A new card and contactless payment service called ‘Square’, created by the boss of Twitter and aimed at small businesses, has launched in the UK this week.
Square has been launched in the UK because 5.4 million small businesses don’t / can’t yet accept card payments, and statistics show that 70% of people now prefer to use their debit / credit card for payments to shops and other businesses.
Started in the US
The ‘Square’ card / contactless payment system launched some time ago in the US, and the UK is a promising market for its expansion.
There has also been a UK trial of Square among a handful of small merchants in London, such as the Piano Bar in Soho.
The Square system comes from Twitter creator Jack Dorsey, and it was made with the aim of enabling a largely untapped market of small businesses owners to take advantage of the kind of better payment technology that he is able to provide through Twitter's position in the IT world and its resources.
How Does Square Work?
To use Square, businesses need to purchase a Square reader for £39 from Square’s online shop: https://squareup.com/gb. A free P-o-S app download then enables a business to connect the reader to a device e.g. a phone or a tablet, via Bluetooth. Businesses using the Square system do not need to set up a separate processing account, and Square accepts cards, contactless payments and cash.
The costs to business for using Square are the purchase price of the reader plus a 1.75% fee for in-person payments, and a 2.5% fee for other transaction types such as online or phone.
Businesses using Square receive the money the day after the transactions take place, thus getting money relatively quickly into the business cashflow.
Some of the many useful features of the Square system include the ability to manage employee permissions, digital and printed receipts, invoices and recurring payments, sales reporting and analytics + real-time inventory management, refunds, tipping and discounts.
Some of the benefits of Square are reported to include minimum costs and hassle to the business (no training required, drag and drop customising, low set-up costs) and convenience for customers.
What Does This Mean For Your Businesses?
If you are one of the millions of SME businesses that does not currently take card payments, Square is an opportunity for you to set up a low-cost, relatively low-hassle and effective system that has the backing and expertise of a tech giant. This could, of course, translate into an increased ability to compete (or even gain competitive advantage), gain / attract more customers, and hopefully increase profits. It also means that there is now another effective competitor in the market, whose offering may put pressure on other providers to review and change their offerings, and may even lead to more 'me-too' card services for small businesses in the near future.