To Square or Not To Square for Home Inspectors

paymentjackThe introduction of mobile payment options, like Square, have changed the landscape of credit card processing.  The question is, as a home inspector, is Square type of account right for you?  In this article, we will discuss the pros and cons of Square as well as other options that you, as a home inspector, may want to take a look at.

The first question you want to ask yourself when considering if a Square type of account is right for you, is….

“How much do I process in credit cards every month?” or “How much do I think I will process in credit cards every month?”  The number one advantage of a Square type account is that there are no monthly fees.   You may ask yourself how they are able to have no monthly fees when everyone else has them?  It is simple, they charge a much higher percentage on ever transaction.  Square charges 2.75% for swiped transactions and 3.5%  and $0.15 cents per transaction.  So, let’s say you do a home inspection for $400.00 and key in the transaction, it would cost you $14.15 (if it were swiped it would cost you $11.00).   If you are only doing 1-3 inspections a month on credit card, then Square (or a Square type of account) is probably something that would work for you.  If, however, you are doing 3 or more inspections a month on credit card, then that higher percentage starts to add up.

A traditional merchant account is generally going to have around $10.00 a month in set fees, however, the percentages are much lower.  There are two types of traditional accounts, a swiped account and a card not present account or MOTO (mail order telephone order) account.  These accounts will usually have three tiers of fees, qualified (swiped or card not present but with zip and security code), partially qualified (reward cards) and non-qualified (government, international or corporate cards).  On average you will pay around 1.9% – 2.4% for a traditional account when you take the different tiers into consideration.  So, with either the swiped account or the card not present account, you save almost 1.0% on all your transactions versus Square.  That is a savings of almost $10.00 on every $1,000 that you process.  In other words, if you are doing 3 or more inspections a month on credit cards, it is cheaper for you to have a traditional account instead of a Square account.

Advantages of traditional accounts:

  1. Integration capabilities:  If you are using some type of Home Inspection software (i.e. ISN, Home Inspector Pro, Home Gauge, Horizon, etc…) they give you the options to integrate your credit card processing with their software.  This will allow you to send your contracts and invoices with payment links and it will allow you to take credit cards onsite with their mobile apps.
  2. Customer support:  If you use Square and have ever tried to get a human being to help who understands your problem, you know what I am talking about.  No one likes to deal with any customer support, but you will generally have better luck with customer support when you have a traditional account versus Square.

3.Fees:  Although traditional accounts will always have monthly fees (varies based on the type of account but it will range from $5.00-$15.00 a month) the percentages you are charged can be significantly lower.  If you are doing more than 3 inspections per month on credit card, this type of account will be cheaper for you.

4.Monthly billing:  This makes your reconciliation much easier.  If you do a $400 inspection, then $400 will show up in your account the next business day.  The fees will all come out at one time the first business day of the next month.

5.Swiped or Card Not present accounts:  Based on how you want to process and if you want to integrate your credit card processing with your Home Inspection Software, you can get either one of these types of accounts.

Advantages of a Square type account:

1.No monthly fees:  If you do 3 or fewer inspections a month on credit card, the fact that there are no monthly fees means this type of account will save you money.

2.Simple fee structure:   Square has two rate categories, 2.75% for swiped and 3.5% + $.15 cents for card not present.  You will always know up front exactly how much it will cost you to take a card.

Disadvantages of a Square type of account:

  1. Higher percentage when you use it.  On average, you will pay about 1% more on every transaction when using Square instead of a traditional account.
  2. No Integration: There is no way to integrate your Square account with your Home Inspection software.
  3. Daily Billing:  The fees will be taken out before the funds are deposited in your account.  So, if you do a $400.00 card not present inspection,  $385.85 shows up in your account.  This makes it more difficult to reconcile your accounts since the dollar amounts on your invoices will not match the deposits in your account.

Disadvantages of traditional account:

  1. Monthly fees:  Generally range from $5.00 per month to $15.00 per month depending on the type of account and who you use (remember, even though there are monthly fees, the percentages are much lower.  So, as long as you are doing 3 or more inspections a month, this account is still cheaper than a Square type of account).
  2. Fee structure is not as simple: Their will usually be three tiers and all of your transactions will fall into one of these tiers.  It is not a simple one rate fits all like Square has. Although it is not as simple as Square, once you get used to it, statements from traditional accounts are easy to understand.

To summarize, both Square and Traditional credit card processing accounts have positives and negatives.  If you have any questions about which type of account is right for you, please don’t hesitate to give us a call.

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