Square beat the competition by crediting merchants next day
Square is getting a lot of attention these days. Banks are sitting by while Square eats their lunch, and this is quite typical. This happened with eCommerce where banks let PayPal and others take that space. At the pace mentioned in this Bloomberg piece, Square is looking at up to 8% of the market which seems high but here is the quote.
Square, founded in 2009, is processing transactions at an annualized rate of $5 billion, up from $4 billion a month ago, as more consumers embrace mobile payments, Chief Operating Officer Keith Rabois said in an interview. The San Francisco company is making cash from sales before 5 p.m. on any day available in merchants’ accounts on the next business day, compared with as many as five days out for other processors.
But that is not what really caught my eye here. Square credits the merchant next day in most cases, versus up to 5 days for other processors. If there is one thing banks are able to control it is timing of payments. I am not sure how Square do that, when they must use banks’ but for sure banks could beat that because they control the payment infrastructure.
Details on Square:
Square’s technology enables U.S. businesses to handle payments through Apple Inc.’s iPhone or iPad, or through devices running on Google Inc.’s Android software. The card reader plugs into the headphone jack of the mobile device. The reader, introduced in 2010, is available atWal-Mart Stores Inc. (WMT), Target Corp. (TGT) and Apple outlets.