M-POS an expensive option – Rick Berry – CEO of ABC Mobile Pay


Square has soared up to over $5 billion per year in payment card transactions, a phenomenal figure, while PayPal has claimed 2,000+ signups per day after their recent launch into the retail brick & mortar marketplace.

The main reason for the huge dollar volume being processed by Square is that it was developed for P2P or person-to-person payments and it works without requiring a traditional merchant account.

PayPal accomplished its sudden deployment and recently successful campaign to sign up merchants by having an established infrastructure it developed via its relationship with its parent company, eBay.

Both companies fulfill a need. However they are not designed for real businesses that require POS features that integrate with QuickBooks, SAP, Oracle, Sage and others. Merchants also need technology that delivers reports, controls inventory and monitors transactions.

But the foremost concern for a business is cost. A merchant is in business to make money and that business is their livelihood, that’s how they feed their family. Therefore any business with significant sales volume finds the payment processing cost to be critical.

Meanwhile, the basic cost for Square is 2.75%, and PayPal basic is 2.70%.

So let’s do the math. A merchant with $25,000 per month in transactions that uses Square to swipe card-present transactions pays around $687.50. That’s because keyed-in transactions cost 3.5% + $0.15 per transaction. So, $50,000 would cost $1,375, and $100,000 in sales would cost around $2,750. Any keyed-in transaction of more $1,000 is held for 30 days.

PayPal would be about $2,700, plus additional monthly fees in three versions. A virtual terminal is available at 3.1% plus $0.30 cents per transaction.

PayPal can also link to an existing merchant account for a $179 set-up fee and $19.95 per month with 500 free transactions.

A merchant processing $100,000 or more can save $700-$750 per month when charged a more reasonable 1.99%, which saves around $9,000 to $10,000 each year. That’s a lot of money; money merchants can redirect to inventory, marketing or even a vacation.

If you search long enough, you’ll find a PayPal tiered volume discount rate structure you can apply for starting at 2.9% + $0.30 up to $3,000 per month, 2.5% + $0.30, $3000 to $10,000 per month, $10,000 plus 2.2% + $0.30.

Not having to qualify for a typical merchant account means more risk, which is why the pricing is higher, and there are parameters such as volume limitations and payment holds and much more when using Square or PayPal.