Hip to Be Square

Read the case study and answer the questions that follow.

If you have recently been to a farmer$$s market, craft fair, or shopped at any other small business,

chances are that you have purchased something using Square. Even Starbucks and Apple retail

stores are using Square.

In $2009,$ Jack Dorsey, cofounder of Twitter, and Jim McKelvey, started Square. Square, a mobile

payment company, started off as a simple way for small businesses, such as street vendors and

startups, to accept credit cards without incurring the prohibitive fixed monthly and per

transaction costs of merchant service providers and banks. Square made it easy for small

businesses, especially mobile businesses, to accept credit card transactions. Square soon

established itself as a disrupting influence in the mobile payment industry.

The burst of Internet usage combined with social media connectivity in the $2000$s fueled many

entrepreneurial endeavors. However, credit card machines only worked with grounded

connections, meaning that traveling businesses could not accept credit card payments. Square

revolutionized mobile payment by capitalizing on the ubiquity of smartphones and providing an

alternate method for digital payment$$replacing the immovable hardware of the credit card

machines with a small accessory$$a white square$-$shaped credit card reader$$that was easily

inserted into the audio jack of any smartphone. As long as a smartphone was available, any

business could accept a credit card payment from any customer, regardless of the credit card

used, with a simple swipe. In addition, as the pioneer in mobile payment processing, Square

eliminated all fixed monthly fees, opting for a mere $2\mathrm{.}75$ percent per transaction fee.

Following a round of $$10$ million in funding, in May $2010,$ Square launched its app for iOS and

Android and shipped $50,000$ units of its free credit card reader for pilot testing. By November,

Square was processing millions of dollars every week. Following a second round of funding for

$$27\mathrm{.}5$ million, Square brought its credit card reader to the public in January $2011.$ In March

$2011,$ Square processed over $$1$ million per day. Four years later Square went public.

In addition to businesses, Square attracted consumer$-$to$-$consumer value exchange transactions.

In $2018,$ Square acquired Weebly, allowing them to compete with Shopify and PayPal. Square

Cash competed directly with PayPal$$s Venmo, allowing consumers to easily make free peer$-$to$-$

peer digital payments without having to use cash or involve an intermediary credit card

company. Square Cash surpassed Venmo in $2018$ and by June $2019$ had $56\mathrm{.}1$ million users, $6\mathrm{.}4$

million more than Venmo. Square Cash continues to disrupt the prepaid payment card industry.

Over $80$ percent of Square Cash customers report that they have used prepaid cards in the past

but now opt to use Square Cash instead. Using Square Cash eliminates the risk of loss or theft

that is typically associated with prepaid cards. Furthermore, Square Cash can be used to deposit

paychecks, buy and sell stocks, and exchange cryptocurrency. Square also competes with Stripe

and PayPal in online payment processing. Square has a reputation for ease of use, while Stripe

still holds the edge with international eCommerce because of its strong multicurrency payment

support.

From its humble mission of allowing small businesses to accept credit cards, Square has

developed numerous other merchant financial processing services, and has become one of the

world$$s largest financial technology corporations. Square offers a suite of business software

including an iPad app as well as payment hardware products including Square Register, which

replaces traditional cash registers in brick$-$and$-$mortar stores. In addition, Square offers back

office business tools including accounting software, invoicing, payroll and data analytics

capabilities.

Square very astutely acquires new customers with their easy$-$to$-$use and extremely convenient

credit card reader and then secures customer loyalty by offering them additional product and

services within the Square ecosystem. Square$$s customer base includes millions of businesses, of

all different sizes, that use Square services for their day$-$to$-$day operations, including Square$$s

free point$-$of$-$sale $($POS$)$ system. Square$$s app has been downloaded more than $38$ million times.

A pioneer in the mobile value exchange industry, Square has become the preferred solution for

per transaction flat$-$rate fee$-$based payment processing and proven that it is hip to be Square.

How did Square grow from acquiring small businesses to acquiring industry giants like

Starbucks and Apple retail stores?