Since the beginning, Square’s unofficial motto has been “Make Commerce Easy.” The startup is most recognized as a payments processor, but with a number of other products and services geared toward helping small businesses, Square is developing many sources of potential revenue outside of payments.
The San Francisco-based company currently employs 800 people (double last year’s figure) and has offices in Japan and Canada, with further international expansion in the works. While the Square dongle has made it easier for businesses to process payments quickly and efficiently, Square offers a number of other tools, including a digital receipt feedback tool called Square Feedback. On an emailed receipt, the customer can easily rate his experience with the merchant with a happy or sad face. Square Feedback also provides notifications when customers send feedback so issues can be resolved quickly, and gives merchants the ability to track the responses and see what changes or improvements need to be made.
Square has also been expanding its point-of-sale service, Square Register. Initially for small businesses, Square now works with bigger retailers like Whole Foods, Uniqlo, and Burberry. In April, Square announced that it would offer three new services — Pickup, Register Offline, and Inventory Tracking. Pickup helps businesses more efficiently manage pre-orders and makes it easier to manage pickup times. Register Offline lets merchants use Square Register even when they’re not connected to the internet — the service stores the transactions until an internet connection is present. With inventory tracking, businesses can combat low inventory issues with a web app that lets users track their inventory and set reminders when inventory levels reach a certain level. All of these services sound pretty simple, but they have an immense value for businesses.
Square Capital, Square’s new small business financing service, is an integral part of this growth, as well. We wrote about Square Capital earlier — Square analyzes merchant data and determines an amount it would feel comfortable advancing a business, offers the capital, and then Square charges a flat rate that is repaid from transactions made through Square.
Square says new customers will switch to the service to qualify for Square Capital. The rationale: If Square Capital enables a business to add a new location, then that in itself is a new business doing its processing on the Square platform, which means that it could potentially add other products such as Feedback. And Square Capital repayments are made through Square-based transactions, so Capital will help retain customers.
All of these broader initiatives from Square give the company a number of different revenue streams. Right now, Feedback is the only paid service (it costs $10 a month); the other features are free add-ons. As for the potential for premium services, Square told Bank Innovation to “expect more services” like Capital and receipt feedback “in the future.”
These new products and potential revenue sources are important for Square. An analyst recently said to me that “Square deserves a lot of credit for being so innovative, but [in the payment processing] market, it’s hard to make money off transaction fees when you can get undercut by competitors, which is what’s been happening to Square.” But, it’s clear that Square is focused on providing a group of services that fit the needs of small businesses, which can create new areas for monetization.
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Since the beginning, Square’s unofficial motto has been “Make Commerce Easy.” The startup is most recognized as a payments processor, but with a number of other products and services geared toward helping small businesses, Square is developing many sources of potential revenue outside of payments.
