Square hopes its new checking and savings accounts, which build upon its debit card offering, will be attractive to small businesses who have struggled to gain access to more mainstream banking services, said Christina Riechers, Square Banking's head of product.
Deposits collected from small businesses will be lent back through Square Loans, she said. The industrial bank is part of efforts by Square to expand its revenue stream beyond facilitating card payments for small businesses.
This meant that the Reader devices were remarkably simple and inexpensive to manufacture. However, this simplicity came with a glaring disadvantage. Since the Readers were simple analog devices, some companies—including payment processing company Verifone—claimed that Square Readers were security risks. There were two specific partnerships that helped propel Square into the mainstream.
What made this growth even more remarkable was the fact that this growth had been driven almost entirely by word of mouth. In , Square took its first tentative steps into the world of consumer financial apps when it unveiled Square Wallet.
Wallet was also highly ambitious from a technical perspective. It was among the first financial tech app to leverage geofencing, the now common practice of establishing virtual boundaries using WiFi, cellular, and RFID data to offer users timely, location-based incentives such as coupons.
This gave Wallet users instant access to a range of services, such as search functionality to find participating merchants nearby, user reviews of stores, menus, contact information, images, and directions. Wallet aimed to remove as many obstacles as possible between a consumer and a satisfying transaction, including the need to present cashiers with a physical card. Dorsey saw a future in which payments were byproducts of everyday interactions, not the focus.
Wallet ultimately failed, but it proved that Dorsey and his team had a larger vision of what Square could be as a company and its role in the rapidly changing landscape of consumer finance. Square continued to solicit venture funding throughout As for product innovation, we will do a lot with the receipt. The second pivotal partnership that drove massive growth for Square was an agreement that the company entered into with Apple in Square understood that the true value of its Readers was in the experience.
The company could have sold its Readers as a retail product and would have likely grown at a similar pace. This effectively removed any potential objection to trying Square on the basis of cost and significantly reduced the already-low barrier to entry. In addition, the availability of Square Readers at Apple stores gave the emerging brand even greater credibility in the eyes of consumers.
In August , Square negotiated a partnership in which coffee retail giant Starbucks would use Square exclusively to process card payments in 7, of its locations.
Before Square, any number of companies could have easily developed a similar product—but nobody did. McKelvey and Dorsey could have focused on small businesses as their initial target market, such as coffee shops, florists, and bakeries.
Instead, they chose to focus on individual entrepreneurs like McKelvey. McKelvey and Dorsey smartly identified solopreneurs who lacked any means of processing card payments as the potential Square users with the greatest need for a solution. Processing card payments was only half of the equation Square hoped to solve. The ability to accept credit card payments was a huge problem for small businesses—but so was the fact that most small businesses had little to no actionable sales analytics data.
This prompted Square to release its Register product in May Essentially an iPad that came preloaded with Square software, Register was designed as a replacement for entire cash register systems. The product was released as part of a limited nationwide launch across the U.
It really was an effortless, frictionless experience. After a period of such explosive growth, Square was ready for the next phase of its plans for global domination—and it set about accomplishing these plans by refining its product and with a series of strategic acquisitions.
By , Dorsey and his team realized that Square had significant commercial potential beyond its mobile Reader product. During this period, Square expanded up-market, targeting larger businesses with higher ACVs by building out its product to become a dedicated point-of-sale system and making strategic acquisitions.
Square kicked off by launching its first consumer-focused app, Cash. Essentially a means of sending and receiving money between users, Cash was initially limited to employees of Box, Pinterest, and Twitter during its closed beta period.
Funds could be sent near-instantaneously, a very attractive alternative to the often days-long wait to transfer funds between two checking accounts. The key differentiator was that Cash felt much faster and was actually fun to use. Solutions such as Square Capital, Caviar the food ordering and delivery service it acquired and Instant Deposit which puts money into merchant accounts immediately not only helps its existing SMB customers navigate the changing retail world in which they were operating but also recruits larger merchants to the portfolio.
Square has come a long way from being an mPOS solution for cash-based glass blowers and farmers market purveyors. Square Market made it possible for any of those sellers to create a store on its platform for free, provided they run their transactions thru Square, of course.
For larger merchants, Square Market syncs up items sold in their physical stores via Square Register so that inventory counts and product availability remain accurate across all channels.
Square also cites evidence that those loans are extending opportunities to those who might not otherwise get financing. Among sellers who have accepted a loan from Square Capital, 54 percent are women and 46 percent are men; among millennial business owners, 60 percent are women and 40 percent are men. Square also reports that access to all of the services in their portfolio are helping tiny businesses get bigger, in addition to attracting larger small businesses.
In the U. Cash Pro is the SMB version of Square Cash and does enable bank-to-bank transfers in addition to debit card transactions for a 1. In the fall of , Square Cash added a virtual debit account to the mix, meaning that a recipient can opt to create a virtual Visa debit card on which to apply those funds — and then spend it anywhere online that Visa is accepted.
On the hardware side, in late , Square rolled out its latest generation of card readers that were both chip- and Apple Pay-compliant. It also invested in accelerating the speed of its EMV card readers. A firmware update reported earlier this year that the typical time a person has to wait for their EMV card to be read was reduced from an already fast 4.
He served as the 71st Secretary of the Treasury. No one should be left out of the economy because the cost is too great or the technology too complex. Download all images. Board of Directors.
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