The Top 500 retailer buys Campus Deals, which offers mobile coupons to college students.
Square rounds out offerings with an iPad app designed to boost in-store sales
Merchants pay for Square’s mobile point of sale service as they need it.
Square Inc., a start-up that develops mobile payment acceptance apps, is betting that many merchants will want to use its updated iPad app as a cash register replacement, enabling employees to wander stores with tablets that they can use to complete sales on the spot.
Launched in 2009, Square enables merchants and individuals to accept card-based payments with an app on devices using Google Inc.’s Android mobile operating system or Apple Inc.’s iPhone, iPod Touch or iPad devices.
Square touts merchant acceptance that requires no contract or monthly fees. Square charges merchants 2.75% per card-present transaction and 3.5% plus 15 cents per transaction for each payment where a card is not swiped. Square provides a tiny card reader accessory that attaches to the audio jack of a device. Many other payment service providers require contracts and charge monthly fees for various services, such as providing statements, but may offer lower rates depending on the volume of a merchant’s transactions.
Square’s updated app now enables retailers and other companies to sends marketing messages to consumers’ smartphones and promote specials in a new Menus area of the mobile app. The updated app also has a digital wallet feature, called Card Case, which enables consumers to store card numbers and other payment methods to use at participating Square merchants. Consumers also can use the apps to discover nearby merchants that accept Square transactions via a device’s GPS function. The earlier version of the app was solely an acceptance service.
Square’s changes to the iPad version of the app could create a new kind of retail experience for consumers, some experts say.
“It makes a lot of sense,” says James Van Dyke, president of Javelin Strategy Research. “Tablets are the way of the future for business and consumer power users.”
Because tablets enable easier access to product and store information, moving the salesperson closer to where the customer is—anywhere within a store—enables the salesperson to help customers with more than just payment acceptance, Van Dyke says. “Your checkout clerk can become a sales counselor,” Van Dyke says.
The additional features likely will attract many merchants, says George Sutton, research analyst at Craig-Hallum Capital Group LLC.
“It’s easy to envision how the ‘future’ store will not likely be a place to stand in line, but instead the transaction will occur as customers buy items through both self-service and wandering service employees,” Sutton says.
But Sutton is skeptical about a mobile app’s ability to replace cash registers. Payment-acceptance smartphone apps are supplements to cash registers, Sutton says.
Square’s claims that the updated iPad app is a cash register replacement may not be applicable to all merchants, adds Todd Ablowitz, president of consulting firm Double Diamond Group LLC.
A merchant may not be able to use Square if its payment card volume grows past a certain point where the card brands—such as Visa Inc. and MasterCard Inc.—require a retailer to have its own merchant account, he says. Square is an aggregator, meaning merchants who use its service do not have their own accounts with a payment brand.
“Once you get bigger, the business proposition for using Square gets a little dicey,” Ablowitz says, though he expects that is an issue Square is working on. Square did not respond to Internet Retailer inquiries.