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Square Just Got a Little Pricier

Starting February, the payment processor will drop its flat monthly fee and will charge all merchants a per transaction charge.

Alternative payment service Square is getting tougher on its merchants.

Starting February 1, Square will eliminate its monthly flat rate pricing in favor of a per transaction fee. Square lets merchants accept credit cards without the hassles and expense of signing up through a merchant bank.

Customer Snark

For entrepreneurs that do a relatively high volume of transactions--about $10,000 or more per month--it means you are going to pay more.

In simple terms, Square charges merchants 2.75 percent for every swipe or online sale. Square launched the flat fee service of $275 per month in late 2012. That service was capped at $250,000 per month. More than that amount, businesses paid $1 per transaction plus the 2.75 percent.

On its website, Square said the changes were the result of high-growth merchants feeling constrained by the limits:

"Over the past year we heard from many of our customers that caps and limits in the program were inhibiting growth--at a certain point, rates went back up the more you sold," the company wrote.

The change has angered some small business owners, who posted snarky comments on Square's Facebook page shortly after the San Francisco-based payments company announced the changes.

"Too bad the flat rate won't be available to make it easier on his business," says business owner Michelle Perez, in response to a Square post about how it is helping a new customer who dropped everything to start a hot-dog stand in Utah.

Last updated: Nov 15, 2013

JEREMY QUITTNER | Staff Writer | Staff Writer, Inc. and

Jeremy Quittner is a staff writer for Inc. magazine and He previously covered technology for American Banker and entrepreneurship for BusinessWeek.

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