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Lead Story

This event is brought to you by: Insert your company name


Industry Update

Supreme Court upholds AmEx's merchant contract

Authentify xFA renders passwords obsolete

Mobile user desires universal, First Data finds

Check usage survey reveals key behavioral insight

Selling Prepaid

Prepaid in brief

Gift cards remain a strong product category

Gift card issuers face new accounting standards


With prepaid debit gains, it's a mixed bag

Patti Murphy
ProScribes Inc.

Maintaining equilibrium in acquiring

Ken Musante
Eureka Payments LLC


Street SmartsSM:
Smooth apperators

Dale S. Laszig
Castles Technology Co. Ltd.

How consumer demands and biller priorities align

Eric Leiserson

Making a Square peg fit a triangle mold

Steve Norell
US Merchant Services Inc.

POS attacks on the rise

Nicholas Cucci
Network Merchants Inc.

The mix moves the message

Nancy Drexler
Acquired Marketing

Company Profile

Plug n Pay Technologies Inc.

New Products

Docking station for secure checkout

USA ePay

Online value-add for merchant portfolios

Real Local Pages ISO program
Real Local Pages


Checkup for the road ahead


Merchant selling in the connected age


Readers Speak

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

July 22, 2013  •  Issue 13:07:02

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Making a Square peg fit a triangle mold

By Steve Norell

The one topic that has had the acquiring industry buzzing more than any other over the last year has been Square Inc. While merchant level salespeople (MLSs) and ISOs don't have many good things to say about the company, the merchant side of the industry can't say enough nice things. Why the difference in attitudes?

Simply put, Square has found a way to dip into the pockets of MLSs and ISOs by offering a relatively simple, inexpensive solution for accepting credit cards. The very merchants that we all felt were a waste of time and money are now a cash cow for Square.

I know what you are thinking: Square is losing a bundle by selling to merchants at a flat rate, especially to merchants that average low ticket totals.

It doesn't take a rocket scientist to figure out that a merchant who is paying 2.75 percent on hundreds to thousands of transactions with ticket averages of $5 to $15 is unlikely to be profitable for Square, especially if the majority of the merchant's transactions are on debit cards, which is common for a low-average-ticket merchant. I would expect a company like Square to go bust sooner or later, or change its business model. As much as we all hope that happens, this outcome doesn't seem likely since Square continues to grow and Visa Inc., of all companies, has made a sizable investment in the company.

Also, keep in mind that small merchants may one day grow big. When that happens, Square will already have a firm hold on them. Square is firmly entrenched and making a lot of money that could and should be yours.

A three-point strategy to fend off Square

As MLSs and ISOs, what are we to do to compete with Square? The answer is simple and can be summed up by what I call the triangle solution, sometimes known in the sales world as the three-legged stool.

Each point of the triangle or leg of the stool is identified as quality, price or service. The concept is one that businesses driven by a sales effort are thoroughly familiar with.

I first encountered the triangle solution many years ago, when I was working in another life and industry. A distributor of dairy products I was selling for told me that he approached business customers with the triangle solution.

He invited his potential customers to pick two of the three points, because they would never ever get all three.

He explained to me that no company can ever seriously offer quality, low price and service - and stay in business. While pondering his system, I tried to find a flaw in his model. Guess what? The triangle model is unflawed; he is absolutely correct. It can't be done.

So how does this apply to Square, and how can I use it to compete with them? When any merchant uses or requests Square, first ask yourself which two of the three points of the triangle Square is offering its merchants. Its rates are cheap, so price is definitely the first point.

As far as the general purpose and workability of the product, I think we would all say that quality is covered, as well. So that leaves service. Anyone who knows anything about Square will tell you that service is extremely limited, if not nonexistent.

Square's vulnerable point

If a merchant has a problem, he or she cannot call the company; Square does not even give its merchants an 800 number to call 24 hours a day, seven days a week, as most ISOs do. The only way merchants can communicate with the company is by email, which means that it could be minutes, hours, days or weeks before they get answers.

All of us have experienced merchants who call every hour about some sort of issue - whether it's the terminal, their deposits, missing transactions, credits or voids. I am sure all of us wish we could offer service that is restricted to email communication. For us, such limited service is a pipe dream.

If that is what's missing, then I say we can be just like Square. Here is how we compete with Square. When a merchant says he or she wants a program like theirs, we say it's not a problem and offer exactly what Square offers: 2.75 percent per swiped transaction, or, for manually entered account transactions, 3.5 percent plus 15 cents.

However, this customer will not be able to call us for service of any kind. We will not provide these customers with an 800 number and will not visit their places of business under any circumstances. However, if a customer does call and we help them in any form, we will charge them $100 per hour, with a $50 minimum.

A better option

As you can imagine, merchants usually decline this option, so I offer Plan B. I provide the Square pricing and - instead of the pay-as-you-call plan - I offer a flat $20 per month to allow the merchant to call when he or she wants to. Using this plan has worked for me, and I find I am making more money than ever before. So, I have to thank Square for that.

POS vendors who install expensive computer systems have been doing this for years. They sell the POS equipment and then offer a support contract for one-year periods. If merchants do not take the support contract and later call for help, they are told that service will cost them $100 per hour, with a standard $50 minimum. Why should we be any different?

We all need to remind ourselves that we have value, and we need to be paid for it, or else we will go out of business. So remember, when you are presenting to merchants who want the Square program, tell them you only offer the triangle program: quality, price and service.

Invite them to pick two, because they are not going to get all three from anyone.

Steve Norell is Director of Sales at US Merchant Services Inc. Based in Port St. Lucie, Fla., he oversees the USMS sales force and maintains the company's bank and processor relationships. You can reach him by email at or by phone at 772-220-7515.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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