It&#x27;s not just Starbucks. He did those calculations based on the interchange fees Square pays to Visa&#x2F;MasterCard&#x2F;AmEx compared to the flat 2.75% it charges merchants.<p>To swipe a debit card, Square has to pay at least $0.21 + 0.05% per transaction. 2.75% of any amount less than $7.75 doesn&#x27;t cover the $0.21 fixed cost. They lose money.<p>Same deal with credit except it&#x27;s $0.10+ (and 1-3.5%) instead, so they&#x27;re only losing money on every swipe under $4.<p>There&#x27;s also some amount of markup over interchange going to their underwriting banks (JP Morgan Chase and Wells Fargo) which makes the minimum charges at which there&#x27;s any profit even a bit higher than that.<p>Basically, coffee shops are loss leaders for Square.