Purpose: 

This guide explains how an agent's earnings work when selling Square through our program.


PART I: How Margin Is Calculated

An agent's earnings are based on net margin, not the full processing rate.

  • Net Margin = Total Fees Charged to Merchant – Interchange Costs
  • This is the true profit available on the account


PART II: The 50 BPS Buy Rate

  • The 50 basis points (0.50%) is the agent's fixed cost (Schedule A expense)
  • It is not taken from the top (rack rate)
  • It is deducted after net margin is calculated

In short, agents should think of it as their “cost to access the program”


PART III: How Agents Get Paid

Once net margin is calculated:

  1. Subtract 50 bps (the agent's cost)
  2. Apply the agent's split (example: 70%)

Example:

  • Merchant rate: 3.00%
  • Interchange: 2.00%
  • Net margin: 1.00% (100 bps)

Now apply the model:

  • Minus 50 bps cost = 50 bps remaining
  • 70% split = 35 bps paid to you


PART IV: Don’t Forget Transaction Fees

Square includes per-transaction fees (like $0.15/txn), which add meaningful margin.

  • Example: At a $50 average ticket, $0.15 = ~30 bps
  • This boosts total margin significantly

Ignoring this will make deals look less profitable than they actually are.


PART V: Real-World Expectations

  • Average gross margins on Square deals: ~120 bps
  • Typical agent payout (at 70% split): ~50 bps

This is slightly lower than traditional processing platforms (~67 bps), but still strong and consistent.


PART VI: Key Takeaways

  • Agents are paid on net margin, not the full rate.
  • The 50 bps is a fixed cost, not a reduction to pricing.
  • Transaction fees and blended rates increase profitability.
  • Expect ~50 bps residuals on average with a 70% split.