Square Space, Changing Small Business

by Eric S

In today’s society, hundreds of start up companies, small business and entrepreneurs are born every day. They have a great idea and want to share it with the world, make some money and live the “American Dream.”  But as you start a company there are many factors to think about.  The top 4 things that can make or break a startup are marketing, sales, quality products or services and a trustworthy team.  Following that is a system and a set of policies that must be created to make your business stay successful. According to SBA approximately 742,000 small businesses opened alone in the United States in 2010.

 

Today, I wanted to talk to you about a small startup company who has made it and changed the game by focusing on a simple solution for small businesses. The companies name is Square and there vision was to figure out a way to help small businesses and entrepreneurs be able to take credit card payments at an affordable flat fee rate either at there main office or on the go using your mobile device. Founded in 2009 by Jack Dorsey (yes the man who invented twitter) and Jim McKelvey they launched their first app and service in 2010. The key in their business solution is being mobile friendly and using something you already own. According to PC Magazine, “(Square) plugs into a variety of mobile devices and uses a simple, attractive interface to allow you to accept credit card payments.” Tis handy device is changing the game. During a Study of Consumer Payment Preferences, “we find that credit card revolvers are significantly more likely to use debit and less likely to … use check or cash.” (Sprenger)  That means less people in today’s society carry cash and prefer to pay with plastic for everyday items. This may be because using plastic allows you to carry as much spending credit as possible in a convent way.  Because of this small businesses need to be able to accept credit card payments or they can loose on the opportunity of potential buyers of their product or service.

 

Every Year I attend the LA county Fair and I personally have seen growth in many booth and small business owners using and advertising now accepting credit cards instead of there big “cash only” signs. Looking further I noticed they were accepting credit cards using square. Knowing one of the vendors at the fair who recently switch to square, in an interview,  I asked her if there was any difference in  using it vs. the traditional credit card machine. She said “Absolutely!” there are no hidden fees and no outrageous charges for roaming or not being in the area of service for her old bulky credit card machines. She also told me in her line of work taking credit card slips and trying to process later was always a hassle and very unreliable. Now she can know instantaneously if the card will be approved. She also likes the fact that receipts are emailed or texted to her customers phone helping her save on costs and go green. But what she liked most was the next day deposit of the money right into to her bank account.(Williams)

 

Today this small start up company has grown into a leader and trend setter of mobile credit card services. Square, which has raised $341 million in venture capital funding, according to CrunchBase, is now worth an estimated $3.25 billion. They started the trend in making mobile payment readers.  Currently Lipman, VeriFone, Hypercom, Intuit, Google wallet, OpenCuro Inc., PayNearMe, Dwolla, mPowa, ClientBiller.com, Storific, PayPal, SumUp, and Jusp are just a few companies now in the market trying to compete. (Crunch).

 

According to Pc Magazine, the way square works is it takes a small fee for every transaction. “If you swipe a credit card, the fee is 2.75 percent of the total transaction. If you key in the number manually, the fee is 3.5 percent. The fee hike is because keyed-in cards are inherently less secure, since you’re not swiping an actual card. You’ll see 97.25 cents of every dollar.” As other services have entered the market like PayPal, which charges 1.9-2.9 percent plus 30 cents, for small purchases  is the way to go since it’s a far better deal since there’s no fixed fee.

 

As square has evolved over the years it now allows merchants through the use of there website the ability to track their sales history, easily issue refunds, or download the transaction information to a  CSV file that can be imported into Excel, QuickBooks and other software they use in there business. You can easily link your bank account to your Square account, and Square will automatically deposit your earnings every 24 hours up to a certain limit. They also now offer a complete point of sale service system included in there free app that easily can be connected to a cash drawer and printer or scanner for easy store check out. They have also started the square Ecommerce mobile site which allows you to sell your items on there site sort of like Etsy and takes the same credit card transaction fee as if you were sliding  a credit card. It also allows you to find mobile business such as food trucks and retailers who sell at farmers markets and fairs.

Overall, I think square which had a simple vision of helping small businesses accept credit, has changed and evolved into a small business community which has changed the way small businesses and entrepreneurs do business today and in the future. Square also has plans of possibly going public soon in mid 2014.

 

Resources:

Kim Williams, Personal Interview, 2 Febuary 2014

Pierce David, Pc magazine, Web Article http://www.pcmag.com/article2/0,2817,2380586,00.asp

SBA Small Busniess facts, web article, http://www.sba.gov/sites/default/files/Startup%20Rates.pdf

Square, Crunch base, Web Article,  http://www.crunchbase.com/company/square

Sprenger, Charles, and Joanna Stavins. “Credit Card Debt and Payment Use.” Financial Services Review, 19.1 (2010): 17-35. (academia )

Sam Gutson, The 6 Most Important Tech Bombshells Coming This Year, Business Times web article  http://business.time.com/2013/05/01/time-tech-40-the-ten-most-influential-tech-ceos/slide/jack-dorsey-twittersquare/

 

15 thoughts on “Square Space, Changing Small Business”

  1. Square is also really useful for clubs. We used Square for MISSA last year to collect payments for the CIS banquet. It’s really one of the best pieces of technology to come to entrepreneurs, small business, and hobbyists alike. In a world where people only carry plastic with them, these target groups are now able to make sales and compete with larger companies.

    1. You can also use there register app to set up quick buttons to enter the amounts quickly and save time when having to work with lager groups of people doing the same transaction.

  2. I really enjoy the Square because for my CIS 310 class I had to present the Square and other POS providers and the Square managed to beat all them with their software, their prices and the small physical profile that the Square provides and with its device being completely free is appealing to customers. Good job!

  3. I like the idea that Square can easily fit in the earphone jack of your phone. Like you mentioned, there are a lot of competitors in the market like PayPal Here and Intuit GoPayment that came out after Square. I wasn’t really familiar with these kind of mobile credit card processing services so your article really helped me understand why they can benefit small businesses. Nice post, I learned a lot!

  4. Ive been seeing this more and more in small businesses that I visit. It has been spreading over the past few years and continues to grow.

  5. This is great because I’m sure I’m one of many who don’t carry cash around with them. I would be wary with the security though because it’s shared with a publicly used network.

  6. I think this technology is almost a must for small businesses, and especially businesses that don’t take place in a shop. I am a one of those people that only carry cards nowadays because cash is just too much a of a hassle to deal with. Square definitely made their product easy to use and compatible with a multitude of devices. I wouldn’t be surprised if Square explodes in the next few years.

  7. I’ve used Square to send and receive payments for goods and services at swap meets so I am familiar with how it works from both perspectives. It is definitely a very useful medium when cash isn’t an option. Using this in a more established business setting can also reduce costs associated with payment cards and also can streamline PCI compliance.

  8. As much as I liked your post, I am still afraid to use Square, mainly, because of their ability to hold your funds when there’s even the slightest suspicious activity. Also, not to mention their terrible email only customer support.

  9. I think this was a great topic to speak on because it showed how by providing a free tool such as the swipe instrument could easily grow your customer base. I was at a concert 4 years ago and I remember they were handing out the devices for free and this amazed me, I feel this strategy is something that is very ingenious. But the main thing is that they had the money to give out the devices for free to begin with.

  10. I’ve use square before and its an awesome attachment to your phone. Ive used it for instances in church events where we have charged for parking and it worked really well. I bought it at best buy where they even gave me 10 dollars to try out the product and reimbursed me the cost of the dongle.

  11. I have seen many small tea shop using it or using Paypal one. They just need to open the App, enter the amount and swipe the card, and then the transaction is completed. It is paperless, and little bit quicker via internet instead of phone-line type credit card machine. However, for security purpose, I still not quite trust it because the phone which uses for swipe the credit card may be specially modified or the high-jacked App(I believe it is easier to do it) to steal your card information.

  12. Square is incredible! It has definitely saved my organization so many times. Just recently, the organization made an extra $480 just from Square, in donations from people who “didn’t have cash”. This is an awesome start-up idea and it’s amazing how much they’ve progressed! I see plenty of mom-and-pop shops that are using iPads and Square to do business rather than a cash register.

  13. I’m really glad this was used for a topic. I love it when smaller merchants get empowered with tools like this. The big name credit companies have had an iron grip on this market for awhile and it’s solutions like this that step up the competition.

    After considering the rates of other companies you mentioned in your presentation, it’s safe to say that this product in particular is a fair wager. I’m going to keep this in mind next time I find myself in need of a credit channel when I do business.

    Great read, great topic.

  14. Square space is a great new technology for small businesses. It makes it a lot easier to purchase items on the fly if you don’t have cash on you. It’s also a great way to keep people and businesses safe especially if you’re on the go because everything is paperless and it’s all online.

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