In its latest pricing change, Square Inc. disclosed Tuesday that it will raise the cost of instant and same-day transfers from its merchants’ Square balances to their bank accounts to 1.5% per transfer from the previous rate of 1%.
The change, announced on Square’s blog, took effect Tuesday for new users of the transfer service and will kick in Feb. 7 for existing users. Pricing for standard next-day transfers remains at zero.
In explaining the rationale for the increase, a spokesperson for San Francisco-based Square tells Digital Transactions News by email that “now that sellers have alternative fast and free transfer options, including free next-day transfers and no-cost instant access with Square Card, we felt the timing was right for this change.” The spokesperson would not say how many Square merchants, dubbed sellers, use instant and same-day transfers.
Square Card is a prepaid business Mastercard issued by Sutton Bank that makes funds in the seller’s Square account available instantly for purchases. Cardholders also get a discount when they make purchases at other Square sellers’ locations.
The instant-transfer service was called Instant Deposit until last month. The higher fee is just the latest move by Square to generate more revenue from its growing array of services. In November, the company replaced its longstanding 2.75% point-of-sale discount rate for a new pricing plan of 2.6% plus 10 cents. Digital Transactions News estimated the change could reduce Square’s POS credit card revenues slightly but increase income from card-present debit transactions.