Today, Rocky McGredy takes a look at Square, the mobile digital payment system company founded by Jack Dorsey, who as one of the Founders of Twitter has already changed the world of communication and broadcasting through Twitter, and is now disrupting the world of digital payment for merchants and consumers by allowing acceptance of credit card payments anywhere with your iPhone, iPad or Android phone.
I know that I haven’t been the only one thinking about this lately. It’s too hard not to, that little card reader is just so incredibly sleek and functional. A free (and cool) app, and a peripheral device that I don’t even have to pay for? This is fantastic. What’s the catch? They want 2.75% of my transactions? Considering the service I’m getting, I’m willing to pay that fraction. I haven’t said it yet, but of course I’m talking about Square. Have you seen this thing? It’s SO COOL! Okay, I’m done geeking out. I mean, I have one and I don’t even use it... but I really didn’t want to miss out on being a part of the future.
Square has really made businesses rethink the way they operate. If anything, their technology is reinvigorating the thinking around brick and mortar storefronts. For an “indie kid” such as myself, this is an extremely exciting thought. To me, it means that more unique retail and coffee shops will sprout up. How trendy. Who am I kidding? This is exciting in general. The possibilities seem to make me forget about just about every e-commerce solution out there. Every single one. Yep, not a single one comes to mi– Oh yeah, I guess PayPal is still a thing.
Let’s make a comparison here: Square is a young, hip digital payment system with a compelling and fair business strategy. PayPal, although to some a necessity, is getting a bit out of touch. The other morning, in the midst of my morning ritual of coffee and Reddit, I read the post of an outraged internet merchant. The user in question was positively livid with his current PayPal frustrations. Apparently, the paid-subscription accounts for merchants have a unique protective security function built in. In order to “protect from fraudulent credit card transactions,” PayPal has the ability to put 30% of your funds on hold for 90 days. That’s a pretty large percentage.
After browsing through the comment thread of the post, I found even more customers complaining about similar issues. One of the things I found most interesting is that eBay customers can receive a full refund for a purchase through PayPal without having to return the product. I guess this is a common scam that people pull.
Despite these qualities, PayPal has remained dominant in their field because of their availability. The main reason is that PayPal used to be the most viable option for secure internet sales. It’s undeniable that without PayPal, it wouldn’t be as easy to start an internet business on a small level; but nowadays things are changing. I know that Square’s service is a bit different than what PayPal has to offer, but I still consider them competitors... and I won’t be surprised if the line begins to blur even more.
Currently, I view PayPal’s stance on Square as arrogance. I guess I can understand where they’re coming from, though. PayPal is HUGE. They made almost 40% of eBay’s revenue last quarter. I guess that’s what gives them the ability to function in the manner that they do. Regardless, I don’t know if it would be the smartest decision to continue down the same path. Sooner or later, the value of switching will greatly exceed the value of staying in the same place. At that point, who knows what will be around; but there is that amazing, young, humanitarian scientist who has no greater motive than to assist in moving society forward. You know what I’m talking about, the guy who lives in the modest apartment on the corner because he does his lucrative work for no other than good intentions. The hero of the movie, that’s the one.