How Will Square's Register and Card Case Impact Retail Businesses?

Square Register: Despite its versatility, the pricing of Square Register may not be competitive for smaller merchants or those processing a limited amount of transactions per month. Although Square insists on the merits of their pricing model, a closer look at the numbers reveals that their claims may not hold up for many businesses.

Market Segmentation

It is important to clearly define the market segment Square is currently addressing. Square targets small merchants who may not have previously set up a merchant account or are new retail or service businesses. Specifically, Square aims to capture the "tail end" of the market, which comprises a large portion of the service sector. This approach is innovative, and it addresses a market contention in a highly competitive space.

Impact on Established Players

The barriers to impact on established retail players are substantial. Firstly, system integration is a significant challenge. Major retailers have highly integrated systems encompassing payment, inventory management, and staffing allocation. Integrating Square into these systems would be akin to a complex and difficult bureaucratic process, involving multiple service partners and technical/logistical obstacles.

Additionally, overseas support is a critical factor. Square's current inability to service customers in numerous international markets poses a significant hurdle. Navigating the complex financial institutions and regulatory issues in different countries is a formidable challenge. To achieve a scalable impact, Square needs to address these issues and demonstrate their ability to conquer new territories.

Strategies for Scale

For Square to make a significant impact, the following strategies are essential:

Pick a Partner and Enrich Current Offering

Collaborating with local partners, such as Yelp, can help Square enhance its appeal. By leveraging these partners' coupon/promotional offerings, Square can create demand and make the product more attractive to potential customers. This approach would also help Square gather valuable customer insights to improve their service/product.

Expanding Internationally

Expanding into international markets, particularly those with similar demographics to the US, can mitigate risk. For instance, choosing a country with a similar economic structure can provide valuable experience in adapting to new financial laws and regulations. This strategy can also help Square refine their product and build a stronger brand presence.

Producing Consumer Insights

With its current processing rate of over $3 million daily and projected billion-dollar run rate, Square has a wealth of data that can be leveraged. Utilizing this data to create a better service/product and actively seeking partnerships can help strengthen spending habits among customers and support merchants with valuable tools. This will give them a competitive edge against traditional payment competitors.

Conclusion

While Square has made strides in the retail technology space, there are significant hurdles to overcome before achieving substantial impact on established retail players. By focusing on system integration, overseas support, and strategic partnerships, Square can enhance its products and expand its market reach.