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Square Seeks Bigger Merchants

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Square Inc. has built its reputation as a quick and simple way for micromerchants to accept card payments, but the company says it’s also proven it can serve the more demanding needs of larger retailers.

When Starbucks invested in Square last year and agreed to use Square’s processing services, the coffee giant chose not to use Square’s hardware, a decision that seemed to indicate Square’s product was not ready for such a large client.

However, Starbucks didn’t need new point-of-sale hardware — what it needed was analytics.

Starbucks “wanted to forge a deeper relationship with their customers,” says Sarah Friar, Square’s chief financial officer. “We can give you a very deep sense of who your consumer is.”

Before signing on with Square last year, Starbucks did not have a way of electronically tracking which customers were ordering which products, Friar says. Now Starbucks uses Square’s business analytics software.

She maintains that the $10 billion in annualized gross payment volume that Square has processed for more than 3 million merchants demonstrates its technology has become robust enough to meet the needs of large retailers.

“We’ve proven we have the chops to do this,” Friar says.

Speaking during the closing session of the recent National Retail Federation convention in New York, Friar detailed Square’s efforts with both small and large retailers, as well as the opportunities that arise with its new consumer-facing mobile wallet.

For smaller merchants who want an off-the-shelf option for tracking sales, Square offers the Square Register app, which it claims can perform many tasks merchants need at the point of sale, she maintains.

The company also offers Square Wallet, which enables consumers to use just their mobile phones to make payments from a linked card account.

Square retailers that move from using just the mobile card reader and register app to also accepting the wallet have increased their sales by 15%, Friar says.

Square Register, a free app, doesn’t have as many features as Intuit’s Quickbooks Point of Sale — which, in its cheapest version, costs $1,100. Friar says. Square is increasingly serving a different sort of merchant, she maintains.

“When people think of us, they think of traditional retailers, but we’re seeing a massive uptick in things like professional services like haircutters, dog walkers, doctors and lawyers,” Friar says.

Friar provides details of how retailers can use the Square Register app on a tablet device to track customer purchases and inventory to create targeted promotions. For example, a restaurant with excess perishable food can aim a two-for-one promotion toward customers who have bought that meals basws on that food in the past, eliminating the restaurant’s waste and increasing sales.

Square also provides merchants such as Starbucks a location-based marketing opportunity through the Square Wallet.

The mobile wallet provides consumers with a real-time directory of Starbucks locations in their area, along with other merchants that use Square. according to Friar.

“The idea is to open the door to consumers,” she says.

In the future, the Square Wallet will use consumers’ past purchasing activities to suggest other retailers that might interest them, particularly when they’re moving to a new neighborhood or visiting an unfamiliar city.

Users can also add Square merchants as favorites in their wallet and when they visit that retailer.

The technology interfaces with the retailers’ Square Register, enabling customers to initiate payments by providing just a name.

“When I get close to my favorite places, I don’t even need to take my wallet out of my pocket,” Friar says. “I can have a fabulous experience on the payments side that doesn’t interrupt my experience in the store.”

“Usually my phone is buried at the bottom of a massive bag,” she continues. “My face will come up on the register and I say, ‘Put it on Sarah,’ and that’s it.”

Square last month added a gift card feature for users to send gifts to friends.

Friar provides the example of using the wallet to send her assistant a gift card to a local bakery near their office.

The bakery accepts Square, but the business is too small to have the gift card capabilities of larger merchants.

“As you rethink mobile, it really opens the door for all businesses to the things that large retailers take for granted,” she says. “It’s a great way to democratize all the things that big merchants do, but still keep that uniqueness that you’ve developed” at a small business.

 

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