Twitter founder Jack Dorsey is getting a lot of attention for his latest venture. Square, his mobile payments platform, is already the darling of the startup world. The company was valued at $40 million before it even launched.
But the mobile payment space is quickly getting crowded. Today at TechCrunch Disrupt, Dorsey explained the feature he thinks will set his product apart from other mobile payment products: analytics.
With PayPal, Visa and MasterCard all active in the mobile space, Square is just one of many companies trying to deliver mobile payments.
But Dorsey is trying to position his company as the best option for small businesses and individuals. As he says, "90% of this country pays with a plastic card. A lot of people only carry about $60 in their pockets."
Until this point, accepting credit card payments has been a difficult process. Dorsey points out that to do that, individuals have to fill out a 48 page agreement, pay a setup fee, and purchase expensive hardware.
"The process was in dire need of simplification. We wanted to get people in accepting credit card payments immediately."
To help with that process, Square is completely free to setup. Individuals can create an account online, and as long as they have a functioning bank account, can get Square's free hardware shipped to them to start accepting payments. After that, they're ready to start accepting payments.
Dorsey boasts that Square is cheaper than most other mobile payment options. The transaction fee is 2.75% plus 15 cents if you swipe the card. He says that the flat fee structure is particularly well suited to businesses, which normally have to deal with fluctuating fees set by credit card companies. For instance, a retailer may have to pay upwards of 4% for a transaction from a person that uses a rewards card.
Going forward, mobile payment fees are likely to spark a price war. Consumers — and businesses — don't like fees. High percentage fees for every $5 mobile collection start to add up pretty quickly for a small business. There's also the issue of hardware. If credit card companies — or another startup — can figure out a way to receive payments without any extraneous hardware, they'll have a leg up.
PayPal is already there with its Bump to pay app. But Dorsey is betting that Square's commitment to small businesses will set it apart. The company has created a dashboard that enables analytics for small and medium sized businesses.
Square's iPhone app is meant for person to person transactions. But the iPad
app lists full itemized views of business transactions. Both also send receipts that have all the
items someone bought and can track a user's transactions over time.
Dorsey notes that large corporations know exactly how much inventory they're selling. But for a small coffee shop, keeping track of how many cappuccinos they've sold is a harder proposition. With Square, they can keep do that.
Moreover, purchasers can keep track of what they've consumed — and where. They can also read up on a business that's registered through Square.
It remains to be seen who will be the winner in the mobile payments space, but Dorsey seems committed to adapting the Square product to the changing mobile environment.
Square external device seems like an unavoidable hurdle with the current state of smartphone technology, but the company can register payments through any mobile card swiper that is compatible with the iPhone, including ones that are sold in the Apple store.
If Square can keep up with the rapidly evolving state of mobile, and maintain its focus on invidual need, it may quickly prove the validity of that $40 million valuation.