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Comment by nielsbot | Hacker News Reader

Really? Maybe for a merchant on Starbuck's level, but for small merchants, cc processors definitely charge more than 2.75%. Even if you get a lower percentage rate (impossible) you get charged 0.05 or more per transaction, plus a monthly service fee + monthly equipment fee, etc. Square is definitely a cheaper option.

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It's very rare for a brick and motar merchant to pay more than 2% processing fee. 2.75% is the high end for ecommerce accounts.

card present business (like your local coffee shop) pays less than 2% and their monthly fees are also lower. 2.75% range is usually for online businesses (card not present).

I might be wrong but I am under the impression Starbucks runs their transactions as card not present, at least in Canada and I'd suspect also the U.S. This allows them to swipe-and-done a credit card without requiring a signature or chip verification.

The act of swiping your card demonstrates its presence. The fact that there is no signature or PIN requirement is a result of the type of business that Starbucks is (Mechant Classification Code), and the typically low transaction amount.

This thread is full of misconceptions about payment processing which appear to be simple assumptions stated as facts. Having worked for one of the largest merchant acquirers in the world, it reminds me of glad I am not deal with any of that any longer.

Thanks for the information! Is there data on the magnetic strip that wouldn't be provided in a card-not-present transaction, or do the processors take the machines' word that the card was present?

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