Square Reshapes Product Lineup, Adding B2B Service, Yanking ‘Order’ (March 24, 2015)
Square Inc. this week poured more heat into P2P with the debut of Square Cash for Business, an extension of its consumer-targeted Square Cash P2P product launched in 2013. The new service targets Square’s core small-business 
audience, going after companies eager to reduce their reliance on checks by introducing a new way to send invoices and receive payment via Square’s app using debit cards. Participating billers create unique user names—which Square calls “$Cashtags”—and distribute them to their customers, who must download Square’s app and enroll a debit card to make
payments. It’s free to payees, but billers pay a 1.5 percent fee per transaction, lower than the 2.75 percent rate Square charges businesses for credit and debit card acceptance. P2P is becoming a hot area with banks, technology providers and companies like Google vying for a foothold in the space. And, Facebook last week unveiled a free, payments card-based P2P service for its 500 million Messenger app users.
Separately, Square last week shut down its Square Order app, which debuted in May 2013 as a replacement for the Square Wallet app. Square Order enabled users to order ahead at cafes and restaurants in New York and San Francisco, but the service failed to ignite. Square said it plans to focus instead on enriching its arsenal of small-business tools and will continue to support gift cards and online ordering through its Square Online Store.
Meanwhile, other payments players are advancing their order-ahead and delivery services. PayPal in 2013 launched its Order Ahead service through the PayPal app, and festival-goers at this month’s SXSW in Austin, Texas, were using the app to place coffee orders ahead for in-store pickup, a PayPal spokesperson tells Paybefore. Dunkin’ Donuts last year began testing an order-ahead service, and Starbucks this month said it’s expanding its “Mobile Order & Pay” system to 800 stores in the Northwest after a test begun last year. Starbucks also plans to test product delivery through the San Francisco-based startup Postmates Inc., and pilot a separate service to deliver Starbucks products to workers’ in certain New York office buildings.
Why did Square shut down an app in a seemingly fast-growing niche, while doubling down in the highly competitive P2P arena? “Like any company pushing innovation forward, Square has had a few failures. It’s smart to pull back on products that don’t seem to be succeeding, cutting losses at an early stage,” explains Rick Oglesby, head of research at Double Diamond Group.
Now Square is returning to focus on its core strengths, according to Oglesby. “Square has the most recognizable brand in m-POS, which is a distinct advantage,” he says. This month Square purchased Kili Technology, a Toronto-based maker of payments processing software and hardware that boasts expertise in NFC and EMV technology. “Acquisition has been a clear part of Square’s strategy for a while now, but Square has other options, Oglesby observes. The company has “significant assets” that could make it ripe for acquisition by a larger company, he says.
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