A simple product that plugged itself into the lives and hearts of millions
My thoughts on why the Square Register is a great product
The merchant payment industry has not seen a major revolution in ages until Square entered the market in 2009 with its Square Register. Since its debut, over 2 million users have processed 8M+ in transactions through the small square dongle. The combination of Square dongle and the Square Register is an elegant solution to enabling small-medium sized businesses to complete the purchasing-process with credit-paying customers.
Through my experiences operating a textbook store on campus (which used three antiquated payment processing machines), I have come to understand and appreciate the various features and design choices that Square has made which allows it to dominate the market. From its portable size, intuitive user-interfaces, competitive pricing and data analytics — these are just some of the areas in which the Square dongle and register combination excels.
Portability
- Lightweight (travel friendly)
- Small size (is not an inconvenience)
- Accessible across most smart-phones (Android and iOS, which account for the majority of the 200M+ smart-phones used by Americans today)
The Moneris payment-processing terminals that my store previously used were wired, bulky and clunky. Square eliminates these friction points by being conveniently small and lightweight. Furthermore, you can easily replace it with another Android/iOS device to resume operations if your primary tablet malfunctions (and since all store data and transactions are synced to the cloud, your service is uninterrupted).
Intuitive interactions
- Simple installation and set-up creates low barriers to entry/use
- Clean, understandable user-flows
- Few steps required to make account settings or administrative changes
The Square dongle does one thing really well. It process credit card transactions. By cutting the physical product to its core function, Square enables users to intuitively understand the product. With the microphone jack designed to be uncased and protruding, it beckons users to plug it in — naturally this makes sense with the headphone jacks on Android and iOS devices.
Once a merchant has plugged the dongle in, set-up can be done in minimal steps. Comparing my complicated set-up from the Bookstore (calling Moneris to change ownership and reading through manuals to understand how charging and depositing of credits work), Square’s installation was a breeze.
More than just simplifying the user-flow for the merchant side, Square’s charging interface for users is straightforward: acknowledge the payment, sign with your fingers and enter in your e-mail address for a digital receipt of your purchase (both eco-friendly and never lost).
Competitive Pricing
Accepting credit cards is a non-trivial question that many business owners must decide. Even if Square was just designed to be simple, elegant and easy-to-use, it has to be cost-effective.
If we break down typical payment processing charges that merchants pay, we have a high fixed monthly fee for device rental, incremental charges for software updates and of course the percentage fee on all transactions. Square has simply the has no merchant account fees and just simply charges a 2.75% fee. This comparison creates a low-barrier of entry for small and medium sized businesses.
Powerful Data Analytics
- In-depth analytics enables powerful decision-making power for merchants
- Data on customer purchasing behaviours has huge potential for future targeted ads
With their online and device-specific dashboards, Square Register enables merchants to track their sales, costs and better understand their customers. The data can be spliced by daily/weekly/monthly/yearly partitions which will show merchants sales trends and cost improvements thereby increasing their adaptability in the market.
More than just amazing features of the product, the Square dongle and Register can generate scalable growth. By being positioned in the middle of merchants and customers, Square is able to take a percentage of all processed transactions. And as they are scaling past the $8 billion dollar mark, even a small percentage is significant. Furthermore, as the market opens up to Square and more merchants come onboard, revenues rise proportionally. Through prolonged exposure and usage by customers, their attitudes towards paying with Square will also change. What this does is it embeds Square into user behaviour, thereby making it harder to remove — thus creating a strong revenue source to advance future growth.
However, Square is not a perfect product. Its technology can be mimicked easily, resulting in a low barrier for competitors to enter the market. As a result, we have seen competitors like Amazon and Intuit launching similar dongle and register products. Furthermore, Square is not as proficient at handling high-volume transactions, which has plagues its entry into the fast-food market and other chain stores.
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