I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?
If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.
That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.
Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology