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Cold water: Square Wallet was a big dud, as was the Starbucks partnership. That was their "greater plan" at one point. Square Cash is easy to use.. but operat

by abalone 12y ago

Cold water: Square Wallet was a big dud, as was the Starbucks partnership. That was their "greater plan" at one point. Square Cash is easy to use.. but operates at a structural loss of over 20 cents per transaction. There's plenty of issues when you look past the surface, particularly with the business model. They have not yet delivered a polished product that's enjoyable to use and makes lots of money.

potatolicious 12y ago
Agree. Not to mention Square doesn't exactly have a monopoly on "making useful things that users love", not by a long shot. If "proven ability to execute and release polished products that are enjoyable to use" is the bar for a high valuation and optimistic projections, we should maybe start throwing gobs of money at a lot of design firms and app consultancies.
swartkrans 12y ago
It's too bad about Square Wallet, I really liked that product, I don't know why it didn't take.
- abalone 12y ago
  What did you like about it? I forced myself to use it a bunch but in the end felt it didn't save me any time over swiping and signing. By the time you unlock your phone, open the app, wait for it to locate you, check in, say "hey i'm paying with square my name is x", wait for the cashier to scroll down and find you (sometimes you take a few seconds to show up), and wait for them to tell you you're good to go... it's really at best neck-and-neck with swiping and signing. At worst, slower and more awkward. Auto check-in was super unreliable. Apple Pay on the other hand is going to be a significantly faster way to pay (no signing/PINs) and also vastly more secure (no real card numbers!). Two real concrete benefits.
  - swartkrans 12y ago
    > What did you like about it? An easy way to see everything I've ever spent at a place. Not having to share credit card details. You can pay just by walking into the place and saying your name, you didn't have to have to pull your wallet out at all.
mcintyre1994 12y ago
Also nobody would use Square Cash over a plain bank transfer for a domestic (or more generally fee free through their bank) transfer, rationally speaking? PayPal have a product that is good enough unless you do such transfers really often to care enough, do they change something fundamental or are they left literally competing on fees with PayPal?
- abalone 12y ago
  I disagree that PayPal is good enough. To receive money via PayPal you have to link your bank account which takes verification and can be a PITA. Square Cash "refunds" it directly to your debit card. You just type in the number. It's also usually easier than using your bank's EFT interface to send money. However this debit mechanism is also what makes it so expensive for Square to operate (>20 cents per transaction in interchange fees).
inthewoods 12y ago
Completely on point - I don't think people realize the scale you need to achieve to make money in the credit card fee transaction business. Billions and billions are required. To me the more interesting question is who will buy them.
larzang 12y ago
> They have not yet delivered a polished product that's enjoyable to use and makes lots of money. The small business I work for recently switched to Square Register via an iPad and the Square Stand for all POS and it's pretty brilliant. It's a big step up from using a phone plus the regular little reader, and setup and use are quite simple even for our tech-illiterate employees. Judging by the popularity of the related receipt printer and cash drawers on Amazon, we're far from the only ones to make this jump recently. I don't know how much money they're making per $100 stand, but they've made the barrier to a modern flexible POS system so low that I'd be surprised if their share of the payment processing pie isn't growing quickly.
- abalone 12y ago
  It's not the stand they make money on, it's the 2.75% payment processing rate. That is higher than what competitors charge (closer to 2%), and as business grows that can add up to a significant premium. That is what drives them off of Square. So there's a kind of glass ceiling there.. to keep those customers Square would need to renegotiate a lower rate that trims down their gross margin. Square does have a really good niche in the mom-and-pop shops where 2.75% is an ok price given the easy of signup and free POS system. But at the same time there may be significant customer acquisition and support and fraud costs in that niche.

by abalone 12y ago

potatolicious 12y ago

Agree. Not to mention Square doesn't exactly have a monopoly on "making useful things that users love", not by a long shot. If "proven ability to execute and release polished products that are enjoyable to use" is the bar for a high valuation and optimistic projections, we should maybe start throwing gobs of money at a lot of design firms and app consultancies.

swartkrans 12y ago

It's too bad about Square Wallet, I really liked that product, I don't know why it didn't take.

abalone 12y ago
What did you like about it? I forced myself to use it a bunch but in the end felt it didn't save me any time over swiping and signing. By the time you unlock your phone, open the app, wait for it to locate you, check in, say "hey i'm paying with square my name is x", wait for the cashier to scroll down and find you (sometimes you take a few seconds to show up), and wait for them to tell you you're good to go... it's really at best neck-and-neck with swiping and signing. At worst, slower and more awkward. Auto check-in was super unreliable. Apple Pay on the other hand is going to be a significantly faster way to pay (no signing/PINs) and also vastly more secure (no real card numbers!). Two real concrete benefits.
- swartkrans 12y ago
  > What did you like about it? An easy way to see everything I've ever spent at a place. Not having to share credit card details. You can pay just by walking into the place and saying your name, you didn't have to have to pull your wallet out at all.

mcintyre1994 12y ago

Also nobody would use Square Cash over a plain bank transfer for a domestic (or more generally fee free through their bank) transfer, rationally speaking? PayPal have a product that is good enough unless you do such transfers really often to care enough, do they change something fundamental or are they left literally competing on fees with PayPal?

abalone 12y ago
I disagree that PayPal is good enough. To receive money via PayPal you have to link your bank account which takes verification and can be a PITA. Square Cash "refunds" it directly to your debit card. You just type in the number. It's also usually easier than using your bank's EFT interface to send money. However this debit mechanism is also what makes it so expensive for Square to operate (>20 cents per transaction in interchange fees).

inthewoods 12y ago

Completely on point - I don't think people realize the scale you need to achieve to make money in the credit card fee transaction business. Billions and billions are required. To me the more interesting question is who will buy them.

larzang 12y ago

> They have not yet delivered a polished product that's enjoyable to use and makes lots of money. The small business I work for recently switched to Square Register via an iPad and the Square Stand for all POS and it's pretty brilliant. It's a big step up from using a phone plus the regular little reader, and setup and use are quite simple even for our tech-illiterate employees. Judging by the popularity of the related receipt printer and cash drawers on Amazon, we're far from the only ones to make this jump recently. I don't know how much money they're making per $100 stand, but they've made the barrier to a modern flexible POS system so low that I'd be surprised if their share of the payment processing pie isn't growing quickly.

abalone 12y ago
It's not the stand they make money on, it's the 2.75% payment processing rate. That is higher than what competitors charge (closer to 2%), and as business grows that can add up to a significant premium. That is what drives them off of Square. So there's a kind of glass ceiling there.. to keep those customers Square would need to renegotiate a lower rate that trims down their gross margin. Square does have a really good niche in the mom-and-pop shops where 2.75% is an ok price given the easy of signup and free POS system. But at the same time there may be significant customer acquisition and support and fraud costs in that niche.