Digital Transactions Authoritative, insightful and timely information for payments professionals
n
Square Inc. kept up the pressure on the traditional merchant-acquiring industry on Monday by introducing a souped-up version of its iPad app for brick-and-mortar merchants called Square Register with enhanced business-management functions. Meanwhile, the Isis mobile-payments venture announced it has struck deals with the major U.S. point-of-sale terminal makers to configure their hardware for Isis acceptance.
n
Square also announced that it is now processing $4 billion in annualized payments, double the $2 billion it said it was processing just in 2011’s fourth quarter. That’s an unmistakable sign that the start-up headed by Twitter co-founder Jack Dorsey is quickly taking root in the merchant community.
n
Square has focused mostly on part-time and very small merchants, enabling even consumers who only occasionally sell items to the public to accept card payments on their smart phones with software and a free magnetic-stripe reader from Square. The company indicated it would move up the merchant food chain last May when it introduced the first version of Square Register along with Card Case, the consumer-facing version of Square. Card Case enables consumers that have downloaded its app to use their smart phones to find Square-accepting merchants, view menus and special offers, and pay by merely opening a tab on the phone and giving their name.
n
The original Square Register for the iPad functioned as the merchant part of Card Case, enabling stores and restaurants to deliver loyalty offers and handle payments from repeat customers registered with Square. In payments, for example, the merchant’s Square app pulls up the registered Card Case customer’s photo, eliminating the need to swipe a card.
n
The upgraded Square Register offers more features and is a stand-alone app for Apple Inc.’s iPad tablet computer, according to a spokesperson for San Francisco-based Square. The system includes the card reader but also handles cash payments, which means the merchant could replace a traditional cash register with an iPad and a cash drawer, according to Square. The user interface enables merchants to display products or menus as they wish. It also now comes with free online business-analytics capabilities. The analytics feature includes a so-called dashboard that provides basic sales information and recent transaction history, including the number of payments, subtotals, tax, tips, refunds, and account deposits. It also shows several interactive data sets, breaking down sales by month, days of the week, time of day, and size of payment, according to Square.
n
Square also enhanced Square Register’s links with Card Case, which gives consumers a registry of Square merchants in a local area. Merchants are notified through Square Register when a regular customer registered with Square walks in the door. Square is maintaining its card-present pricing at a straight 2.75% of the sale.
n
It’s too soon to tell how well Square’s new features will go down with merchants, but it’s clear that Square is squarely in the running for established merchants that generate many more transactions per month than the part-time businesses or consumer sellers who make up so much of its portfolio today, according to Adil Moussa, a senior analyst and acquiring-industry analyst with Boston-based Aite Group LLC. “It’s going to be serious competition,” he says.
n
Many small merchants could probably get lower discount rates than 2.75% from independent sales organizations, Moussa notes, but they might find Square’s analytics services and links with Card Case to be attractive as mobile payments become popular among consumers. “At they end of the day that’s what merchants want, and they’re willing to pay for it,” he says.
n
One ISO that offers free business-management POS hardware and software to small merchants is Hampton, N.J.-based United Bank Card Inc., which does business as Harbortouch. Chief executive Jared Isaacman tells Digital Transactions News that he doesn’t see Square, whose basic franchise he describes as peer-to-peer payments, encroaching on Harbortouch’s turf, at least not yet. From what he’s seen of Square Register, the service is still best suited for micro merchants getting a bit bigger, not for managing accounting, inventory, bar codes, and other systems a full-blown small business would want. “It is a step up in that vertical market, but hardly a leap,” says Isaacman.
n
The Square spokesperson says Square Register is only for the iPad, by far the leading tablet computer, and that Square does not have plans to develop a version for tablets running Google Inc.’s Android mobile operating system.
n
Also Monday, Isis, the joint venture of mobile-phone carriers AT&T, Verizon Wireless and T-Mobile, said that the four major U.S. POS terminal makers would integrate and support the Isis Mobile Commerce application in current and future product lines. Isis’s electronic wallet for payments and product offers by mobile phone is based on near-field communication (NFC), a technology many industry observers hope will gain acceptance among merchants and consumers as the U.S. gradually replaces mag-stripe cards with the so-called EMV smart cards.
n
The terminal makers are VeriFone Systems Inc., Ingenico North America, ViVOtech Inc. and Equinox Payments, the U.S. operation of the former Hypercom Corp.
n
The announcement comes on the heels of Isis’s disclosure that JPMorgan Chase & Co., Capital One Financial Corp. and Barclaycard U.S. would be the first credit card issuers to offer Isis to consumers. On the merchant side, Isis is preparing for tests this year in Austin, Texas and Salt Lake City, Utah, that might include up to 1,000 Isis-accepting locations in each city.
