{"id":594,"date":"2015-09-13T22:07:09","date_gmt":"2015-09-14T02:07:09","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/squaring-off-the-competition-how-square-will-change-transactions\/"},"modified":"2015-09-13T22:07:33","modified_gmt":"2015-09-14T02:07:33","slug":"squaring-off-the-competition-how-square-is-changing-transactions","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/squaring-off-the-competition-how-square-is-changing-transactions\/","title":{"rendered":"Squaring off the Competition: How Square is Changing Transactions"},"content":{"rendered":"

 <\/p>\n

Square: we\u2019ve all seen it. Every farmer\u2019s market, every craft fair, every food truck. But this revolutionary piece of hardware has exploded into a network of innovative solutions infiltrating all parts of the transaction sector. Ranging from near invisible hardware solutions, to elegant software interfaces, Square has the potential to revolutionize the future of transactions. \u00a0<\/span><\/p>\n

 <\/p>\n

White Space: White Square<\/b><\/p>\n

Square initially started as a solution to a growing problem: mobile businesses without mobile payments. In 2009, the connectivity offered by social media and the Internet offered more accessibility for people to start businesses, but the necessities of running one were still grounded in the mindset of \u201cbrick and mortar.\u201d Because credit card machines could only work with grounded connections, remote merchants could not access digital payments. This was where Square was key. They entered the market with a solution; replace the clunky, permanent hardware of the credit card machine, with a sleek, agile accessory that was inserted into the audio jack of any smartphone. With free hardware, and only a 2.75% transaction fee, they quickly divorced the merchant from the shackles of digital wires. What once was a mess of antiquated hardware and opaque pricing, was now as simple as the swipe.<\/span><\/p>\n

 <\/p>\n

\u201cStart Selling Now\u201d<\/b><\/p>\n

Square could have easily continued to operate as merely a hardware mediator for credit card access, but the company co-founders, Jack Dorsey and Jim McKelvey realized there was an untapped opportunity; untangling the convoluted world of commercial transactions. And was the moment in 2011 that Square launched Register; a small piece of hardware that fit onto the iPad, and transformed it into an instant register. This shift to dominate another piece of the transaction landscape led Square to go from only operating in the world of micromerchants, to emerging as a disruption in the restaurant space. Initially processing $1 billion annual payments with the phone Reader, the inception of Register exploded its sales to $12 billion.<\/span><\/p>\n

The successes of these innovations were multi-faceted. As hardware, the infrastructure for payment processing was no longer a large investment for a specialized machine, but an add-on to digital real estate we already own (iPads, iPhones, etc.). This also meant that as long as someone had the Square app, they could be a transaction node as well; any employee could serve as a point-of-sale. No longer were the moments of selling confined to a static piece of infrastructure.<\/p>\n

Another moment of value was in Square\u2019s offering of transparency. Unlike previous processing solutions where a contractor had to come and install the credit card machine, and its software was managed by the card company, Square allowed the merchant to be able to control their point of sale, and clearly understand the process to every transaction; they removed the black curtain. Naturally, this gave them the opportunity to innovate in the backend, and start to utilize the data collected to provide analytic solutions for merchants. Cue an entirely suite of new Square services: Dashboard, Employee Management, and Payroll. Now, there was finally a marriage between sales and management. And because of the interoperability of all the software, all steps required to run the business could finally speak to each other.<\/p>\n

\"3022182-poster-cafe-overhead\"<\/a><\/p>\n

The Future of Transactions<\/b><\/p>\n

Perhaps the most innovative moment in Square\u2019s trajectory though, wasn\u2019t their ability to innovate in the merchant sale space but rather their shift away from sales and to new types of transactions; effectively allowing them to \u201cown both sides of the counter.\u201d <\/span><\/p>\n

The beauty of digital transactions is their nature to be trackable, interoperable and fluid. The newest group of Square products strive to achieve this in the consumer market. Square Cash, is a peer to peer payment application, that is linked to your debit card or bank account, and allows for direct payments to other users, and receiving payments from non-users as well. Venmo-like easy payments, but with the use of \u201ccashtags (linked usernames)\u201d and the brand of Square. Now Square has digital real-estate in the phones of its consumers, the same people who used its interface to pay their merchants.<\/p>\n

What is interesting in this shift is not Square\u2019s desire to have a stake in the consumer transaction market, but the possible marriage of the payment infrastructure two players; the customer and merchant. Currently, that symbiosis is the credit card, but a physical piece of plastic seems antiquated when looking at the new relationships formed by a digital transfer. Because now, for the first time, Square has the possibility of eliminating the intermediary, the credit card, and serving as a point of value exchange between a user\u2019s mobile phone, and the merchant\u2019s digital interface, without the need for extra hardware. This is the future of transactions.<\/p>\n

 <\/p>\n

Fair and Square<\/b><\/p>\n

Square has attempted to innovate in this middle space with products such as Caviar (an ordering app that allows pre-ordering and instant restaurant pick-up), Square Payroll (an tool for business owners to process payroll for employees), and the newest piece of hardware, Square Contactless and Chip Reader (hardware that accepts Apple Pay and chip cards). Although the credit card has yet to disappear, and some of Square\u2019s products have discontinued (Square Order in 2015), it seems like the company has set itself up in an opportunistic space to become the forefront leader in dominating the entire transaction cycle. <\/span><\/p>\n

 <\/p>\n

http:\/\/www.fastcompany.com\/3033412\/internet-of-things\/back-to-square-one<\/span><\/a><\/p>\n

http:\/\/techcrunch.com\/2015\/08\/11\/square-has-both-the-hardware-and-software-to-help-businesses-of-all-sizes\/<\/span><\/a><\/p>\n

https:\/\/squareup.com\/<\/span><\/a><\/p>\n

http:\/\/www.fastcompany.com\/3033453\/match-or-mismatch<\/span><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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