The Evolution of Square

I read an article in The Financial Brand recently that talked about Square’s growing ecosystem threating the future of banking. I admit this had me intrigued, so I did a little digging to better understand the article’s position. If you don’t know much about Square, they’ve had an impressive journey and are changing the traditional banking relationship for the small business owner.

Square’s strength in the market is largely due to their impressive array of small business options designed to support their client with inventory management, payroll, and even short-term loans. These tools make it easy a small business owner to focus on their business. They have also excelled in the P2P space, just behind Venmo and Zelle.

Though their rapid boarding, bundled pricing, and “off-the-shelf” solutions are ideal for small, and even some mid-sized merchants, they lack the competitive advantages of large direct acquirers. By definition, Square is a payment aggregator that uses larger acquirers for much of its back-end processing. The more sophisticated financial needs of larger merchants are still better served by traditional banking relationships that provide customized treasury needs and the availability of interchange plus pricing, which affords the merchant better control and visibility over their processing costs.

In their 11th year, Square’s revenue growth continues to impress and will help their development of the tools needed to compete on a bigger stage. It would be prudent to keep an eye on Square. They’ve surely learned a lot from their early partnership with Starbucks; an experience that will help them continue to threaten the field.



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