6 ms·

Every time someone talks about Square, they call their service "disruptive". Sorry if I'm being dense, but what is it that they're disrupting?

danilocampos 15y ago
The abusive, overly-expensive and often insecure cartel of payment terminal/merchant account service providers.
- mildavw 15y ago
  I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?
  - Qz 15y ago
    You are not their target customer.
  - zedpm 15y ago
    If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.
  - pitdesi 15y ago
    I guarantee that you don't have 1.79% + 22 cents for all transactions. You've got tiered pricing, which is mostly a bait and switch scam. http://feefighters.com/blog/tiered-pricing-for-merchant-accounts/ http://feefighters.com/blog/tiered-pricing-for-merchant-acco... If you'd like, you can email me your statement and I'll tell you what you're really paying
    - mildavw 15y ago
      That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.
- jcnnghm 15y ago
  How exactly are they disrupting that? They are significantly more expensive than my merchant services provider. The only place they may have an edge is low volume, low price, transactions.
  - dmix 15y ago
    Disruptive technologies generally target early adopters first at a higher cost. Then once they move to a more mainstream market the prices drop.
    - namityadav 15y ago
      Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology http://en.m.wikipedia.org/wiki/Disruptive_technology
  - chopsueyar 15y ago
    What kind of process did you go through to get your merchant account? What kind of process does one go through to set up a Square account to take payments?
sliverstorm 15y ago
I imagine they must be making some vague reference to 'the status quo', nothing more
- danilocampos 15y ago
  Then you'd imagine incorrectly – see above, there's an entire industry around accepting payments for goods and services. The economics are often terrible and the UX sucks for everyone. Square is disruptive because it's better for everyone – the merchant and the customer. The only one getting screwed for a change is the payment processor. Hence, disruption. About time, too.
  - enjo 15y ago
    How is the processor "getting screwed" here? Again, for a great many businesses Square is the (significantly) more expensive option. I get that they're killing it at craft fairs, but I'm the with the thread-parent...I don't see what the "disruption" is here. *edit: Re-reading this I realize that it seems like I'm implying that Square is a bad product... which isn't what I'm saying. I think they're going to make insane amounts of money (I'd invest in them given the chance). They can be huge without being truly 'disruptive', however.
    - khafra 15y ago
      I showed the Square reader to my hippie friend who sells hand-made jewelry in an outdoor booth at a beach resort. He thought it looked pretty cool, and was seriously considering buying an iPhone and service plan just to use it. At his usual transaction size and volume, traditional credit-card payment systems weren't that great a prospect. That's what a disruptive technology does.
superchink 15y ago
I believe those types of comments are referring to Square drastically lowering the barrier of entry for accepting credit card payments.
SandB0x 15y ago
You gotta disrupt to get ahead. This can only be achieved after rejection therapy and pivoting.
thinkcomp 15y ago
Nothing. Square further propagates the status quo (plastic cards). There's no disruption involved. That's why Visa is an investor.
- roc 15y ago
  It looks more like a trojan horse to me. If they become the new merchant-interface, there's nothing stopping them from offering an alternate payment mechanism that doesn't rely on credit or debit cards.
  - sliverstorm 15y ago
    Nothing stopping them- until Visa buys them.
    - goatforce5 15y ago
      Building the technology that could support Visa/MC/Amex alternatives and the userbase that gives it critical mass is probably the best way to get bought out by Visa/MC/Amex at an inflated price. No one says they actually have to ship their alternative payment system.
  - jes5199 15y ago
    I'm an engineer at Square, so I can neither confirm or deny such speculation ... but in an interview with Wired, CEO Jack said "People understand credit cards. They know exactly what to expect from them. They’re used everywhere. But Square is payment-device agnostic. It doesn’t matter how you pay. Some of our users accept only cash." http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1 http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1
    - thinkcomp 15y ago
      Why not accept FaceCash then? The rate is 1.5%, much lower than what you charge now.
  - iloveponies 15y ago
pbreit 15y ago
Getting a pseudo-merchant account and a swiper for $0 could be fairly disruptive. It's a massive, very customer-unfriendly, very entrenched indusstry.
mbizzle 15y ago
Setup is effectively free and incredibly easy. They're disrupting the gorillas of merchant services, by tapping into a market that your Visas, MasterCards, AMEX haven't been able to get to: local, small business owners. It's disruptive because it changes the customer demographics for some of these businesses and the way they think about payments (customer analytics, payment options, loyalty programs). Square is poised to gain market share very quickly AND there's a huge play to be made in emerging markets where the mainstream guys haven't found great traction and smartphone usage is growing rapidly.

danilocampos 15y ago

The abusive, overly-expensive and often insecure cartel of payment terminal/merchant account service providers.

mildavw 15y ago
I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?
- Qz 15y ago
  You are not their target customer.
- zedpm 15y ago
  If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.
- pitdesi 15y ago
  I guarantee that you don't have 1.79% + 22 cents for all transactions. You've got tiered pricing, which is mostly a bait and switch scam. http://feefighters.com/blog/tiered-pricing-for-merchant-accounts/ http://feefighters.com/blog/tiered-pricing-for-merchant-acco... If you'd like, you can email me your statement and I'll tell you what you're really paying
  - mildavw 15y ago
    That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.
jcnnghm 15y ago
How exactly are they disrupting that? They are significantly more expensive than my merchant services provider. The only place they may have an edge is low volume, low price, transactions.
- dmix 15y ago
  Disruptive technologies generally target early adopters first at a higher cost. Then once they move to a more mainstream market the prices drop.
  - namityadav 15y ago
    Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology http://en.m.wikipedia.org/wiki/Disruptive_technology
- chopsueyar 15y ago
  What kind of process did you go through to get your merchant account? What kind of process does one go through to set up a Square account to take payments?

sliverstorm 15y ago

I imagine they must be making some vague reference to 'the status quo', nothing more

danilocampos 15y ago
Then you'd imagine incorrectly – see above, there's an entire industry around accepting payments for goods and services. The economics are often terrible and the UX sucks for everyone. Square is disruptive because it's better for everyone – the merchant and the customer. The only one getting screwed for a change is the payment processor. Hence, disruption. About time, too.
- enjo 15y ago
  How is the processor "getting screwed" here? Again, for a great many businesses Square is the (significantly) more expensive option. I get that they're killing it at craft fairs, but I'm the with the thread-parent...I don't see what the "disruption" is here. *edit: Re-reading this I realize that it seems like I'm implying that Square is a bad product... which isn't what I'm saying. I think they're going to make insane amounts of money (I'd invest in them given the chance). They can be huge without being truly 'disruptive', however.
  - khafra 15y ago
    I showed the Square reader to my hippie friend who sells hand-made jewelry in an outdoor booth at a beach resort. He thought it looked pretty cool, and was seriously considering buying an iPhone and service plan just to use it. At his usual transaction size and volume, traditional credit-card payment systems weren't that great a prospect. That's what a disruptive technology does.

superchink 15y ago

I believe those types of comments are referring to Square drastically lowering the barrier of entry for accepting credit card payments.

SandB0x 15y ago

You gotta disrupt to get ahead. This can only be achieved after rejection therapy and pivoting.

thinkcomp 15y ago

Nothing. Square further propagates the status quo (plastic cards). There's no disruption involved. That's why Visa is an investor.

roc 15y ago
It looks more like a trojan horse to me. If they become the new merchant-interface, there's nothing stopping them from offering an alternate payment mechanism that doesn't rely on credit or debit cards.
- sliverstorm 15y ago
  Nothing stopping them- until Visa buys them.
  - goatforce5 15y ago
    Building the technology that could support Visa/MC/Amex alternatives and the userbase that gives it critical mass is probably the best way to get bought out by Visa/MC/Amex at an inflated price. No one says they actually have to ship their alternative payment system.
- jes5199 15y ago
  I'm an engineer at Square, so I can neither confirm or deny such speculation ... but in an interview with Wired, CEO Jack said "People understand credit cards. They know exactly what to expect from them. They’re used everywhere. But Square is payment-device agnostic. It doesn’t matter how you pay. Some of our users accept only cash." http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1 http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1
  - thinkcomp 15y ago
    Why not accept FaceCash then? The rate is 1.5%, much lower than what you charge now.
- iloveponies 15y ago

pbreit 15y ago

Getting a pseudo-merchant account and a swiper for $0 could be fairly disruptive. It's a massive, very customer-unfriendly, very entrenched indusstry.

mbizzle 15y ago

Setup is effectively free and incredibly easy. They're disrupting the gorillas of merchant services, by tapping into a market that your Visas, MasterCards, AMEX haven't been able to get to: local, small business owners. It's disruptive because it changes the customer demographics for some of these businesses and the way they think about payments (customer analytics, payment options, loyalty programs). Square is poised to gain market share very quickly AND there's a huge play to be made in emerging markets where the mainstream guys haven't found great traction and smartphone usage is growing rapidly.