The Shopify Card Reader…

At first I thought this could be bad for Square (like every time I see a business using Clover). But then I thought…you know, this is probably just the new normal for companies that support small businesses. Maybe someday Wix will even come out with one.

Seems to me there’s enough TAM to go around for a while.



The younger generations carry no cash. If you want to sell them anything, you better be able to process a card. Or apple pay. Or Android pay. Or…

The vending machines in our breakroom at work were recently equipped with card readers. How it can make sense to pay for CC processing on a $0.75 sale is beyond me.


How it can make sense to pay for CC processing on a $0.75 sale is beyond me.

If like Square, the fee is a flat percentage (2.75%), then the size of the transaction is immaterial. We use Square at our book store (Only for CC processing, not Point-of-Sale) and couldn’t be happier.

As a merchant, their daily activity reports are useful: repeat customer statistics (1, 2, 3+ visits), period when most sales happened, new vs returning customers, Every transactions listed, etc…

Not to mention, the fees are straightforward. Ask anyone that uses an old style processor what their reports look like and if they can verify the fees are correct…

Not to mention portability when we do off-site events (just need a smart phone to swipe).

Square also has a lot of add-ons (that we don’t use):

  • Loyalty Program
  • Auto-built mailing list
  • Scheduling (Services like hairdressers, etc…)
  • Instant Deposit (i.e. you get money in your bank account literally right away instead of 2 days)
  • Capital (Get a business loan, and square does repayment directly from every swipe w/ a known %)
  • Multi-employee registers
  • Payroll (who in their right mind does manual payroll?)

As a user, I’m delighted. As an investor with a small position, I’m cheering all their add-ons.



The younger generations carry no cash.

Can confirm. I’m a college student. We use cards for everything, even as low as 0.50 transactions. I’ve had the exact same amount of cash in my wallet for at least 3 months, haven’t spent a single dollar in cash. We also use venmo a ton, if we go to dinner, one person pays with a card and we venmo them back.


The main takeaway is that they offer the reader for free and it’s bluetooth based.

Square has had something like that for about a year, but it’s $49.

I think at the end of the day, Shopify vendors will be inclined to use the Shopify reader (if they don’t already have something) and based on the wording, it seems like they are primarily targeting the artisan/artists/fair individuals as opposed to larger businesses.

Makes sense to me to mine your user base with add-ons that are useful and easy to use.


We also use venmo a ton, if we go to dinner, one person pays with a card and we venmo them back.

can I ask you a few questions, just cause I am curious. Which area do you live? When 1 person picks up the bill, how do you determine how to split and pay it back? Do you just divide by the number of people at dinner or do each try to figure out their individual portion and that is what they pay?

I am just curious to see how it is different from maybe when I was around your age as well as how different I find it is when it comes to settling a bill in Asia than from when I am was in the US

How it can make sense to pay for CC processing on a $0.75 sale is beyond me.

If like Square, the fee is a flat percentage (2.75%), then the size of the transaction is immaterial. We use Square at our book store (Only for CC processing, not Point-of-Sale) and couldn’t be happier.

So there’s no flat part to the fee? For example, Paypal charges something like $.35 plus 3%.

I am positive they would work out a deal with the vending machine vendor to charge a minuscule flat fee proportionate to the purchase size. Merchants can work out deals like this all the time with different processors.

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With Square, on a swipe or dip, it’s a flat 2.75% fee.
If you enter it manually (i.e. over the phone, internet, etc…) then it’s 3.5% + $0.15 fee

If you are a high volume merchant (> 250K/yr) then they can cut you special deals.

The other thing I didn’t mention is that it does not matter if it’s Visa, MC, Amex, Discover, Debit Card
They are all the same rate.

Traditional processors will charge more for Amex (that’s why some place don’t take it) because it’s a different system than Visa & MC. A loyalty card, cash back, frequent flyer credit card? Guess what, those perks a paid by extra fees that traditional processor pile on top of their regular transaction fees and that merchants end up absorbing.

That’s why it’s impossible to decypher a traditional processor report.

With Square, because of the flat fee, none of that matters to me as a merchant.
It goes back to knowing exactly how much you’ll put in your pocket.

Square absorbs those costs from its cut. The nominal 2.75% rate is higher than what traditional processors quote (anywhere from 1.25% to 2%) BUT there are all sorts of fees added on top ($25 monthly fee, etc…) and the extra % for perk cards, Amex, etc…

It just flabbergasts me that small retailers are still going with regular processors.

Did I mention you usually have to purchase the credit card machine for anywhere from $300 to $700+, have it programmed, pay maintenance, etc…

That’s why lots of small places have not gone to the chip yet (need to replace the machine) and still swipe only. The bad thing is that on a swipe, the merchant is now liable for fraudulent activities.

You need to dip (i.e. have chip reader) for the credit card to cover fraudulent activity.

With Square, it cost us an iPad, a stand and the $49 chip reader - not necessarily cheaper than a CC machine…

BUT the iPad can be used as a Point-of-Sales system, interface with a cash drawer, print out receipts on printers, manage inventory. AT NO COST TO THE MERCHANT.



I have not used cash in months. I expect to swipe.

And, no, I cannot decipher my merchant statement. O know what my swipe and manual entry fees are, the same for any card, but the other fees I cannot make hide or hair from and am too busy to figure it all out.

So I assume I am getting, screwed in there somewhere.

But once you get your payment system up and running, and particularly on your website, and it works, and the money goes into the correct account, and you have it built into your invoice system so that clients have a click to pay embedded in the very email you send out w an invoice, you kind of do not want to change vendors and start all over again.

Never mind the application process and getting the banking accounts lined up and whatever other things need to be done.

So grabbing “real estate” is important here. Yes I can change, but changing requires effort and mental energy I’d rather not have to put forward or trust other people with (not always wise to trust anyone but yourself with the direct money part of your business).



I agree that when you have back-end integration (i.e. Web, emailed invoice with payment links) then switching is problematic.

Funny story: We have a 2nd business (movie equipment rental) which is heavily invoice based and we use Quickbook Online for the accounting & Invoicing. QBO offers you the option of paying with CC via a link in the invoice. A natural fit as everything is integrated.

We had to go through a traditional account setup for the CC processing so they could assess the business risks and decide if they would accept us as merchants. Had to submit documentation and it was generally a pain. And it takes a good 3-4 days for payments to make it to our bank account.

When I contrast that with how super easy is was to setup a square account, I still shake my head.
For a typical retail/transactional merchants that just operate with Point-of-Sale, I shake my head.

We have a good friend that operates a home & garden boutique and uses hand written receipts.
She uses the traditional card terminal and doesn’t plan on switching to the chip due to costs. She’s now on the hook for fraud.

As I see it, for her moving to square would be a benefit just in the visibility she would gain on how the business operates (all sorts of reports available, Sales distributions by day of week, hours, monthly sales comparisons, etc…) Not to mention that Square could track her inventory (if she was so inclined). Beyond the initial outlay for ipad (if she doesn’t have one already)/stand/reader, it would cost he nothing. Actually, you do need internet access, but she has that already.

We have other friends in the same space that use square as a Point of sale and inventory system. They have hundreds of different items that change every season. They admit that entering stuff is a PITA but at the end of the day, they can run reports and see exactly what items are good sellers and which are stale and how much shrinkage (theft) they experience. All of this is included for free.

BTW, whenever I mention “Square”, fee free to substitute another similar system. Another friend has a coffee shop and he uses Vend ( - Square happens to be the system I know.

For standalone systems just to take CC payments via phone (at markets, etc…) there are plenty of similar players: PayPal, Square, Quicken, clover, now Shopify.

To bring it back to SHOP: this is why I see their new reader as more of an extension to serve their existing customer base in an integrated fashion to support physical (vs online) transaction. It’s a low hanging fruit for Shopify but at this point isn’t competition to the more full featured Point Of Sales systems.