How Square Is Winning the M-commerce Battle
As 2011 draws to a close, it’s increasingly clear that the forecasts were correct—that this was the year that mobile commerce finally went mainstream.
For proof, look no further than the recent Black Friday retail frenzy: A record number of U.S. consumers turned to their smartphones and tablets to jumpstart their holiday shopping efforts, with digital retail services provider GSI Commerce reporting a 254-percent increase in mobile-based sales compared to year-ago totals. Black Friday 2011 also saw eBay-owned PayPal experience a 516 percent year-over-year increase in global mobile payment volume, with the number of consumers shopping via PayPal mobile services growing 371 percent year-over-year and 148 percent compared with the average Friday.
But what an established brand like PayPal did on Black Friday is one thing—what up-and-comer Square does every day is another. Led by Twitter co-founder Jack Dorsey, Square enables users to accept credit and debit card purchases anywhere and at any time via iPhone, iPad, or Android devices. Sellers input the transaction total, swipe the consumer’s card through a reader dongle that plugs into the mobile device’s audio input jack, and Square handles the remainder of the transaction, claiming a flat 2.75 percent fee. As of mid-November, the mobile payment solutions startup is now processing an astounding $11 million in daily transactions, almost triple the $4 million each day the firm quoted in late July.
Unlike the fledgling Google Wallet and other Near Field Communications-based mobile payment services that promise to replace traditional point-of-sale technologies, Square isn’t replacing anything—which is why it’s gotten so big, so fast. Instead it’s allowing small businesses with no previous access to conventional credit-processing hardware—SMBs like food trucks and crafts fair vendors, for example—to finally begin accepting plastic wherever their work leads them. That’s not an evolution; it’s a revolution. And it’s given Square an enormous head start in the race to become the de facto mobile payment standard.
Unlike the fledgling Google Wallet and other Near Field Communications-based mobile payment services that promise to replace traditional point-of-sale technologies, Square isn’t replacing anything—which is why it’s gotten so big, so fast.
Now, Square is expanding its model beyond purchases to become a full-fledged mobile commerce platform, complete with loyalty programs and other cutting-edge marketing programs. Square recently rolled out version 2.2 of its mobile app, giving business users the tools to reward consumers at the point of sale—merchants determine both the terms of the deal or reward offer, as well as what constitutes a “regular” customer (e.g., the number of purchases or repeat visits necessary to earn the perk in question).
“The merchant has never been able to extend the reward before or automatically recognize who their loyal customers are,” Square director of product Megan Quinn told The Wall Street Journal. “Now with this update, a business owner won’t just see a name when customers go to buy something, but they’ll see a ‘regular’ ribbon attached and offer a discount.”
The new customer loyalty solutions follow just weeks after Square revamped its Card Case application for Apple’s iOS, enabling consumers to make purchases and settle tabs without removing their mobile device from their pocket or purse. Card Case leverages location-based service enhancements in the new iOS 5 operating update to identify when a user’s smartphone is within 100 meters of a participating merchant—consumers who’ve opted in to the Card Case service and attached a credit or debit card to their Square account can automatically open a tab with the retailer and pay for the transaction simply by giving their name. (The merchant version of the Card Case app shows a photo of the user alongside his or her name to guarantee against fraud.)
It’s another perfect example of how Square is leveraging mobile innovation to improve relations between small businesses and their customers—and it’s why Square is suddenly the odds-on favorite to become the far-reaching, multi-faceted mobile commerce platform that slow-footed rivals like Google Wallet and the carrier-backed Isis were supposed to be.
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