Square Snares Sellers With Sticky Services In Financial Tech
Best known for processing credit card payments for small businesses like food trucks and farm-stand vendors, Square (SQ) has expanded into a host of financial services as it aims to become a more critical support partner for its customers.
Among its latest ventures, Square recently revealed that it plans to create a banking arm to offer business loans, take deposits and provide other services. It already offers small loans through its Square Capital unit.
“The premise is small businesses don’t have access to capital to start, run and grow their business,” Chief Financial Officer Sarah Friar said. “Our typical loan type is about $6,000. This is not a playground that the banks typically can serve in any sort of profitable way. So we felt there was a market need.”
It’s all part of Square’s master plan to continue serving the often neglected small business market, as well as to move upmarket to larger businesses.
Loaning to you customers is a two edged sword, great if you do it right, but it can also give you incentive to stuff the channel with incentives to the loanees.
I keep finding new ways to use Square in my businesses.
Latest one is collecting rent from people renting office space.
I created a recurring invoice. 1st of the month, rent is charged to the credit card on file (in the square system. I don’t have my renter’s card information).
No need to chase paper checks and money is in my account on the 2nd.
Yes, it does cost me 2.9% (+ 30 cents, which is noise when dealing with typical rent) but the convenience and time gains more than outweigh the fee.
Have you tried Venmo? My landlord friend uses that because it is easy to notify people when rent is due, and they usually respond quickly in that scenario. The website says it is free…
Paying your friends back for pizza shouldn’t cost more than your slice. That’s why when you send money using your Venmo balance, bank account, debit card or prepaid card, we waive fees so it’s free to use. If you want to send money using a credit card, our standard 3% fee applies.
Receiving money and making payments to authorized businesses with Venmo is free. See the Venmo User Agreement for more information on Authorized Merchant Payments.
Looks like it charges the sender 3% if they use a credit card instead of a linked bank account.
Have you tried Venmo? My landlord friend uses that…
Venmo is growing wildly among Millennials. It links money transfer with social media tools. Easy peasy. If you hold a personal account, be aware that personal accounts may not be used to receive business, commercial or merchant transactions. For those, a business account is required.
I actually use Venmo to pay my daughter’s shared utilities to her roommate.
I personally don’t care for it as it operates very much in a social media manner:
- You link bank/credit card account
- You find your friends
- You can then send/receive $
- It can be posted on social media ('cause “Bob paid Jenny for Ice Cream” is what I want on my facebook page)
It certainly is alright for what it is: A quick way for a group to give money to a single person to pay for shared expenses. As a “business” platform, I don’t care for it.
The other thing is that I don’t need YET another dang way to get paid.
- We use Square most: Point of Sale Payment, Invoicing, Paying 1099 Contractors, recurring payments
- We use Intuit’s QuickBook Online Invoicing (actually trying to move away and use Square for payment)
- We use PayPal for buy/sell of used equipment payment
As an owner, I don’t need another platform tied to my businesses.
It does not simplify my life or bring me any benefits.
How I take my customer’s money has ZERO effect on whether they will be a customer or not.
“I’m sorry, but I can’t buy this book, rent your 1200W HMI or pay the rent because you won’t let me pay with Venmo/Apple Pay/Google Wallet/Other payment solution” is not a scenario I foresee
Another thought just occurred to me:
Why is it on ME to remind my renters that THEY owe me rent?
With square, this is literally automated: On the 1st, the rent is collected with nobody’s (me or renter) involvement.
Now, if the charge was to be denied (notice, no bounced check charge…) then a talk will ensue.