Friday , February 22, 2019

Eye on Small Merchants: Wells Simplifies Pricing; First Data Trumpets Clover

Wells Fargo & Co. this week disclosed a simplified point-of-sale pricing plan for small card-accepting merchants, while First Data Corp. touted the strong growth in its Clover line of payment technology for small businesses.

At San Francisco-based Wells, which has a joint merchant-processing venture with First Data and is one of the nation’s largest merchant acquirers, standard pricing for merchants with $100,000 or less in payment card volume is now 2.6% of the sale plus 15 cents per dip, swipe, or tap for respective EMV contact, magnetic-stripe, or contactless card transactions. Keyed-in card-present transactions will be charged 3.4% plus 15 cents.

In addition, merchants pay a monthly fee of $9.95, $14.95, or $24.95, depending on the type of equipment they use, a Wells Fargo spokesperson tells Digital Transactions News by email. Merchants with non-Wells demand-deposit accounts or certain types of equipment also could be charged other one-time or recurring fees.

Merchants with more than $100,000 in annual volume can chose the standard pricing plan or opt for a customized one, depending on their needs, according to the spokesperson. The new structure replaces complicated pricing plans that varied from client to client, a Wells Fargo executive told the Bloomberg news service.

“We have recently rolled out new, simplified standard pricing to make opening and managing a merchant-services account easier for small-business customers,” the spokesperson says. “We believe these changes deliver a better value and experience for these customers.”

When asked if the changes were the result of pressure from Square Inc., Wells’s fast-growing crosstown rival that has made simple pricing for small businesses one of its main selling points since launching nine years ago, the spokesperson said no. “These changes reflect our continued transformation as we build a better bank and simplify the merchant experience,” the spokesperson says.

Square seemed to be on the minds of First Data executives at the big processor’s investor conference Tuesday in New York. There, company president Guy Chiarello highlighted the growth in Clover, a line of POS hardware and software services for small merchants—merchants who might otherwise chose Square.

“We are well on our way to shipping our one-millionth Clover device in 2018, and we’re processing nearly $60 billion in annualized payment volume, which has been growing over 50% recently,” Chiarello told analysts. “In case you didn’t notice, this is 20 percentage points higher than the leading competitor,” he added, without mentioning that competitor by name. Square, however, reported its processing volume grew 31% year-over-year in the first quarter to $17.8 billon.

Like Square, Clover has been moving up the merchant ladder in pursuit of higher volumes and a more stable clientele. More than 50% of Clover’s volume comes from merchants processing more than $500,000 annually, and 90% of Clover merchants generate at least $125,000. “These merchants are much less likely to attrite, and also have much greater appetites for value-added services and software,” Chiarello said.

First Data launched Clover in the United Kingdom and Ireland in 2016, and this year plans to take it to Germany, Austria, Canada, and Argentina. Some 97% of Clover’s current volume comes from the U.S., Chiarello said.

A Square spokesperson declined to comment on the Wells Fargo and First Data developments.

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