The only thing I can think of is because certain issuers/networks treat Card Not Present transactions differently for chargeback disputes. For example, depending on the network, if you fail to collect CVV or zip code, you automatically lose second presentment rights. I don’t know how CNP vs CP charges are priced, but the mere presence of different fraud liability treatment leads me to believe there’s a fundamentally different lens applied to online transactions, and real life (less likely to be fraud?) transactions.

Just my guess

Stripe is available is more countries.

Sounds like his app is for people who already are using stripe (existing online store, etc) and want to start using Stripe for in-person too.

Maybe they already have Stripe and don't do very many transactions this way, so they're not that cost-sensitive? For exceptions to their normal way of doing business, convenience might be more important.

My question is: why doesn't Stripe just include this feature themselves? Not enough of a market? But as an integrated feature it would certainly be higher (probably much higher) than what this third party app is making.

Stripe is supported in many more countries. In europe for exaple nobody ever heard of Square on the other hand people wait with open hand for Stripe to come to their country.

The margin might be ample, but the fact that it adds up to only $60K per month might not attract much competition. This is no unicorn, it pays the bills for a couple of families.

Market forced competition always has to grind up against inertia and switching costs.

There are several copycat apps that have tried varying pricing structures (some more like 1.3%) and others that tried to go lower (like 0.1%).