Square Too Expensive? Try These Alternatives / As Square cancels flat fees for small businesses, it's time to review your other payment processing options.

Erik Sherman for Inc. writes: It was too good to be true for too long. Square, the innovative start-up that turned smartphones into credit card processors just killed its flat fees for small companies, effective in February. Instead of charging $275 for up to $21,000 in monthly transactions, the company is moving to a 2.75 percent swipe fee, or 3.5 percent plus $0.15 for each manually entered transaction.

To compare, 2.75 percent of $21,000 is $577.50, which is $302.50 higher than the old monthly fee. If you can swipe all the transactions, then the only way to keep your fees with Square under that $275 number is to process no more than $10,000 in monthly transactions. Not exactly a smart goal for an entrepreneur.

According to the Wall Street Journal, Square said customer feedback claimed that flat monthly fees inhibited growth. Although you could argue that, mathematically, limiting sales to avoid additional processing costs might make sense, depending on your business volume and margins, it's hard to imagine any entrepreneur passing on growth to game credit card fees.

No, this is likely a move to increase revenue to satisfy investors and possibly make a rosier-looking story as Square reportedly explores an IPO and the company looks for profitability--in 2015.

The problem is that Square has done a good job marketing itself--reportedly it has more than four million customers--and probably thinks that it can make the change and that businesses will accept it. However, if a vendor is willing to significantly change terms and conditions to favor itself once, what will keep Square from doing it again in the future?

Luckily, there are other choices. It might make sense to make use of them at least part of the time to keep your company from becoming too dependent on any one vendor.

PayPal

Like Square, PayPal has a free app and device it will send you. Like Square, you can accept Visa, MasterCard, American Express, and Discover. However, you can also accept checks for electronic deposit and generate and send electronic invoices. Fees start at 2.7 percent per transaction--a little bit less than Square--but if you manually enter the card information, the cost is like Square: 3.5 percent plus $0.15 per transaction.

Money is "usually available in minutes in your PayPal account." Square will have payments charged before 5 p.m. in your account the next day and, after 5 p.m., in two days.

That does make PayPal sound better, but it's not so simple. If you need the money in your business bank account, you'll now have to transfer the money, which could take a few days. But if you need immediate access and you have a PayPal merchant debit card, PayPal would likely be faster.

Intuit

The company's GoPayment system offers two payment schemes. Under one, there is no up-front fee. Charges are 2.75 percent per swiped transaction. If you enter the card manually, the charge is 3.75 percent with no 15 cent charge. That means on manual transactions up to $60, Intuit is less expensive than Square or PayPal. Over $60 and it's more expensive.

The other option is paying $12.95 a month, which gets you a swipe rate of 1.75 percent. Compared to the straight 2.75 percent of Square, a business would pay more until it processed at least $1,295 a month. Pass that and Intuit's monthly fee is a cheaper option. But, according to a salesperson who answered some questions online, you need to open an Intuit merchant account for credit card processing and money doesn't get to your bank account for two to three days.

These aren't the only choices. For example, VeriFone SAIL is another offering, but trying to verify the costs is difficult given the lack of intelligible details on the company's website.

No matter what you pick, be scrupulous in reading all the information available as there are various little limitations and special conditions that you might run into. For example, rewards cards, corporate cards, and certain other types may not qualify for the cheaper swiped processing rates. So, before you go with anything, read all the fine print.

EMS

EMS says it's been in the payment business for decades. If you hadn't heard of the company before, you might now, given that it offers a mobile credit card processing system with a 2.25 percent swipe rate and a manual keyed rate of 3.5 percent plus $0.15 transaction charge. Plus, there is 24-hour telephone support, and optional Bluetooth printer for paper receipts, and no increased swipe costs for business or reward cards.