The Truth About Square

By  |  Monday, May 23, 2011 at 9:40 pm

There’s lots of talk today on mobile payment processor Square’s outstanding results. 500,000 readers shipped, 1 million transactions so far this month, $3 million in transactions per day.

That’s impressive. There really is a real need out there for the everyday consumer to have a method to accept good old plastic. I can tell you personally that I rarely carry cash anymore: it’s just so much simpler to swipe.

Square’s rates aren’t horrible (although not great either): 2.75% for each swiped card, or 3.5% plus 15 cents for manually entered ones. So its not surprising they’re doing well.

At the TechCrunch Disrupt conference in New York City Monday, Square announced that it was improving its iPad experience to offer businesses an alternative to the cash register, as well as offering a new feature called the Square Card Case, which would be available through participating Square Register retailers (its not available on the App Store publicly).

For businesses, the iPad app is attempting to replace the cash register. Square improved the app with tracking functionality which makes it easier to follow sales trends, and the register interfaces with the Square Card Case app to allow for quicker transactions.

In simplest terms, customers will be able to use the Square Card Case app to pay for their transactions, as well as see purchase histories. In addition, the customer will be able to place orders for products or services from the app, and receive customized offers based on purchase history.

Since Square will already have payment details, the purchase will be done without any need for interaction from the merchant’s end, and the order would be processed in that merchant’s cash register automatically.

All of this seems really interesting, but I’d hardly call it disruptive as TechCrunch’s Leena Rao says it is, or for that matter quite a few of the bloggers there. As the go-to guy on technology for a local business, I can tell you I wouldn’t buy into this system — and we’re looking for a new system. Frankly, it’s just not up to snuff for modern retail uses.

I’ve taken a look at the app and its kind of disappointing. First off there’s no barcode support at all, thus this is useless for just about any business outside of restaurants. There’s also no easy way to run end-of-day reports — something most bookkeepers will tell you that is necessary to make sure your books are straight. Businesses need point-of-sale systems to be fully functional, and Square isn’t.

The Card Case app? It’s essentially a walled garden. Only 50 businesses in the entire country use it (although more are coming, the company has said). These types of closed systems never seem to work well, especially when you haven’t built the network up first.

Square has grown impressively, but mainly among consumers. That seems to be the ideal market for this product. I’m not sure if this is a viable solution outside of that — after all, who wants to spend $500 on a tablet for a cash register when there’s plenty of cheaper options out there, including a fully functional computer that can be used for other business operations?


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36 Comments For This Post

  1. Joe's Pferdebilder Says:

    I am not sure why we still using a magnetic card readers whereas chips are so inexpensive nowadays.

  2. Jim Says:

    I’ve been a user of FaceTime since I got my hands on the iPhone 4 just days after release. To me it has always been more of a gimmick and not really something that I would use often. However, two PLNDR promo codes events occurred recently that shed a new light on the service.

  3. Rick Says:

    Valid points, but I think this is probably just a first step for them, with additional functionality to occur later.
    It is, actually, a very Apple like approach – creating a "walled garden" with a focus on consumers, with the expectation that businesses, especially larger ones, will then experiment on their own and try to find a way to make it fit in (maybe bar codes need to be a thing of the past?), if enough consumers are using it.

  4. Its Wilder Says:

    Re: Barcodes
    What about the camera's in the new iPad? Couldn't one or both of them be utilized in conjunction with an app such as Red Laser to scan barcodes? What if Square was working on a partnership with just such a company?
    My point is building off what Rick said above. It's easy to see how this type of device+software could replace traditional setups in the coming years. Square, might not have it ALL figured our right now, but if enough consumers want it, it'll happen.

  5. @bartmayo Says:

    Yep, this is a lousy solution for any business other than a restaurant. (Sarcasm) I have a Computer Repair business that is primarily onsite for Residential or Small Business customers. I use Quickbooks Online for my accounting so I can create and email an invoice immediately. The Square App on my iPhone allows me to take a picture of the invoice and immediately accept the Credit Card without the $45 per month Merchant Fee. And that's $45 even if I do not have a transaction for the month.

  6. Su2lly Says:

    Yes, it's perfect for you in the field. But I can't see this working in, let's say, a retail clothing shop. Correct me if I'm wrong but there seems to be no way of tracking inventory, it's only a payment system. So yes, this will work for some but not for most. I think it's a good product. I follow Jack on Twitter and wish him well with it but it's not the business model changer some would have us believe.

  7. vigvee Says:

    Square is just cool liek that. WOw.

  8. @joelhousman Says:

    There are tens of thousands of small businesses, who don't need inventory tracking, whom Square is perfect for. Like my Mother.

    She owns a hair salon in a rural small town. Up until a month ago she has been check or cash only. Never had accepted credit cards because the fees of the credit card machines + their high percentages they take from you were just to expensive for her. When I bought my iPad 2 I gave her my old iPad which she's now using Square on to take cards for the first time in her 30 years of running the business. It's great for her.

    Pooh pooh it all you want but get some perspective. Not all businesses need inventory tracking.

  9. Ty Henry Says:

    . . .but they ALL need accounting features for tax purposes. (FULL DISCLOSURE ALERT: I represent a company, Payjunction, where you don't need machines, yet can swipe on any computer AND create comprehensive sales reports) But is she's doing less than 5K/mo, Square is probably best for her.

  10. Mike Bass Says:

    $500 is not bad for a virus-free, no tech support required, extremely mobile computer (and monitor and card reader) in the iPad. Plus, the software is free. Square’s set-up may not have all the features businesses need, but don’t knock the price.

  11. Seth Says:

    I helped run a charity golf tournament a couple months ago. Square was perfect for us. We didn't want to get saddled with a contract for an event that only happened once a year. We couldn't be more happy with the result. But I don't know if I would want to use it on a daily basis. The cards couldn't be read by swiping half of the time which left us with entering manually (higher charge). Depending your location it can be slow to respond at times.

  12. Tom Says:

    Square likely won't be a game changer for large retailers, but as someone who's started up a small business, if we could have run cards like this over a smartphone, it would have been a lifesaver. For one *segment* of our business community, this will be a game changer.

    In an economy where a significant number of people people are ditching the job search and setting out on their own, a simple payment vehicle like this is very well timed.

  13. Jack Says:

    1 million transactions in a month? If an average business only did 33 transactions per day, that would mean that only 1,000 businesses had adopted Square. Hardly impressive. And 500,000 readers = 1 million transactions? That's not a pathetic adoption rate

  14. @zach_inc Says:

    RE: Adoption rate, agreed. 1 MM transactions a month at ~ 3% transaction fee is a GREAT, scalable business. I do agree about the bookkeeping piece being super important. If you look at Induit's Square clone card reader it auto-exports to quickbooks.

    This could be hugely valuable for Square's SMBs. Making accountants love you too will lead to a huge amount of new inbound business. I promise! 🙂

  15. Ed Oswald Says:

    I agree. I'm just confounded they'd release something like this without such an important piece for many businesses.

  16. Dan Reich Says:

    They are just getting started. It's like saying 4 years ago the iPod will be no good because it doesn't have iTunes.

    Just give them time.

  17. Mike k Says:

    Cheaper options? Please name one.

  18. stakenouchi Says:

    Are you kidding me, I can think of a handful of businesses that would benefit from Square this instant. Every time I go to the Farmer's Market, I think about how Square would increase someone's sales so much more! Non profits would hugely benefit from using Square. I could go on and on!

  19. Ty Henry Says:

    Nah. Non-profits wouldn't benefit because Square has no recurring billing feature, essential for non-profits who need to provide customized donation features.

  20. iPhone gloves Says:

    good news for iPhone users,with this accessory they can just pick up the credit card and pay anywhere

    touch screen gloves

  21. touch screen gloves Says:

    I agree. I'm just confounded they'd release something like this without such an important piece for many businesses.

  22. Mark Hernandez Says:

    I apologize for not being clearer… There is the whole SPECTRUM, from Point-Of-Sale systems at Home Depot that can manage running balances of barcoded gift cards and interface to inventory management systems managing hundreds of thousands of inventory items, all the way down to ME taking a credit card when I sell that old projection TV at my garage sale.

    Square is for the bottom end, for the INDIVIDUAL, a totally untapped market. And from that end of the spectrum Square using the iPad app to stretch a bit up the spectrum beyond single items, handling say, a refreshment stand at a church bazaar.

    The problem here is that YOU have decided that the product is inadequate just because it doesn't handle situations much farther up the spectrum that it wasn't meant to address at all. I would go further than you and say it cannot handle 99% of the needs of business. But it DOES handle 99% of the needs of INDIVIDUALS.

    Just like the iPad itself is suddenly usable by, and interesting to a vast untapped population of people, the Square solution is suddenly usable by a gigantic untapped population of individuals. And the device is sent to you for F-R-E-E and there is no risk or money required to set it up and go. THAT IS DISRUPTIVE.

    The fact that Square cannot handle the needs of business is obvious, and it's only a problem if you mistakenly think it's supposed to. That is the error in your point of view.

  23. Jim Says:

    I use Square, and I like it a lot. The pricing scheme works for me too, as a small business. I maintain a separate, more traditional merchant account for online sales, but for markets and in-person sales, square works perfectly.

    I haven't seen anyone claim it can replace a whole POS system. But it is a way to make a credit card sale virtually anywhere. From the sidewalk in front of your big box store to on-site at a client. For a business, it is a very cheap extension, enabling sales anywhere.

    A side note… if you mean "disruptive" in the correct sense, I agree with you. Square is interesting. A tool for some people, sure. But I don't see this even getting close to replacing cash and checks for consumers.

  24. JoeV Says:

    I love using Square…It made it much easier to sell our items after our renaissance festival shows. We usually would be cash only but we can now take CC because of Square. Many people love the idea of not having to pay with cash if the option is available.

    I also noticed another positive when using it. A few people would say that they had no cash and would come back after visiting an ATM. The ATM at the festival has a $3 fee for use and that doesn't include the out of network fee that their bank may charge. I would say that I could take the card as payment without a fee.

  25. Jakej Says:

    A user makes the ultimate and seemingly final decision to delete a file or an email message. Once that Delete key is hit, the data will be gone stop smoking forever, right? It’s actually extremely easy to recover a file or other item that has simply been deleted.

  26. Nick Says:

    At one organization where I worked, a termination was handled poorly, and the person was allowed to go back to his office unaccompanied to clean up his files. He ran through his hard drive and deleted a bunch of files, and then opened Outlook and deleted all of his email messages. Later that day, his supervisor called me in a panic indicating that all of this information had been deleted. I was able to recover the data by remotely connecting to the machine, recovering the deleted files from the how to stop smoking Recycle Bin (yes, the Recycle Bin), and then opening Outlook and undeleting the messages. The recovery process took about two minutes, and all of the information was back where it needed to be.

  27. Real estate Toronto Says:

    "good news for iPhone users,with this accessory they can just pick up the credit card and pay anywhere"

    Sorry are you sure about that? I am about buying an iPhone and have not chosen between 4 or 4s could you please tell me what edition should I purchase if I want to pay with my credit card through this accesory?

    Thanks in advance

  28. pellet mill Says:

    That would be a good sign that Apple is taking the best of Jobs’s approach and tweaking it to meet current market needs and opportunities.

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  31. Bill Barber Says:

    at the end of the day with my 1.6% swipe deal through the bank ends up being 2.66% with all of the "other" charges. So it really isn't a bad deal at all. Plus they take their fee out up front instead of waiting until the first of the month to snatch it out of your bank account.

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  34. Ty Henry Says:

    Why not have a company that can provide mobile device and online sales? You're unnecessarily replicating fees.

  35. mazapoint Says:

    the iPad app is attempting to replace the interchange registry. Paddle improved the app with chase functionality which makes it easier to move income trends, and the register interfaces with the Honorable Greeting Soul app to earmark for quicker transactions

  36. mary jo Says:

    I downloaded the square app for my ipod and just received the swiping device and attached it. i am testing it and keep getting an "unknow error" when I swipe a card. it gives no explanation. has anyone else had this problem?