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Square Expands Retail Footprint in Wal-Mart Deal
October 24, 2011
The number of locations where you can buy a Square card reader has just surpassed 9000 with the latest retail distribution deal inked by the company. Wal-Mart will now carry Square readers in all U.S. locations, joining Apple, Target, Radio Shack, and Best Buy in physical-world distribution arrangements with the company, according to Bloomberg News. Bloomberg's reporter, however, seems to confuse mobile payment acceptance with NFC-based contactless and other types of mobile payment on the consumer side of the transaction. Citing stats from Juniper Research and PayPal, Bloomberg grabs this wrong end of the stick and then proceeds to beat around the bush with it.
Square is targeting small businesses that may not be able to afford machinery that handles credit cards, Chief Operating Officer Keith Rabois said in an interview. The company is vying with EBay Inc.’s PayPal as well as providers of so-called near field communications to help consumers pay for things on the go. At stake is a mobile commerce market that Juniper Research predicts will surge to $670 billion in 2015.
“Payments have a lot of friction, a lot of distraction,” Rabois said. “We can’t eliminate all of that this month, but our mission is to make Square ubiquitous.”
Square’s technology lets U.S. businesses handle payments via Apple Inc.’s iPhone and iPad, as well as devices running on Google Inc.’s Android software. The card reader plugs into the headphone jack of the mobile device and lets merchants swipe customers’ credit and debit cards.
The device can be ordered free on the Web. The reader is sold at stores for $9.99, a cost that can be refunded online. Square makes its money from each transaction, with merchants paying 2.75 percent of the amount paid.
Square publicly launched last October and has about $140 million in funding, according to regulatory filings.
The company is betting that consumers will choose its system over near field communications, which lets phones function like credit and debit cards by waving them in front of a reader. The process requires customers to take out a phone and place it near a reader, much like they already do with a credit card, Rabois said.
“We don’t currently believe that NFC as a payment technology is likely to improve either the merchant’s experience or the buyer’s experience,” he said.
More than 800,000 of Square’s devices have been shipped to merchants. The company says it is processing more than $2 billion in payments on an annual basis. PayPal expects more than $3.5 billion in mobile volume this year and processed $29.3 billion total in payments in the third quarter, according to a statement by the San Jose-based company last week.
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