At some point over the past two and half years, most of us have handed our credit card over to some proprietor of a small business – whether to a cab driver ferrying you to the airport, or a food truck vendor down the block from the office – to have have them swipe it through a small card reader attached to their smartphone or tablet.
For the past few years, products from Square, VeriPhone and Intuit (GoPayment) have been offering something basic but previously inaccesible to many small and micro business owners: the ability to accept credit cards. When launched, these offerings were going up against giant financial institutions and forced to compete for customers who were thought of as “undesirable” and therefore traditionally ignored by banks – those too small and with too little or poor credit history to get a merchant account. Now that they’ve established themselves and are handling billions of dollars a year in transcations, the question is: What’s next?
For Square in particular, there are two big things on the horizon that could be bigger game changers than the initial offering:
Gaining, and retaining, vendors in the face of competition: Empowering vendors to accept credit cards is really just step one. As those retailers move from a cash-and-calculator business to swiping credit cards, they gain access to something else beside more sales – data, lots and lots of POS data. With each transaction comes information and an opportunity to improve their business, from inventory management to customer analytics. It’s big data for the little guy, which allows them to process and analyze data in a real-time manner that they previously could not. Square’s big competitor, Intuit GoPayment, is already ahead of the curve, having offered Quicken-branded POS software to small and mid-sized businesses for the past decade and allowing users to link GoPayment into Quicken’s POS offering. Square is now beefing up their software offering as they go from enabling payments to empowering with data.
Out-Googling Google: On the consumer side, Google Wallet and similar solutions are making customers more comfortable with using their phone as a means to pay, which Square has realized could one day render them irrelevant. So when Square introduced their own e-wallet offering, they included a feature that allows you to keep your phone in your pocket, or fanny pack if that’s your thing, and pay by merely using your name at certain retailers that you frequent most often. Not unlike Uber, dropping your name to pay for a latte offers a VIP experience to the masses.
And as of last week, Square is taking that notion one step further. Now not only can consumers use Square’s Wallet app to pay for their coffee at thousands of Starbucks outlets across the US, but now they can pick up a Square card reader for free ($10, but with a $10 rebate) at the register.
And I thought a “venti soy triple dirty chai latte” was a weird coffee order. I think “tall coffee and a mobile payment system” might be even more unexpected. With a $25MM cash influx from Starbucks last year, plus I’m sure all the gratis red eye’s they can handle, Square and the seemingly indefatigiable Jack Dorsey are shaping up into a serious force and change agent in the oft-staid financial services space.
As exciting as Square’s initial offering was, especially to food truck afficianados like myself, it’s what’s next for the firm that could be truly innovative and help turn your everyday financial transactions into something else entirely.