The merchant/EFTPOS experience of SMEs is always a topic of conversation – more so now than pre-Covid. A half a dozen years ago, Square felt like a new kid on the block, whereas now it is entrenched. In fact, given the amount of discussion and street-talk about Square, it would be easy to presume that Square’s market share is enormous. People that don’t even USE Square talk about Square!!! Throughout the different businesses we talk to, across a range of industries, locations, size of business, number of terminals etc., it is evident that Square has certainly captured the market’s attention.
Why? What’s the fuss and is it warranted?
By way of preamble, here are some comments about Square that emerged in some group discussions over the past couple of weeks. These comments, which mostly talk to the sign-up process, all have one thing in common – see if you can pick it …
“Square’s made the process and the setup really easy. I did it all online and it was just so easy. I’m not a tech-minded person but even I could set it up. They made that so easy, they made the processing of payments easy, they make the tracking easy. There’s nothing difficult about it and there’s no monthly fee, so it was easy from start to finish.” (2-5 FTEs, <5 years in operation)
“I would have to agree, I found Square really simple to start up, it was just a matter of putting in your details and you got it. When I switched to ANZ I found ANZ to be harder. Square was easier and more streamlined than doing it with ANZ. Somehow with ANZ I ended up having to go down to the bank – physically, whereas with Square it was all online – bang, done.” (2-5 FTEs, <5 years in operation)
“Square was very easy. It was streamlined, you just buy the little gadget – in fact I think we got it from Officeworks – and you go from there.” (20-50 FTEs, 5+ years in operation)
“Signing up with Square couldn’t be easier, it’s all done online. You buy it at a retailer, you download the app and go from there. Seriously it is so simple.” (Sole Trader, <5 years in operation)
“I’ve seen the EFTPOS terminals that banks like NAB have and they’re great big clunky things. Square’s a little tiny thing, you can do the touch, you can do the insert, it’s all by your phone. It’s so easy, so seamless. I don’t have to think too much about it, it was just so easy. I went to Harvey Norman, paid $60 – only $60 – and bought this little tiny thing, and suddenly, after downloading an app to my phone, I’ve got an EFTPOS machine. Pretty easy. I don’t even look at the fees, every one of them is going to have fees so I don’t worry about those.” (Sole Trader, <5 years in operation)
‘Easy’. They all used the word ‘easy’ (or ‘easier’) … the first person obsessively so! It is this notion of ‘ease’ – a streamlined, idiot-proof merchant experience – that is attractive. One of our panellists talked in a similar way, suggesting that Square is ‘plug and play’ …
“There’s this little device that you can get from Officeworks and it looks like an Apple device and it’s to take payments. So you have the app on your phone, you load in all your products, you can load in discounts, you can load in all kinds of stuff and for those mobile events where people are paying you, everything is between the phone and the Square device – because no-one has cash now anyway – and then it literally just gets dumped into your business account a couple of days after. And they take a small fee for it. That’s just BRILLIANT, it just makes things so easy … It’s plug and play – it syncs up to your phone, you download the app and it’s very much ‘follow your nose’. I thought ‘this is amazing, how cool is this’ – for $60 or something from Officeworks.” (Online Retail, Sole Trader)
She’s not the only business owner to mention Square in the same breath as Apple, as the following comment observes. Maybe the most interesting aspect of the next comment is the way this business owner feels that a terminal from CBA would be ‘more of a commitment’ whereas Square feels like a user-pays model, and less of a commitment. This gives us an insight into something about the Square branding and positioning …
“You get your little Square physical device that arrives and it’s a little bit like an Apple product, it comes with that little book and it’s been well designed and you just follow it through step 1 and step 2 and the rest. I followed it and it worked! … I’ve been umming and ahhhing for years about the Commonwealth Bank and having a merchant facility – having it for a year and not using it, and then trying it again for another year – it seemed like a big commitment. Whereas with Square you’re only going to pay if you use it. There might have been a bit up-front but it wouldn’t have been that big. So basically it just seemed like a user-pays system whereas with the CBA it seemed like it was more of a commitment.” (Workplace Health Consultant, Sole Trader)
The above comments highlight some of the perceived attributes of Square … namely that it is easy … the distribution channel is different (ie Officeworks/Harvey Norman etc) … it is Apple-esque … the fees seem reasonable. But there is more to Square than this. It seems to have nudged into the analytics/insights arena, through the provision of information to merchants. We have always thought this is a major battle-ground going forward (although we note that it isn’t of interest to ALL SMEs) ...
“Square gives ALL of your reporting, so I can see what items are selling, at what point, what time, when’s your busiest time, when’s your busiest day, top-selling items, top-selling staff, you can do all your rostering through it. Clock in and out – so I do all the payroll through it … You log in – I think it’s called SquareUp.com.au – so I can be sitting at home and I can check up on live reports like what sales are at each venue … It’s such a clean product, they’ve made it just so easy to use … (Q : So what does ‘easy’ mean?) User-friendly. You don’t need to be a tech-whiz to navigate through this. And there’s so many tutorials on it where you can really get into the depth on it, and it gives you all that you need.” (Bars, 20 FTEs + Casuals)
These analytics also appeal to another business owner we interviewed …
“You can just log into your Square account and it says you’ve done this many transactions, you’ve had this many discounts, this many voids, this is what you did yesterday, this is how many of each individual item, you can see the gross amount, the fees they’ve taken out. There’s just absolutely everything there and I do it almost daily.” (Hospitality, 16 FTEs + Casuals)
On a different issue, the above business owner was asked about the importance of terminal placement in an era of social distancing, and he has developed a solution to this … “Our solution is that we’ve got multiple places – we’ve got a register set up in the window, a register set up at the door, one over here, one over there. In the old world of bank merchant facilities you’d have to be paying a fortune in fees to have 6 devices. But with this nimble technology which just relies on having that little piece of hardware that hooks into your account, you can have as many as you want.” (Hospitality, 16 FTEs + Casuals)
The above guy is a real champion for Square and what it has done for his business. Here’s more elaboration … “It enables us to be fast. Especially at the coffee shop, it’s just so busy … I just took it and ran with it and all of a sudden I had three iPads and I was punching the sale in there and the payment comes up really quickly, the customer does it, it automatically says yep, you can send it off to another screen which all the orders are on, it’s got the time so we know exactly how long the person’s been waiting, and it’s all really clear. And then we took it a step further and cast our screen to a big TV that the customers can see – which is something that customers could really make the most of because they could stand out the front and see their order, check that the order was correct, we put their name at the top … Back when people were nervous, the time that people were standing around was a thing and we had to be so fast because you could only have a couple of people in the shop at the same time so the faster you were, the more people you could get in. We wouldn’t have been able to do that without that technology.” (Hospitality, 16 FTEs + Casuals)
The above quotes from SMEs talk to many of the perceived benefits of Square … but there is a subtlety that is implied but not clear, and is easy to miss. Business owners see Square as a challenger brand. Of course, given Square’s size and market capitalisation, it is a big stretch to call it a ‘challenger’ … but that is how business owners see it. This ‘challenger brand’ positioning is highly desirable, for the simple reason that business owners see THEMSELVES as a challenger brand! That is, they think that THEY are taking on the establishment, having a crack, giving it a go. Somehow Square has been able to appeal to business owners on that level, a provider ‘taking it up’ to the Big Banks.
Conclusion
Square is seen as offering a highly desirable proposition for SMEs. The set-up and ongoing operation are ‘easy’ … almost Apple-esque … it’s a bit different because you buy it from a stationery/equipment supplier, not a financial services company – which not only makes the buying process simple, but also engenders a ‘challenger brand’ feel … it offers analytics that some SMEs value … and it processes transactions cost-effectively. Throw in the POS and it is a strong offering indeed. We know that a high proportion of SMEs simply use their incumbent business bank as a merchant provider (we’re quantifying this in our research right now) … but for those that don’t, Square is seen as being an attractive alternative.
