In talking to mobile payments startups recently, one thing became evident: integrating with the existing point-of-sale (POS) systems available to merchants is always a key concern since it eliminates a crucial setup hurdle. But now Square has made a bold play targeting small merchants by offering an all-in-one payment, POS and rewards system via its newly announced Register app for iPad.
Register uses the free Square Card Reader to accept credit card payments, and offers Square’s 2.75 percent flat rate on all processed transactions. It also includes easy, smart inventory management that allows merchants to create their own entries for goods quickly and easily, and to assign some of those as favorites. Plus, Square Register incorporates a built-in directory that lists your business for anyone using the Square Card Case app to see, and an on-board loyalty program that lets you set up your own program to reward regular shoppers.
With analytics, employee permission levels and optional add-ons like custom tipping options, email or paper receipts and control of physical cash drawers, it really is an all-in-one replacement for traditional, bulky POS equipment and software that can be costly to setup and difficult to replace and update. In other words, Square has taken what can be one of the biggest headaches involved in setting up a new business and essentially replaced it with a free app.
Merchants still have to pay for their own iPad, but the price of entry for that device is relatively low. At just $299 for a refurbished 16 GB first-generation Wi-Fi iPad in the U.S. store, the whole thing won’t make much of a dent in startup capital. And since the item library is fully customizable, there aren’t any limitations in terms of where it can be used; plus, it can act as a carry-around device so that wait staff could potentially use it table-side as well as at a central register. Dave Greenbaum, a Lawrence, KC-based independent Apple IT consultant and technician who counts many small businesses as clients, said in an interview that Register could potentially have a big impact on how small businesses operate.
“I think it will empower small businesses to track and manage their sales more effectively and simultaneously take credit cards,” Greenbaum said. “All this for free (save the price of credit card processing).” But it isn’t without limitations, since as he points out, tech support from Square isn’t likely to be as responsive as the 24-hour live support that often comes included with or as an optional add-on for more sophisticated and expensive POS systems.
Still, he says Square would argue the simplicity of its system negates the need for extensive support. Overall, Greenbaum is “genuinely excited” about the potential of this system for his clients. “I see them spend thousands of dollars on a POS system that is overly complex for their needs, and Square can give them just what they need without all the bells, whistles and extras,” he said.
The inclusion of built-in rewards functionality is also a considerable addition that has huge disruptive potential. In a recent article, we discussed how loyalty startups like PunchTab and Perkville are emerging to try to provide for small businesses and independent professionals what big block stores like Best Buy have been using for years to keep customers coming back. Square’s move here would seem to take the wind out of the sails of companies who are attempting to provide just the rewards piece separate from a payment solution.
PunchTab co-founder and CEO Ranjith Kumaran told BetaKit in an interview that he sees plenty of potential in what Square is doing with its Register rewards, but doesn’t think it infringes on what his company, which currently focuses primarily on rewarding online brand engagement, is trying to accomplish.
“Payment companies are uniquely positioned to be tied in with loyalty solutions,” Kumaran told BetaKit via email. “However, in an online, mobile, and social-enabled world they’ll need to go well beyond traditional purchase-based incentives to win and retain customer mind-share.”
Perkville offers real-world rewards targeted at in-store shoppers. CEO Sunil Saha told us that the introduction of Register is a sign his company is on the right track. “Square’s direction validates our strategy,” he wrote in an email. “We’ve always felt that loyalty should be tied to the point of sale system and this is exactly what we bring to our POS partners. We excel at loyalty because it’s our focus, and we think Square will eventually add APIs so that companies like us can work with them.”
Potential competitors may see a sliver lining here, but Square’s new offering and its inclusion of a loyalty system is designed specifically to provide an all-in-one solution to small business owners, and definitely adds considerably to its overall value proposition. Square is already seeing success in the mobile payments scene with its card reader and Card Case, but the introduction of Register marks the beginning of yet another stage of disruptive development, and POS vendors and small businesses are the ones who will feel those changes the most.