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Education
A disruptive innovation It is important to note,
So what kind of significance does Square stand to play in
the payments horizon? The term "disruptive innovation" however, that new features
was coined by Clayton M. Christensen in the late 1990s.
Time will tell if this description accurately describes the and divisions simply equal
legacy of Square. Let's look at the pattern that defines a
disruptive innovation. new expenses unless they are
successfully adopted. Square is
It typically starts with novel combinations of already
existing technologies, take for example a smartphone built from venture capital and
and a mag stripe reader. A new product, birthed out
of the combination, is then applied to an emerging at the moment faces imaginary
or underserved market. This would be a segment or
demographic that may have offered too slim of a margin gains and real losses.
or too little market share, or both, to make it worth the
immediate attention of the larger firms.
Christensen's theory states that it is not until this disruption forced to sunset payment projects such as Google
reaches the value networks of the larger entities that they Checkout (discontinued in November 2013) and Groupon
begin really paying attention. Unfortunately, at that point Payments (downsized in January 2014). It makes sense
it is typically too late to completely fend off the attack, as to keep a watchful eye on Square because its trial and
the disruptor has become established in said market. This error process helps us see what works. Square can be our
eventually impacts the overall price points or product litmus test of market demand. Its brand recognition is a
offerings of the pre-existing firms as they follow suit in hindrance and a blessing, as it allows us to benchmark
an attempt to retain their remaining market share. our value proposition and adapt to market demands.
On the horizon It will also be interesting to see how Square adapts to the
upcoming Europay/MasterCard/Visa mandate. The new
Forum member jgarza, who initially directed us to criteria for processing physical cards will force Square
articles about Square's long-term plans, theorized about to launch newer, more expensive hardware that may be
how Square could impact the future of payments. "I difficult or cumbersome to integrate with mobile devices.
think this will mold the landscape of payment pricing
considerably," jgarza said. "This move will take time to Hardware failure has been problematic for many
evolve and get correct, although when they figure out the mobile payment hardware solutions. While Square
model, pricing will change considerably for the standard has demonstrated resilience after its first-to-market
ISO." He demonstrated this point with the example of product launch, it is now stepping up to the complex and
Braintree which, like Square and Stripe, now offers a flat- competitive ISO market channel.
rate pricing program.
Bring it on.
DEE MALIK suggested the best way to protect ourselves
from Square, and the potential future impact of other dis-
ruptors, is by strengthening our industry's barriers to en- Tom Waters has been dedicated to the merchant service sales profession
try and having innovation occur from within. "Our chan- since 2001. Currently, he is responsible for cultivating relationships with
nel should not allow anyone … to play here easily. That is entrepreneurs in information technology, accounting, sales and market-
a mistake. … [T]his is what happens when a VC backed ing in his role as Sales Director of Bank Associates Merchant Services
venture, with more money than what to do with it, sees (www.bams.com). Using fresh and matter-of-fact training methods,
an opportunity." Whether those defensive acts can still be Tom has contributed to the success of thousands of agents, affiliates and
played at this point is to be seen. clients. He can be reached via email through t.waters@bams.com or via
New choices phone at 347-651-1065.
Square has grown by leveraging alternative payment
options in a market that was not being explored by Ben Abel is Regional Director at Bank Associates Merchant Services.
traditional payment processors. That growth has led to Since joining the team in 2006, he has risen through company ranks
successful rounds of venture capital fundraising, which with a paradigm that his success was measured by the success of those
potentially allow Square to retarget its audience to around him. Ben is a dedicated, pioneering trainer whose methods of
compete more directly with the ISO/agent channel. merchant services consultation have helped many agents expand their
portfolios in terms of processing volume, deal count and profitability. He
can be contacted at 347-866-9571 or ben@bams.com.
We have seen examples of smart, innovative companies
47
A disruptive innovation It is important to note,
So what kind of significance does Square stand to play in
the payments horizon? The term "disruptive innovation" however, that new features
was coined by Clayton M. Christensen in the late 1990s.
Time will tell if this description accurately describes the and divisions simply equal
legacy of Square. Let's look at the pattern that defines a
disruptive innovation. new expenses unless they are
successfully adopted. Square is
It typically starts with novel combinations of already
existing technologies, take for example a smartphone built from venture capital and
and a mag stripe reader. A new product, birthed out
of the combination, is then applied to an emerging at the moment faces imaginary
or underserved market. This would be a segment or
demographic that may have offered too slim of a margin gains and real losses.
or too little market share, or both, to make it worth the
immediate attention of the larger firms.
Christensen's theory states that it is not until this disruption forced to sunset payment projects such as Google
reaches the value networks of the larger entities that they Checkout (discontinued in November 2013) and Groupon
begin really paying attention. Unfortunately, at that point Payments (downsized in January 2014). It makes sense
it is typically too late to completely fend off the attack, as to keep a watchful eye on Square because its trial and
the disruptor has become established in said market. This error process helps us see what works. Square can be our
eventually impacts the overall price points or product litmus test of market demand. Its brand recognition is a
offerings of the pre-existing firms as they follow suit in hindrance and a blessing, as it allows us to benchmark
an attempt to retain their remaining market share. our value proposition and adapt to market demands.
On the horizon It will also be interesting to see how Square adapts to the
upcoming Europay/MasterCard/Visa mandate. The new
Forum member jgarza, who initially directed us to criteria for processing physical cards will force Square
articles about Square's long-term plans, theorized about to launch newer, more expensive hardware that may be
how Square could impact the future of payments. "I difficult or cumbersome to integrate with mobile devices.
think this will mold the landscape of payment pricing
considerably," jgarza said. "This move will take time to Hardware failure has been problematic for many
evolve and get correct, although when they figure out the mobile payment hardware solutions. While Square
model, pricing will change considerably for the standard has demonstrated resilience after its first-to-market
ISO." He demonstrated this point with the example of product launch, it is now stepping up to the complex and
Braintree which, like Square and Stripe, now offers a flat- competitive ISO market channel.
rate pricing program.
Bring it on.
DEE MALIK suggested the best way to protect ourselves
from Square, and the potential future impact of other dis-
ruptors, is by strengthening our industry's barriers to en- Tom Waters has been dedicated to the merchant service sales profession
try and having innovation occur from within. "Our chan- since 2001. Currently, he is responsible for cultivating relationships with
nel should not allow anyone … to play here easily. That is entrepreneurs in information technology, accounting, sales and market-
a mistake. … [T]his is what happens when a VC backed ing in his role as Sales Director of Bank Associates Merchant Services
venture, with more money than what to do with it, sees (www.bams.com). Using fresh and matter-of-fact training methods,
an opportunity." Whether those defensive acts can still be Tom has contributed to the success of thousands of agents, affiliates and
played at this point is to be seen. clients. He can be reached via email through t.waters@bams.com or via
New choices phone at 347-651-1065.
Square has grown by leveraging alternative payment
options in a market that was not being explored by Ben Abel is Regional Director at Bank Associates Merchant Services.
traditional payment processors. That growth has led to Since joining the team in 2006, he has risen through company ranks
successful rounds of venture capital fundraising, which with a paradigm that his success was measured by the success of those
potentially allow Square to retarget its audience to around him. Ben is a dedicated, pioneering trainer whose methods of
compete more directly with the ISO/agent channel. merchant services consultation have helped many agents expand their
portfolios in terms of processing volume, deal count and profitability. He
can be contacted at 347-866-9571 or ben@bams.com.
We have seen examples of smart, innovative companies
47
