Square Payment Processing
In our newsletter last month, we discussed Google’s move into the mobile payment game with its Wallet, which requires no wallet. Google isn’t the only one playing the “wallet free” payment game. On the contrary, it now faces competition from start-up company Square, a 6-month old mobile payment firm that just received $100 million investment from a venture-capital giant.
Quick Fact about Square: Founded in 2009 , by Twitter’s Co-Founder, Jack Dorsey, Square enables individuals and small businesses to accept payment without going through a complicated and costly credit card processing system. It requires only a quick sign up to get a free “Square Reader” that can be plugged into your smartphone, iPad, laptop, etc. No contract or monthly/annual fee is required either.
So now with a big chunk of money, how is Square going to spend it? Square’s COO Keith Rabois tells Fast Company that Square will use the investment mostly for 2 purposes: Hiring great talent and Marketing. Now let’s focus the discussion on the marketing side.
FiG believes that Square’s marketing needs to focus on 2 things: Brand Awareness and Differentiation.
Brand Awareness: Mobile payment is still at the introduction-to-growth period in a product’s life cycle. As with any company in the introduction phase, Square needs to increase brand awareness. As Rabois said: “People will use our products hopefully because they love it, but they need to know about it.” For mobile payment companies like Square, it is not enough just to let people be aware of Square, but to use it, and to TRUST it. Unlike most other products, mobile payment requires a magical balance of simplicity and complexity. Consumers will only use it when it is intuitive; and consumers will only use it when they think the system is robust enough to protect their money. So far Square has done a good job making a single transaction easy and fast. However there is still a long way for them to market this feature and educate the market about their security.
Differentiations: As we mentioned above, Square is not alone in this mobile payment field. Many other competitors have similar products. Not only the big players such as Google Wallet, PayPal’s Mobile Pay, and Verifone’s PAYware Mobile, there are also Phone Swipe, Mobile Pay, and Venmo, etc. How they stand out in this big crowd will determine whether Square is able to stay in the contest, and win the competition. Although the user interfaces or the systems may seem similar, differentiation can be achieved through services, features, design, emotional connection, marketing, data mining, and price. The question is which one does Square do better than others, and how does the company leverage this advantage. One big lesson is not to get distracted while searching for differentiation, focus on a few key pieces so you don’t lose your consumers to confusion or brand dilution.
So far Square is doing well, with $4 million in daily transactions, and expectation of exceeding $1 billion within a year. But competition will continue to increase as Square further expands–from individual to small business, from personal transaction to “card case” building. Who is going to dominate the mobile payment world? FiG can’t wait to find out.