Can Square make money with its new pricing?

http://www.quora.com/Can-Square-make-money-with-its-new-pricing

by seanharper • 15 years ago

26 4 15 years ago

Sure they can. Their cash flow model differs from other merchant service processors. Square holds potentially thousands of dollars for 30 days before delivery to the account holder. Every moment of that time they're earning interest. It's called playing the float, and some players in the space make most of their money on float interest.

nkurz• 15 years ago

While this might be a good business plan, this isn't what they say they do:

https://help.squareup.com/customer/portal/articles/11866-whe...

I've only done a few transactions with Square, and none took 30 days. Do you have experience to the contrary?

dhyasama• 15 years ago

Actually, if a merchant is "on reserve" and having their funds held, then the processor is required to keep the money in a non-interest bearing account. They don't make money on it. Reserves are to cover the processor's ass on chargebacks.

URSpider94• 15 years ago

I doubt that Square is too worried about whether they can make money today with their pricing. Their #1 goal has to be to get big enough, quickly enough that they can fight off the inevitable competition from other payment gateways, and also to reach the scale where they can negotiate better deals for themselves.

If they don't price aggressively now, then lack of profitability today will be the least of their problems.

Can Square make money with its new pricing?

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