A Boston-based startup named Punchey is attempting to challenge Square and the other mobile point of sale (mPOS) solution vendors. Instead of charging the flat 2.75% rate most mPOS solutions charge, Punchey charges 0.75% plus $0.10 per transaction on top of the interchange fees charged by Visa and MasterCard. This enables Punchey to pass on the savings from lower debit interchange rates the Durbin Amendment established.
Generally, Punchey ends up being a better deal for merchants on debit transactions over $18 and credit transactions over $67. Punchey also charges $19.95 for its card reader, whereas most mPOS solutions, including Square, provide merchants readers for free.
Punchey’s solution offers additional features beyond card acceptance:
For one thing, it aims to help brands with reputation management. For example, at the end of every transaction you can email or text a receipt to a customer as well as a review request that asks a customer how well you met his or her needs. The goal is to get customers to praise or complain to you first, as opposed to grandstanding on Yelp or your Google Local page. Depending on the kind of feedback a customer provides you could either post it on your company’s Facebook page or website or respond directly to an unhappy customer.
In theory, Punchey’s strategy makes sense. This pricing structure benefits merchants with average transaction sizes larger than the average merchant Square targets, such as mechanics and plumbers. The problem is that even when Square’s rates are slightly higher, most of these small merchants are attracted to the simplicity that Square offers. The hardware is all fee, the merchant only pays when a transaction is completed, and that payment is always 2.75% of the total transaction. Punchey’s customer review request is a useful feature, but it doesn’t make up for the additional complexity.
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