU and ACQR fees, and data integrity fees, you are averaging 4% to 6% or more of your monies earned going to  the credit card processing company.

 I have broken everything down, and then did examples from my actual charges.  Here goes:

Discount Rates and Fees:

 All saved credit and debit cards are seen by their system as keyed entries.  That is the highest rate charged.  The rate is .0388, BEFORE the additional fees.

I was told that ALL transactions MUST be SWIPED to get a lower rate.

Each charge has an additional CPU fee of 0.21.

If MC, there is a NABU charge of .0155 per swipe.

If Visa, there is an ACQR charge of .0155 per card swipe.

If keyed Visa, an additional Transaction Integrity fee of 0.10 is assessed.

Visa also has a fixed Network fee of $2.00 per month.

Discover has data usage fee of 0.01850 per charge.

So, let’s consider a $30.00 copay.  With a saved card, here are the numbers:

MasterCard:  $30.00  x .0388 = 1.164

                                             CPU fee = 0.21

                                         NABU fee =  0.0185

                            TOTAL Fees = 1.3925 

You are paying $1.39 on a $30.00 charge, or 4.64%


            Visa:  $30.00 x .0388 = 1.164

                                        CPU Fee = 0.21

                                      ACQR fee = 0.0155

           Transaction Integ. Fee = 0.10

                                 TOTAL Fees = 1.9655

You are paying $1.97 on a $30.00 charge or 6.57%


These are not including the nightly fees.  To closeout for the day, you have to batch.  That is an additional cut of your percentage.  Then, you have a percentage of the monthly fees to add to have an accurate count as to how much this is costing you. 


Nightly Fees: 0.42


To batch, you access the terminal twice, so you are really charged 0.42 to batch, not 0.21.  They hide the second fee under my MC data charges, which is why I thought there was a computer programming error.


Taking the example I just did for 2 Card On File charges:

Total Charges = $60.00

           -Visa Fees = 1.97

            -MC Fees = 1.39

    –Batching fees = 0.42

                 Total Net = 56.22   Fees Charged = 3.78 = 6.3% of what you were paid

These do not include the monthly portion of the service fee and Visa Network Fee.


Monthly charges 9.95

Service fee =  $7.95

Visa Netwk= $2.00

            Total  = 9.95/30 days = .3317 per day


So, on $60.00 in charges, add 0.3317 to 3.78 = 4.1116.  Your fees paid for 2 on file cards are $4.11, or 6.85%.


Square = $60.00 x 2.75% = $1.65


QUAL CARDS – i.e., Swiped.

So what if you swipe everything?  Here are the rates for swiping cards.

MC Discounts:

Mqual = .0234

Nqual = .0388

MC Debit Cards:

Qual = .0039 + 0.04

Nqual = .0388

Visa Discounts:

Mqual = .0234

Nqual = .0388

Visa Debit:

Qual = .0039 + 0.04


Mqual = .0234

Nqual = .0388

Data Usage = .01850


So, using the $30 charge to MC and to Visa, if SWIPED, here is how it works:



$30.00 x 0.0234 = 0.702 + 0.21 data usage = 0.912 + .0185 NABU = 0.9305 or 3.10%



$30.00 x 0.0234 = 0.702 + 0.21 data usage = 0.912 + .0155 ACQR = 0.9275 or 0.93 or 3.10%


Daily Total:

$60.00 – .93 – .93 – .42 = $57.72 = 3.8% of fee not including the monthly portion.


With monthly portion:

$60 – .93 – .93 – .42 – .33 = $57.39 net or fees incurred are 4.4% of what you collected.


For the 2 charges in one day:

Saved card fees for one day =    4.11   6.85% of what you collected

Swiped card fees for one day =  2.61   4.4%  of what you collected

Swiping saves $1.50 or 2.45% savings

This is just a light day with 2 charges.

Remember – Not all swiped charges will get the lowest rate.  If a card is a perks card or a rewards card, you pay the NQual rate of .0388 + CPU fee + NABU or ACQR fee + Transaction Integrity Fee for Visa.  Add the nightly fee of 0.42 + the monthly portion of 0.3317, it all adds up very quickly.  Very few cards qualify for the lowest discount rate.

So, here is a break down of gross receipts for the month, gross charges for the month, and what Square would have been:


GROSS RECEIPTS MW Clearinghouse Fee SQUARE FEE 2.75%
Feb 2013 1242.40 66.85 34.17
Jan 2013 871.40 53.34 23.96
Dec 2012 676.00 41.88 18.59
Nov 2012 1376.66 152.80 37.85
Oct 2012 1046.28 55.07 28.77
Sept 2012 735.00 44.75 20.21
Aug 2012 1304.20 48.12 35.87
July 2012 846.20 35.53 23.27
June 2012 496.40 20.46 13.65



518.80 = 6.04%

236.34 = 2.75%

I spent an additional $282.46 in fees, over 100% more than Square, for some convenience.  To me, 1 less mouse click is not worth it.  My therapy program will not let you close your note until you put in what the client paid.  This is what Dave Ramsey calls the “Stupid Tax.”

Have you ever been told one thing, only to work it out and find it is radically different?