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E-commerce startup Shopify only got into brick-and-mortar commerce last August, but it’s already retooling its transaction structure with the aim of making it a more competitive option to rising in-store payments giant Square. It recently updated the per-swipe rates it’s charging on credit card transactions for its Apple(s aapl) iPad-based point-of-sale system.
Shopify actually raised the percentage it takes off each transaction, but it has eliminated the per-swipe fee on every card purchase. For instance, its basic rate transaction charge has increased from 2.5 percent of purchases to 2.7 percent, but it no longer charges the 30-cent fee on every transaction. That winds up being a big benefit to merchants who do a lot of transactions for low dollar amounts, though merchants who deal in larger amounts end up paying more under the new rates (for the basic plan the crossover point is $150).
Whether the new fee structure will bring Square customers over to Shopify remains to be seen. All of Shopify’s rates are now lower than Square’s standard 2.75 percent on each transaction, but unlike Square, Shopify charges a monthly subscription ranging from $49 to $199 a month. So in the case of its basic plan, a business would need to handle more than $98,000 a month before Shopify becomes cheaper than Square.
Of course, Shopify’s biggest selling point is it manages both e-commerce and point-of-sale transactions, letting businesses consolidate their online and in-store sales from the same platform. Square only recently began targeting e-commerce with the launch of Square Market. Shopify’s rates might not always be cheaper than Square, but they might be compelling enough to convince its growing base of e-commerce customers to trust Shopify with their brick-and-mortar commerce, too.