Square has confirmed that it haslaunched a payroll product pilot in California as it continues to extend thepayment companies engagement with small and medium sized businesses. The product will provideboth employee payroll and related tax filing activities for the targetcompanies.
The move, along with other recentefforts to expand Square’s offerings, should provide new opportunities toexpand revenue beyond core payment processing services, thus providingdiversified margin enhancing offerings. The articlereiterates, Square CEO and Founder Jack Dorsey’s view that “he wants thecompany to offer products that make running a business easier.”
Payroll should be a naturalextension strategically for Square, according to Rick Hall, Director ofCommercial and Enterprise Payments for Mercator Advisory Group. Payroll and the associated management oftaxes and reporting has long been an issue for the SME space with variousmodels currently offered that are not necessarily solving for these issues. If Square succeeds in this space it will bethrough development of a true solutions-based suite of offerings that enablesSME’s to leverage multiple payables and receivables activities through onesource. Over the long-term, it will bedifficult if the solutions are viewed as siloed by potential customers.
Overview by Rick Hall, Director of Commercial and Enterprise Payments for Mercator Advisory Group.
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