Square recently released some news that it was processing $4 Million dollars a day in transaction volume. When I first heard this statistic, I couldn't help but wonder why everyone was so excited about this number. When you compare it to the traditional players, its miniscule...hell, when you compare it even to non-volume services- let's say Groupon for example- it's not nearly as impressive. (Groupon currently claims that it processes 75K transactions a day, but this was at the end of 2010, so they're probably closer to 100K transactions a day by now.)
So why is Square impressive? It definitely indicates that mobile payment processing is becoming more mainstream, that there is a lot of potential in the small to mid-sized business range for mobile payment processing and that it Square's business model (basic processing offered for basic (pretty low) fees) has struck a chord with merchants. The parallel argument to all of this is, well if merchants like to have payment processing, maybe if we give them extra stuff- merchant analytics, loyalty programs and electronic receipting- they'll be more likely to want to pay more for a more specialized device.
If I'm a merchant, I don't know if I'm convinced yet- especially if I'm a small to mid-sized merchant- I don't really need those functionalities- I just need the basic ones, and the extra few dollars a day/month/year can really add up to impact my (relatively) smaller bottom line. Instead of bribing merchants with "special" services in the short term, it might make sense for processors and issuers to focus on doing basic things really well. Maybe once the merchants got used to paying for a processor to do basic things really well (ahem, Square), like accepting multiple forms of payment (credit, debit, gift cards, visualizing for the dinosaurs out there that still like to use paper checks).. THEN maybe they would be willing to pay for the other things as their business grows.
Until then though, I guess we'll wait and see, and Square will keep making money to the tune of $4M transactions a day.
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