Square Inc. launched Instant Deposit in the United States in August 2015. Participating sellers can elect to pay an additional 1 percent processing fee to have credit card transactions deposited into their banks in a matter of seconds. The move follows a two-month beta test conducted across the United States. The test involved thousands of merchants and more than $10 million in deposits, Square noted.
A payments aggregator established in 2009, Square has striven to find ways to remove friction from merchant boarding and acquiring. Its simplified pricing models and next-business-day funds availability have proven popular with millions of small business owners in the United States, Canada, Japan and Australia.
Square calls its Instant Deposit a "game-changer." The feature is located in the settings section of the Square payment app. Sellers can activate it by linking their debit cards to begin receiving funds from each credit card transaction, subject to the schedule and operations of their banks. Most debit cards are supported, the company stated.
Most sellers familiar with the Square payment platform are already receiving next-business-day deposits. The new expedited deposit feature was introduced as a way to further assist small merchants for whom access to cash is critical. One such example Square mentioned is Carlos Hernandez, owner of Solex Collectors, a specialty shoe retailer based in Maryland. Hernandez, who buys and sells rare and high-end shoes, finds that immediate access to funds helps him react quickly to rare buys and invest in his growing business.
Ferne Glemby, President of CardPlus Payment Systems LLC, provided a tablet paired with a Square card reader to a not-for-profit organization's fundraising event. Patrons were able to view merchandise on the tablet and make their selections. "It was a simple, understated way to raise money for a cause," she said. "The images could be enlarged when necessary, and the emailed receipts eliminated the need for paper."
While Square initially appealed to small and micro merchants, the company reported adoption of its payment app is growing among both large and small businesses interested in "unlocking the value of every sale." Its expanded suite of services includes nonbank finance products, marketing services, a money transmittal service called Square Cash, and Caviar, a food delivery service.
The company has found that its mantra, "buying and selling things should be simple," has resonated with merchants and payments industry professionals. Sean Murray, Owner of Raharney Capital LLC, a New York-based merchant cash advance consultancy, has an active Square account, using the service on a monthly basis to accept payments. While this might surprise his payments industry friends and colleagues, Murray said that just as Uber made obtaining and paying for a taxi too easy to ignore, Square made signing up and accepting payments too easy not to try. "Earlier this year, a client wanted to pay by credit card, and I immediately shuddered at the thought of filling out stacks of contracts with a payment processor, getting locked in for a period of time, getting hit on the downgrades, paying monthly minimums, waiting days to get my funds, and wondering if I would get charged for equipment," he said. "Instead I just went to the app store on my phone, downloaded the Square App, typed in my business name and bank account, and then key entered a transaction; the funds were in my account the next day."
Murray suggested that Square's Instant Deposit option goes beyond simple convenience. ISOs that dismiss Square's slightly higher pricing model fail to note that "there's a point at which even the stingiest merchant might not care when they realize how easy something is," he said.
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