At Mercator Advisory Group, we’ve been writing on how payment processors are having to compete on the value they deliver around the payment as well as the payment itself. Reliable payment transaction processing may not be easy but neither was delivering five nines (99.999%) dial tone over the phone system and we all know that service expectation has become assumed. For those of us using mobile exclusively, the five nines benchmark has never been attained and yet we still use the mobile phone.
So, we’ve been watching Square’s evolution with great interest. Its three prong approach – flat rate fees, a customer-facing app to encourage sales at Square-enabled merchants, and payment register software for the merchant – wraps that flat-rate payment processing with services around the payment that build merchant loyalty and satisfaction with the Square system.
This annoucement involves the Square Register app for the iPad. Free software that is starting to approach enterprise-level point of interaction automation, the Register app has got to be giving smaller POS system vendors cause for concern. It doesn’t need a PC to run, just the iPad. A free card reader. And integration to an external cash drawer.
Square Register is a perfect example of value delivered around the payment itself. It’s that kind of capability that will keep merchants loyal and bring more in. With this kind of tool, Square is going beyond the highly mobile merchant who occasionally needs to take a credit card. Now, Square’s moving into the brick-and-mortar store. The power of app distribution and cloud-based services isn’t confined to Facebook posts. It’s about payments. It’s about business.
For Square, this new app is about giving merchants tools for free that big-box retailers have been enjoying for years. The company’s existing iPad app was released last year, and the app has seen increased adoption amongst brick and mortar businesses. So this app aims to provide merchants with even more features to help make running a business easier. And Square is betting on the iPad as the go-to device for smaller merchants to manage their businesses.
2011 proved to be an eventful one for Square. The company ended the year with over 1 million merchants using the mobile payments platform to accept credit cards (there are only 8 million merchants who accept credit cards in the US). In November, Square announced it was processing$11 million in payments per day (up from $4 million a day in July). Sir Richard Branson, Kleiner Perkins, Visa, and other investors poured over $100 million over the course of the year into Square, with the company’s latest valuation pegged at $1 billion. Not to mention the unveiling of retail deals with Apple, Wal-Mart, Best Buy, Radio Shack, and Target.
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