Small business owner here that uses PayPal (PYPL) but has just been convinced to switch my hundreds of accounts to Square (SQ). I sell music and books, primarily, and use PayPal checkout. Today PayPal just sent out their new price increases for August 2nd, and the number hikes are unnecessary and much higher than Square, their main competitor.
For example, a credit card payment with Square carries fees of $0.10 plus 2.6% of the transaction amount. The online fee is $0.30 plus 2.9%. If you manually key in a credit card, it jumps to $0.15 plus 3.5%, which feels dumb until you consider why a card might not scan, and this is insurance on those transactions.
PayPal was competitive at $0.30 plus 2.9% per transaction, regardless if keyed in or run.
PayPal is now increasing their cut to $0.49 plus 3.49% per transaction, a 0.5% plus $0.19 hike. That may not sound like much, but over thousands of transactions, that's a ton of money I'm losing on fees. So I have to spend the weekend dropping new codes into purchase buttons…and those buttons will lead to Square.
As an investor, you might think more fees means more money for PayPal, but I promise you that in talking with other small business owners, we're acutely aware of that bottom line, and I've had many discussions on the merits of PayPal vs Square at major book and music conferences each year. Think about every small-time online retailer…they're going to vote with their pocketbook.
So there you have it. Think about getting some money on the Square train, as that shit might pop.
EDIT: a word
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