I have a small position in Square. The reason i have kept it small is because years ago i worked in retail and our credit card vendor was first data if memory serves. Their charge was less than 1 percent of the transaction. (how much less i can’t recall) It did varied depending on the card, visa, mc or american express. At that time square’s charge was significantly higher. At the time my impression was that square was appealing to the very small retail operations but not so much to the high volume retail stores. Does anyone know how they stack up on transaction costs in today’s world? And are they making any inroads in medium to large vendors? My apologies if these questions have already be addressed.
Kindest Regards,
Steve
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Steve, I recently wrote an article that I believe answers your questions:
The one number, however, that stood out above all the others was Square’s take rate. Square’s take rate is its transaction-based revenue expressed as a percentage of its GPV. This quarter, Square’s transaction-based revenue rose to $482 million, a 32% increase year over year. As a percentage of GPV it was 2.94%, giving us the take rate. This is up slightly year over year from 2.93%. Its transaction-based profit, after the credit card networks and banks were given their cuts and fees, was 1.04%, flat from the previous year.
Why that’s so impressive
Over time, Square has found itself with larger clients for its payment processing services. In 2015’s second quarter, the percentage of Square’s GPV coming from large businesses (as defined by those with GPV greater than $500,000) was 11%. In this year’s second quarter, that number had jumped to 19%. Over the same time period, the payment volume coming from small businesses (those with GPV of less than $125,000) had dropped from 63% to 54%…
Read the entire article at https://www.fool.com/investing/2017/08/13/the-most-impressiv…
If further clarification is needed, please let me know.
Matt
Long SQ
MasterCard (MA), PayPal (PYPL), Skechers (SKX) and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx
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Thanks Matt. For years i would not buy Amazon because i thought there is no way they would thrive selling book at such small margins. We all know how that turned out. My old retail back ground colored my judgement. I’m having the same internal battle with square because i know as a retailer i would go with the lo cost credit card transaction provider. No worries, i have several higher conviction stocks that have done pretty darn good since i stumbled on this awesome board.
Kindest Regards,
Steve
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I have a small position in Square. The reason i have kept it small is because years ago i worked in retail and our credit card vendor was first data if memory serves. Their charge was less than 1 percent of the transaction. (how much less i can’t recall) It did varied depending on the card, visa, mc or american express. At that time square’s charge was significantly higher. At the time my impression was that square was appealing to the very small retail operations but not so much to the high volume retail stores. Does anyone know how they stack up on transaction costs in today’s world? And are they making any inroads in medium to large vendors? My apologies if these questions have already be addressed.
Kindest Regards,
Steve
You must have been in retail many many moons ago as first data never gave 1%(NET)Unless you were Walmart or the equivalent. Was with them for over 20 years and up until a few months ago,(retired now) being on an interchange rate(lowest and cheapest rate)plus owning my own equipment, they were still screwing me and thousands of others blind… each month about 10 pages of incomprehensible charges, such as Location fees, US Cross Border Fees, Amex capture EDC fees, system file fees, compliance fees(and these to me were and still are illegal) etc, etc and on it went…wa charged about 2.35% and that did not include Amex. And I did a sizeable turnover but others who have annual charges plus equipment fees were and are around 2.7% if they could be bothered to work out what the actual NET amount was. Not to mention that for the average business owner with say one store, be it first data or someone else, if you can understand what you were eventually being charged, in today’s money, you are looking at between 2.50-3.25% and much more for those who haven’t read the fine print and got themselves into a 3 plus year contract. Not to mention anyone who is only producing a turnover under 500K. Could top over 3.50% Its actually scandalous what they are getting away with!
So Square. Mostly for smaller business’ with turnover between 250K to 1M turnover. They charge the retailer 2.75% across the board including Amex which alone can charge you between 3.25 to 3.50%. Have a friend who owns a busy coffee place and he loves it. Ipad familiarity. Customized software included. Easy for his staff and his customers to use and knows exactly what he is paying each month. Have spoken to many retailers who have also got rid of the likes of first data and moved on to Square and even though they might be paying slightly higher charges,(actually they are not) they would rather receive a statement that they understand each month plus the customer service they received was mostly excellent.
Also these same retailers when their business does well and they expand, they stay loyal and usually end up getting another unit or two. Will Square’s charges increase over time, no doubt, but good for the shareholder. Also starting to see vendors at outdoor antique markets and such and imho there is a long way to go for this Company and into many untapped areas as well.
I brought at 8 and change and sold at 25 but will dip my toe in again, just waiting at present.
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Branmin,
You must have been in retail many many moons ago as first data never gave 1%(NET)Unless you were Walmart or the equivalent.
It was many many moons ago, so many that no doubt I got the net wrong. Started in retail around 1975. At that time credit card transactions (were I worked) involved making a carbonized imprint of the credit card. This involved placing the card in a imprint machine, placing a carbonized receipt over the card, then pulling a roller over the receipt and card. This would result in the embossed numbers on card transferring to the receipt. Then you had to call a toll free number to get a transaction approval number, then write the number on receipt. Now swipe and your done or pay with your phone or … wow how technology is changing our lives.
Thanks for reminding me how frustrating their end of the month statements were and providing the links on post #30971, it was helpful.
Kindest regards,
Steve
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