Square Introduces Square Cash for Businesses, With a Low 1.5 Percent Processing Fee
Five years ago, Square introduced a sleek card reader to the small-business world that made it easy for everyone from taxi drivers to craft sellers to coffee shop owners to accept credit card payments for the first time.
Context & Ripple Effects
This launch lands two weeks after Square signaled its pivot to merchants by planning instant deposits and disputed-purchase protection, and it extends the company's original pitch — a reader that let taxi drivers and craft sellers accept cards — into person-to-person payments repurposed for business. The 1.5% fee is the headline weapon, undercutting conventional card processing costs for very small merchants.
The corpus shows how the pricing story resolved: within months, Square raised the Cash for Business fee from 1.5% to 2.75% (the November 2015 increase) while layering on paid products — a $60/month retail point-of-sale service, the Square Card for instant access to sales proceeds, and eventually no-store online checkout.
First-order effects
- Very small merchants — coffee shops, craft sellers, taxi drivers — gain a cheaper way to take card payments, with Square absorbing the risk that its 1.5% rate undercuts what those businesses previously paid processors.
Second-order effects
- Raising the fee from 1.5% to 2.75% within roughly eight months demonstrates that once merchants are embedded in Square's system, the platform can reprice unilaterally — the intro rate functions as acquisition pricing rather than a durable cost floor.
Third-order effects
- Square's sequence — cheap entry, then repricing alongside paid add-ons like the retail register service and Square Card — points toward small-business payments consolidating around bundled platforms whose take rates, not hardware, set merchant economics; whether regulators or competition constrain that repricing power is the open question.
The trend: Small-business payments are shifting from flat-rate card processing toward bundled platform ecosystems where introductory fees give way to unilateral repricing as merchants deepen their dependence.