2% can have a big impact. Many business have a gross margin of 20-30%. If you take Square's 2.75% from $100, that's $2.75 off a $20-30 gross margin – or 9.2% to 13.75% of the gross margin. That is a very large cost for a service seen as a commodity.
Square gets 2.75%. They pay their acquirer (I think Wells Fargo) Interchange+maybe a small fee. For example a swiped (card present) debit card purchase at a retail store is 0.80% + $0.15 (an example - this varies wildly). On $100 that's $0.95. They get $2.75. That's a 60% or so margin. It can also go down quite a bit depending on the type of card used which they really have no control over. For example it could drop to 20% on a corporate rewards card. I would say overall they probably have a very good margin.
