Describe how square has evolved based on actors in the microenvironment

Company Case Square: In Relentless Pursuit of a More Elegant Payment Experience It happened one day at an at fav. Jim Mckebvey, an anisan who shipped. Orine payment procossors ike PayPal took care of that worked in hendbown glass, had an adrirer of his wokk ready to buy problem. But in the offine word, SVBs were stll baing excludad. a pioce priced at $2,000. There was j st one problem The customer dd not heve that much cash, and Jim wasnt equipped to take credt. The Dongle That Changed Everything cards. Mckevey could't close the dad and lost avaluble sele. Square launched in 2009 . The idea was simple. Square would But there's a happy ending to this story. McKelvey quicky play the role of a big business, putting up the capial and asrecognized that the problem ha faced that day was common suming the risks of processing credit and dabit card transacto small and medurn-size businesses (SMBs) everywhere. tions. The promise of volume lat Square form partnerships with Realizing how much money he was losing by not accepting credt card comparies such as Visa and Mastercard, bypassing credt cards got him going on soding the problam. Mckelvey the credit card-processing comparies atogather and negotiand partner Jack Dorsey carne up with Square, the payment ating lower fees. With low fees and minimal overhead, Square processing innovator that set fre to an industry. Today, Square is could make its services avalable to aryone-merchart or evvalued at $27 bilion. So you might say that Mckevey's glass art enyday individual-with no contract and no approval procsss. piece is the most valuable piece of gass never sold. Merchants gained piace of mind from a simple structure of afSquare's crigins are not unike the crigins of most statup comr- fordabla transactions fees that were the same for all. paries: The founders recogriwe a problern for which there is no cur-. With the back-olfice part of payment processing sorted out, rent product or sevice solution and set out to solve it. The question Square needed only to figure out the interface between the meris this: What creatad the problem that Jin MoKabey recogrized chant and the customer. It daveloped the now-farnilar Square that fateful day? The short answer: The consumer and maketing dongle- a small yet elegant white plastic magstripe reader that ervirorment had changed, but businesses had yet to catch up. pugged into the heacphons port of Android or Apple iCs smartThe World before Square phones and tablets. The reader cost only $10 (rree today), and When consurners used cash as the pirnary means of paying for hardwere and sofware processed unencrypted, analog card ingoods and servicess, SMB awners had litte problern seling their formation by digiting it and sending it to Square's servers. wares. But as the 1800 s came to a close and more and more busi- Thus, with nothing more than a smartphone, any smal nesses acoepted credt cards for paymant, pecple caried lass and business ownar could acospt credt and dabit card payments, less cash. This put SMBs at a dsadvartage; mery factors made whether soling from a tradtional brick-and-mortar store, a street the processing of credit cards dificut to inpossible for them. cart, a booth at an evert, or even the trunk of a car. Highlighting For starters, before Square and its mary imitaters, it was i. the real benefits of Square, Dorsey notes that payment processlogal for non-registered merchants to accept credt card pay-. ing is "not even in the category of things [marchants] want to ments. Registering with an approved credit card-processing think about. They wart to thirk about things like hiring people terrninal provider was expensive, with a substantial flat fee at and introducing new ingredients." the start and transaction fees higher then most SMBs could af- Once Square launched, its founders quichy redired that tithered ford. Credit card processing was avalabla to merchants only on orily one solution to a very rarrow problern. Credit card payrnert a contract basis - when mercharits signed, they were locked in. procossing was now avalable to all But a che-sie--fits-all solution Adding to this complexity, the terms of the contracts were di. is arely peflect for anyone. For most SMBs, rurring a card through frut to understand, othen leading to unaxpected tees. a reader cornected to a smartphone did not give custorners an imIf all this wasn't enough to keep most SMBs cut of tha credt pression of stability and securty. There also remained the chalknge card loop, when it carre to accopting credit and dabit cards, of appeaing to the segrnent of SMBs that aready had cortracts with they still had to be approved. Like getting a bark loan, being ap-_ I Iminal providers. "The biggast thing (we were) corrpoting with, proved for credt processing services was contingent on indica-_ horesty, was that sellers tend to develiop systerns of doing things tions of financial strength and stability. Then, "even if you do get and t's the adags of "fit's not broke, don't fx it," says Dorsey. accopted by a traditional terrninal provider to accept payments, From its eariest days, Square's founders realzed that they, you typically sign up for a contract that is at best opaque and were far from solving the problerns associated with payrnents. probably not so far," says Square's head of hardware. "There's a And given how rapidy the forces of the marketing ervirorment teaser rate, there are monthy fees, there's a variely of other fees, W were changing, their task would never be done. To meet the dfferent cards cost different amounts." challenges, Dorsey and Mckelvey developed a philosophy of Thirgs stated to chengs in the mid- 1990 s with the advert of never-ending innovation with the goal of making payments lass e-cormmerce. As unikely as it seerns today, in the eably deys of eBiy, paintul and more elegant. By their nature, paymerts represented buyers had to mal cash or a check to selors belore goods were a transaction barnier to both buyer and sellor. To remove the CHAPTER 3 |Analyzing the Marketing Environment 115 payment transaction berriers entirely, payments had to becorne These devicos have many issues that businesses and customers perfectly soarnlass. And to fully accomplish that goal, Square have just come to accopt. For axample, the keypad is small and would ikely have toverture beyond the payment business. C clunky, reserrbing a handheld calculator of 40 years ago. The ContinuousInnovationFollowingthecrignalscreensaretiryanddonotletcustomersexarninetheircompleteTheolderdevicesarealsodifficuttoupdatewithnawcapa Following the criginal dongla, Square urleashed a string of prod- blities, often requiring an entirely new hardware interface. ucts and sevices thet rival the best of Slicon Valley for frequency and quality. Not orly has Square partnered with Apple for various propects, reforencos are often made to the "Apple-esque" Beyond Exciting Hardware design qualities of Square's hardware and software develop-. Square dasigned each of its products with certain appications ments. Although the basic Square dongle is still avaltablo todiay. in raind. But the compary's approach to imovation rests on the the device is the entry level and least sophisticated of Squares Square Stand (2013). The Square Stand turned the Apple iPad (it kid of resonates back to whish we frat started the comparyy into a more complete point-of-sale aystem. The integered aill. "We had some idea of who would use it, but realy no idea how it white stand sits on a marchunt's countertop and sorves as a "Would end up being used. This has very similur properties where custornizable "register," letting errployees ring up orders. Once" the bill is finalzed, Square Stand rotates to face custorrers, al-_ W we'I probably be surprised at how people use it