Monday, August 28, 2017
Curious about what the payments community thinks of Square's latest move, The Green Sheet asked a number of industry veterans how they view this development.
"It's a marketing move, a customer service move, a higher credibility move and an embrace of innovation move," said John Tucker, of 1st Capital Loans LLC. "I'm not sure if Square is profitable 'officially' yet or not, but I really appreciate Square coming into the market and being different. … [I]t's a shame that with all of the registered ISO/MSPs across the country, the vast majority of them look the same, sound the same, offer products in the same way and are nothing but copycats of each other. Then they complain about how processing is becoming a commodity. … Square (for all of its flaws) should be praised for continuing to be different, be bold and be unique."
Peggy Olson, founder and principal of Strategic Marketing, said Square's Showroom just may be a brilliant idea. "Technology selection and operation, including point-of-sale systems, are an Achilles heel for many SMB owners," she said. "They want it and know they need it, but simply don't have the time to devote to researching all the options and weighing the pros and cons of various configurations, specifications and benefits of a plethora of solutions."
Olson added that merchants also aren't technology experts and need low-maintenance solutions. "Square is taking a lesson right out of Apple's playbook, enabling SMB owners to look, learn and use their technology, while getting solid business advice and technical support in a friendly and personal setting," she added.
Calling the store opening an outstanding marketing gimmick, Steve Norell, Director of Sales at US Merchant Services Inc., said, "If I were 30 years younger, I would be doing the same thing." Apple also came to his mind. "But location is everything, not to mention the aesthetics," he added. "Look what it's like when you go into the Apple store."
The store is also seen as a step in Square's play for larger merchants. Jeff Fortney, Vice President, ISO Channel Management at Clearent LLC, is not particularly concerned. He recalled that many in the industry were panicked when Square entered the scene, but then Square became "more of a gateway drug" to true processing. "ISOs found ways to compete," he said, adding that Square served to introduce micro merchants to payment processing, and as those merchants grew, "they were quick to move into greener pastures."
"Square has been going after the better volume merchants for some time now and no one should be surprised," Norell said. "They have a decent POS and a simple pricing model. Anyone who did not see this coming was either sleeping or blind. The only way to respond is to do what others have already done. Offer a surcharge program. We have just entered that arena, and its better than even I would have thought."
Tucker agreed that Square has had its sights on larger merchants for some time. He hopes Square's store opening will motivate more merchant service providers to step up their innovation. "The processing space has been 'stuck' for years now in terms of innovation and game-changing technologies, risk management solutions, and more," he said. "It's time the industry gets a wake-up shock. Companies like Square will continue to drive down the price of processing (which is a commodity for most industries). Thus, the only way to survive is to finally embrace innovation and come out with new solutions to address complex market challenges of small business owners today."
According to Fortney, Square needs to step up its game, as well, to be competitive. "If Square wants bigger merchants, they will have to adapt their aggregator model to a true merchant ISO model," he said. "In effect, they become an ISO, and their form of pricing can create a challenge for them. They will be competing in the same field of battle so to speak. As such, it becomes a competition based on solutions, not a funky pricing model. In that, a good ISO can compete. In fact, Square suddenly becomes competition for Clover and others of that type. In the overall scheme, I think we overestimate the impact of a Square."
Olson added that technology features and functionality alone will not set Square apart in the payments realm. "Focusing on the customer experience will differentiate Square's brand in the hearts and minds of SMB owners in ways that they care about," she said. "That's what Square Showroom is all about. And if the Manhattan store is successful, you can bet that more stores will be rolled out around the country and the globe."
Square's Showroom is open to the public on weekends from 11 a.m. to 7 p.m. and, similar to Apple's Genius Bar, it is open by appointment during the week. Items in the pop-up store within Square's 197 Mulberry Street Showcase are expected to change weekly.
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