Actionable news
All posts from Actionable news
Actionable news in SQ: Square Inc,

So Long, Dongles? Square Goes Big On New Payment System

Square's new Register, unveiled Monday.

The company says it built the product for larger customers, who are becoming an ever-more-important part of the business. Square got its start selling payment-processing capabilities to tiny mom-and-pop shops that had been ignored by traditional payments companies. But Square has become more appealing to larger sellers, thanks in part to its suite of other business services beyond payment processing. “Large” merchants, meaning those who do more than $125,000 in annual sales, accounted for 46% of all the money flowing through Square’s system in the latest quarter, up from 42% a year before.

The new $999 register is just one more way Square hopes to attract larger businesses. The company’s head of hardware, Jesse Dorogusker, notes that Square’s new device offers significant cost savings relative to traditional systems. Businesses typically spend “thousands of dollars on point of sale” systems, Dorogusker says. Businesses choosing the new Register will save a bit on transaction costs, as well. For Square Register customers, Square is dropping its traditional card-based fee to 2.5% per transaction, from 2.75%. There’s also a processing fee of 10 cents per transaction.

Dorogusker sees Square’s new Register replacing “the giant beige and grey boxes” made by legacy payment processors. At first glance, in fact, we mistook the Register for another iPad device, which likely reflects the years Dorogusker spent working at Apple. Prior to Square, Dorogusker was Apple’s director of engineering for iPhone, iPad, and iPod accessories.

Square CEO Jack Dorsey added that the Register’s “buyer facing display” -- a separate screen that shows customers what they’ll be paying for -- addresses one of the biggest pain points cited by larger sellers.

The company says there’s an addressable market of 700,000 small and mid-sized businesses that could benefit from the Register.

Payment systems are already big business, of course. In 2016, market leader NCR reported $674 million in revenue from its “point-of-sale” hardware systems. That compares with just $44 million in hardware revenue for Square in 2016. Some 85% of Square’s $1.7 billion in revenue last year came from its transaction-based fees.