There isn’t a single day that goes by that we don’t hear the question, “How do you guys compare to Square”? This is always such a very difficult question to answer. Yet, the answer is so easy. There is NO comparison. Square is an aggregator and Chosen Payments is a dedicated merchant processor. Learn the differences between the two in this article.
Dedicated Processor vs. Aggregator
Merchant accounts come in two basic flavors, dedicated merchant services providers such as Chosen Payments that integrate with specialized industry specific software or aggregators such as Square and PayPal who use a single merchant account to provide credit card processing for an entire portfolio of companies. Consider these key points when deciding which type is the most advantageous for your business:
This is perhaps the biggest distinction between Chosen Payments and Square. The rates that Square charges are based upon a flat rate. Those rates start at 2.5% and go up to 3.5% depending upon the type of transaction such as card chipped, dipped or swiped or manually entered. You will always pay a dime for every single transaction with Square. Chosen Payments uses a rate model referred to as Interchange Plus. Think of an interchange rate as the wholesale rate. Every credit card processor is charged the exact same rate for any given transaction. As an example, let’s say you charge a customer $500 and process their Visa card using Square by manually keying in the credit card number. You would pay Square exactly $17.60 for this transaction. Assuming that Visa has an Interchange rate of 1.510% for the Visa card presented for payment, the wholesale cost or interchange rate would be $7.55. Depending
upon some variable factors, your cost with Chosen Payments would likely average about $8.50. Using Square for the example transaction dug into your profit by over $9 on a single transaction.
Chosen Payments assigns a dedicated Account Executive to every single merchant account. This allows us to provide better service by truly understanding your industry and more importantly, understanding your business and how you operate. Your dedicated representative is knowledgeable about your industry POS system or specialized software such as reservations software for passenger transportation companies or case management software for funeral homes. With an aggregator such as Square, you are merely a number to them and have no one that has a personal relationship with you or your business. If you have ever experienced a chargeback, you know how disheartening it can be to have money removed from your bank account with no discussion. Chosen Payments has a Chargeback Team. We will help you build a case to dispute the chargeback and have a track record of winning nine out of ten disputes. Square offers no such assistance to their merchants. You would be on your own to try and reclaim your money.
Have you ever seen Square show up at one of your industry trade shows with a booth? Probably, not. Have you ever seen Square sponsor an event within your industry? Likely, not. Chosen Payments is a staunch supporter of the industries we serve. We share a portion of our profits with professional trade associations in the industries we serve. We sponsor hundreds of industry events each year. Is Square supporting your industry in any way? We believe that you should support a processor that supports you and your industry. Have you met anyone from Square in person? Stop by our booth at your next industry trade show. Odds are high that we will be there.
Control of Funds
Funds deposited into your merchant account flow directly into your business bank account. As your processor, Chosen Payments can correct errors, react to potential fraud, and debit your account for chargebacks based on very strict industry-standard rules. With an aggregator merchant account, deposits go to the service provider first (Square) and are deposited to your bank account at the provider’s discretion. There are no industry standards or rules that govern how an aggregators handle or disburse money. They make the rules and change them at will. If you choose an aggregator be sure to pay attention to contract terms and any changes made to them.
Bad Credit or No Credit?
To process with a dedicated credit card processor, your business will need to go through a comprehensive underwriting process to determine your credit worthiness. If your business is very new, or has a poor credit history, an aggregated merchant account may be your only option for accepting credit cards. While you’ll still need to provide credit information about your business to an aggregator like Square, the underwriting for an aggregator is far less rigorous.