Technology has disrupted a seemingly countless number of industries over the past decade, from advertising to real estate. When looking at the industries grappling with technology-driven change, however, arguably few have been more affected than the multi-trillion dollar payments space.
The advent of mobile phone, and the smartphone in particular, has created significant opportunities, many of which upstarts like Square are trying to exploit.
In courting businesses and individuals, many of the Davids have some compelling selling points: they cost little to nothing to get started with, are easy to set up and use, and provide a refreshingly higher level of customer service.
But Square, one of the most prominent and heavily-funded new players on the payment scene, is learning the hard way that you can't please everybody in the payment processing space. According to one Square customer, Jason Gullickson, a chargeback situation turned into a customer service nightmare that sounds an awful lot like the customer service nightmare stories you have probably read about involving larger, more established players. Gullickson's post, which details his experience, has attracted the attention of Hacker News readers, landing it on the Hacker News front page.
All payment providers are facing challenges
Whether he's 'right' or 'wrong' (or neither), Gullickson's blog post highlights the challenges facing payment firms -- established players and upstarts alike -- as individuals gain access to a wider availability of payment processing services.
Here, it's fairly evident that Gullickson had a limited knowledge of the chargeback process, which is something providers like Square have little flexibility to change because of the rules that govern credit card transactions. Could Square have provided a more responsive customer service experience to Gullickson?
Perhaps, but the type of hand-holding he seems to have expected is time-consuming (and therefore costly) to provide. When you're processing billions of dollars in transactions, the $200 chargeback that may matter a lot to a single individual is probably just one of hundreds or thousands of similar chargebacks being handled at any given time.
Payment options will continue to grow
At the end of the day, there's little doubt that the rapid pace of evolution in the payment space will continue to grow the number of payment processing options in the hands of businesses and individuals alike. That's a good thing, and it's creating huge opportunities for entrenched players and startups.
But upstarts like Square, some of which are trying to compete, in part, by creating the belief that they're a friendlier alternative to supposedly less-friendly corporations like VeriFone and PayPal, may find that avoiding the type of criticism frequently leveled at their battle-scarred competitors is simply not possible.