2Square Processes Billions of Dollars in Transactions
Square has quietly become a sales juggernaut. The company processes about $20 billion in transactions annually, and takes a portion of that for its own fees. In 2014, the company expects to process more than $30 billion in transactions. Square’s revenue is made up in large part by the 2.75 percent fee it takes on all transactions, meaning it’s generating hundreds of millions of dollars in revenue each year.
3Square Traces Its Origins to Twitter
Square is not a Twitter subsidiary, but the company’s founding is largely due to the success of the social network. One of Square’s founders is Twitter co-founder Jack Dorsey, who still runs the payment-processing company. Dorsey has said publicly that he’s learned a lot from Twitter that has helped him run Square.
4It’s a Threat to Long-Established Credit Card Processors
Although there are some credit card processors that are offering cheaper fees when a consumer swipes their plastic, Square is offering more convenience. Customers simply swipe their cards, the salesperson types in the charge, and customers sign on a touch screen with their fingers. With more convenience comes a greater threat to long-established credit card processors. Those companies aren’t happy to see Square winning the shopping-convenience war. The race is on for the next generation in credit card transactions, and it appears that Square is in the lead.
5Square Register Could Be Huge
Square offers a Register application that’s designed to replace the standard point-of-sale registers found in today’s retail outlets. Running on an iPad, the app can handle inventory, act as a full point-of-sale terminal and handle all transactions. Once a purchase has been made, it can even modify inventory levels. It might just be the secret tool Square uses to attract more retailers to its platform.
6More Mobile Devices in the Retail Channel?
When Apple started handling its transactions in-store with its iPhone, the company rendered obsolete the old model of using bulking point-of-sale terminals sitting on a counter. Square is extending this highly mobile transaction model even further by allowing its card-swiping device to be attached to a broader range of products, including Apple’s iPhones and iPads. As Square continues to catch on, expect more mobile devices to be used to ring you out at the store.
7Bring On Starbucks
One of the keys to Square’s success over the past few years—in addition to securing boatloads of venture funding—has been its partnership with Starbucks. When consumers head to a Starbucks store with the Square Wallet app in-hand, they can quickly place their order and be on their way. What’s more, Starbucks Chairman and CEO Howard Schultz sat on the company’s board for a year, providing much-needed oversight. Starbucks has been a central component in improving Square’s notoriety and ultimately helping it achieve such success.
8There Are Signs It Is Heading Toward a Big-Time IPO
Rumors abound that Dorsey and his team are inching ever closer to an IPO for 2014. If that happens, it’s believed that the offering will be the biggest since Twitter and another major one for the technology industry. Last year, Square raised $200 million based on a $3.25 billion valuation. It’s believed that by the time the company goes public next year, that valuation would be much higher. It should be interesting to see how the Square IPO plays out.
9PayPal, Others Are Trying to Keep Up
Square isn’t the only company in the marketplace trying to make it easier for consumers to place purchases from mobile devices. PayPal Here, arguably one of its top competitors, offers a similar service with competitive processing rates. Square, however, has found a way to get out ahead of its competitors and attract more retailers. Is it because of its hefty venture funding? Could it be due to Starbucks’ support? Whatever the case, Square has been able to achieve what no other firm in the space has.
10It’s a Whole New World in Retail
The retail space is set for a revolution. In places where Square has gone, consumers are finding a more appealing shopping experience. Gone are the days of walking around a store to find a cash register. If Square’s vision becomes reality, paying for something will be as simple as finding a salesperson, handing over a card and signing the touch screen on an iPhone. Not bad.
11It’s Growing at a Ridiculous Pace
Square’s growth since its founding in 2009 has been nothing short of astounding. In October 2011, Square was processing $2 billion payments annually. That figure quadrupled a little less than a year later, and then jumped to $10 billion on an annualized basis in November 2012. As mentioned, Square is now processing $20 billion in transactions each year and expects to jump to $30 billion in 2014. To say the company is growing fast, and thus will have a major impact on retail, is perhaps an understatement.