What is the effective fee rate

[Jessweather]

I just got my first daily sales summery report. What is the 12.50% effective fee rate?

also, what does this mean?

“Waived processing fees are reimbursed to your account on each transfer. Once you process $1,000 of card payments or 180 calendar days has passed (whichever occurs first), you’ll be automatically charged your standard per-transaction fee going forward.”

am I later going to be charged?

[HC_Charlie · Accepted solution]

Hello @Jessweather thanks for your post, and welcome to the Square Community, we're glad you're here!

It sounds like you are currently on a promotional rate? If you just signed up to Square you may have been offered free credit card processing for the first $xxx dollars of sales. The "waived processing fees..." mean that You'll see the processing fee on each transaction on your sales report, but when you receive that deposit in your bank account, those fees will be refunded back to you (so you'll essentially be paying NO fees on those transactions). After processing $1,000 worth of sales in credit card charges (or after 180 days), those fees will no longer be given back to you and Square will keep those as part of the way it regularly works. Square charges a certain percentage of each credit card transaction it processes on your behalf. That is how they make money and any credit card processing company will charge you a fee for this service.

As far as the effective rate goes, that could be different by individual and individual sale, based on how the transaction was processed. If you give a more specific example on that transaction someone may be able to help break down the fee rate for you. For more info on transaction fees, see this link.

https://squareup.com/help/us/en/article/5068-what-are-square-s-fees

[Jessweather]

So after the free credit card purchasing promo is up, I will be charged 2.6% +.10 + 12.5%?

just trying to understand when the 12.5% comes in.

[Jessweather]

 

[Candlestore]

@Jessweather ;

The effective Rate is equal to the 2.6% fee plus a .10 per Transaction Charge.

So the lower the amount Charged the Higher the Effective Rate, The greater the charge the lower the Effective Rate.

So lets look at 2 examples:

Customer 1 -  $1.00

customer 1 Charges $1.00 through Square 

So Square says on 1.00 there is a 2.6 Charge for using Square or 2.6 cents plus .10 per transaction fee.  So the Effective rate is .10 Plus the 2.6 cents which equals 12.6 cents or 12.6 % effective rate.

Customer 2

Customer 2 charges $100.00

So 2.6% of 100 is $2.60

Then add on the 10 cents per transaction or .10

You get $2.60 plus the .10 = $2.70 or an effective rate of 2.7%

The higher the dollar amount charged the lower the Effective rate.

I hope this makes sense.

[HC_Charlie]

It looks like in this example, you only charged .04 cents...is that correct? @Candlestore is spot on...the higher the amount charged, the percentage would be less (or the EFFECTIVE percentage calculates less. You're still only being charged about 2.6% fee plus a .10 per Transaction Charge.

So if you would charge a credit card only .10 cents, Square is going to charge you .10 to process that transaction, plus the 2.6% fee. That is why you often see signs in small shops about having a minimum purchase for credit cards. It just doesn't make sense to run a credit card at such as small amount.

Hope this helps answer your question.