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New Platform Fees are hurting small businesses

 

We’ve talked about how Upwork’s new fee structure, which was launched on June 21, will hurt both freelancers and clients, take a look at that story here, but what we failed to mention in that article is that many of Upworks clients are small business owners. Additionally, other platforms, like Square, allow for small businesses to process mobile card payments for what used to be a fair fee. Many small businesses look to these platforms to supplement small workforces and to make payment for their services easier. Now, these recent changes to Upwork’s and Square’s fee structures could prove disastrous to small business owners as they need to save every penny they can.

Square is now incorporating a 2.75% swiping fee, they used to charge a much cheaper $275 a month for their services. While Upwork is charging 2.75% for every payment made through the platform. “An entrepreneur could use their Square credit card reader to process up to $21,000 in monthly transactions for a flat-fee of $275 per month. That’s just .013 percent. Compare that to the industry standard charges that can be as high as three percent and it’s easy to get excited about those massive savings. But the fun times came to an end when Square made the decision to pivot to a 2.75 percent swipe fee. Those $21,000 in transactions are going to cost you $577.50 in transactional costs”. Reports Muhammad Azam of business.com.
As small businesses look elsewhere, it’s freelancers who will pay the biggest price.

 

Image source: theatlantic.com
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