SQ's Subscribes to Success

Gotta love Square’s subscription and services-based revenue segment:

Just a few years ago, Square started with a mission to empower small merchants by enabling them to accept card payments. After reviewing the company’s conference call, transcribed by S&P Global Market Intelligence, it is evident that the mission remains the same, even if the means of doing so have changed. While accepting card payments via a dongle attached to a smartphone has largely become commoditized, Square continues to empower smaller merchants by offering them products and services that, until recently, were largely unavailable to small retailers. These tools range from payroll and business loans to mobile ordering-ahead services for small restaurants.

The best part for shareholders? It’s no longer just small businesses that are being attracted to Square’s holistic ecosystem. Gross payment volume from large sellers (defined as sellers with more than $125,000 in annual gross payment volume) grew 44% year over year and now comprises more than 47% of total payment volume.

Read more at https://www.fool.com/investing/2018/03/04/square-subscribes-…

In the article I review the “big three” of this segment – Instant Deposit, Caviar, and Square Capital - and also talk about how each of these services are becoming something like a gateway drug to SQ’s ecosystem.

Still do plan to posting conference call notes, but my biggest takeaways was the explosive growth of this segment and Square’s Cash app’s growth, which I thought Levy’s article which I posted upboard covered very well (see http://discussion.fool.com/square39s-cash-app-is-killing-it-3299…).

Long SQ
MasterCard (MA), PayPal (PYPL), Skechers (SKX) and Square (SQ) Ticker Guide
See all my holdings at http://my.fool.com/profile/TMFCochrane/info.aspx


Long time lurker here, fairly new to self directed investing and stock selection as I am a small business owner and my last 25 years have been dedicated to growing and maintaining my business. I wasn’t even able to start an IRA until 10 years ago and that is just a target date retirement fund from T.Rowe Price which didn’t require any knowledge or effort on my part. Since finding the Motley Fool and this board a few years ago, I’ve been learning as much as I can and waiting until I’ve had extra funds to invest which started almost a year ago. Many thanks to all here as your generous sharing of your knowledge and time makes newcomers like me feel that “hey, maybe I can do this too”.

I’ve never posted here as I’ve never felt like I had anything to contribute to the board until now. Having used traditional payment processors in the past quarter century I was used to the lack of services they provided and thought that was all there was. You would lease or buy an overpriced terminal, you’d negotiate the best rate you could and that was it. If you had technical problems you’d call some centralized merchant services # in a foreign country and hope they could help you. It was confusing as to who you actually were in business with. 3rd party middleman would sell you service for some generic sounding processing company, another company would lease you their crappy equipment (many times requiring you to purchase some bogus monthly insurance plan on it) and the paperwork was so arcane and confusing you needed to have an MBA to figure it out. And heavens forbid you have a chargeback, you were on your own. That required basically a book report of paperwork that had to be produced within a certain time frame (usually you’d receive it with like 3 days to complete it because your processing company took 2 weeks to send it to you. And if you own a small business you already have a to do list that’s way too long so this just adds to it). 90% of the time you’d lose anyway and your processing company wouldn’t do a thing to assist you.

5 years ago, I purchased a 2nd location (I’m a glutton for punishment) and decided to try Square since we needed to put our own processing system in and I had seen some smaller businesses with the little white reader and it looked cool. Unfortunately it didn’t always connect properly, it was hard to print receipts and they charged more than our current processor at our other location so we switched back.

Fast forward to this past fall, having been following this board and SQ as an investment opportunity I began to see more businesses using Square but with a dedicated terminal that looked cool and was super easy to use, it even texted me receipts (or emailed if I preferred) you could opt in at the store or restaurant if you wanted to join their marketing list for future specials or promotions. But change is hard and scary so I stayed with what was working.

I was on vacation in November when I got a call from one of my employees that the credit card terminal was flashing an error message when they opened that the batch from the previous night had failed (so the funds from the previous day were somewhere in limbo) and that they couldn’t process any new business until it went thru. To make this terrible long post slightly shorter, we called merchant services who couldn’t help, gave us a # for the terminal manufacturer who told us that the model we had been sold -just a year ago- was an old model that was phased out and had “issues” like this connecting to the internet and that it couldn’t be fixed. Thankfully my one employee figured out a way to connect the terminal to one of our phone lines as a temporary fix. I wasn’t happy.

I called Square that same day, explained my situation to the sales tech they put me through to and we started working on a plan to port me over. I mentioned that our gross sales were in the $800000 - $1000000 range and that we had a much lower rate than the advertised Square rate and about the experience 5 years prior. He assured me that much had changed, and said if I could send statements with my current rate info he could forward it to the finance department and probably match them as they are aggressively targeting medium sized businesses like mine (they did match the rates). He also gave me a list of what I would need to buy to create my own “Square register”. It came out to be around $700 which is comparable to the crappy terminal I currently had and part of that was for an iPad which can be used as a web browser when we are looking up things for customers. (since then Square has started selling and financing their own dedicated register that looks really cool but I haven’t used- yet)

We set a date for early the next week once my equipment arrived for a training session on setting everything up and how to process payments. Then we scheduled an hour training session on the back-end, the part that separates Square from every other traditional processing company that I’ve ever used. You have access your own portal on Square.com where you get reports on hourly, daily, monthly, and yearly sales. You can break out individual items to see how they are performing on a week to week basis. How certain employees are performing. How many new customers vs. repeat customers. How this month compared to last month. You get the idea…it’s a ton of info I was tracking manually and some new stuff I didn’t think to track, all accessible in seconds. They have a ton of extra services available for a reasonable fee as well: Payroll, Loyalty Program, Gift Cards, Marketing, Capital loan and new things on the way I’m sure. You also get an 800 number for 24/7 support that is run by Square, not a 3rd party. And the deal maker for me, if you have a chargeback, THEY handle it for you.

ok, for the TL;DR among you, here’s all you need to know:

Square is a game changer for small merchants like me. Everyone I interacted with was super friendly and more importantly super helpful. They are aggressively trying to improve my experience as a business owner and offering things that I actually need. I would never in a million years go back to the old systems/processors. I have ported my other shop to Square last month and have referred them to every merchant I know (they even have a referral bonus) So far the 2 that have made the change echo my sentiments on the product and service.

I am LONG SQ the stock and LONG SQ the company.

Thanks for reading, sorry for any typos and run on sentences, its quite early here. Now back into the shadows for me.



Jordan, that’s really an inspiring story, and makes me even more confident in my Square position. Thanks so much for taking the time to post it.


Outstanding post!

Years ago the Motley Fool had an idea for an investment and asked online if someone who lived in the area could go by and see if this company’s parking lot was full. It was. And it also was on the weekend. The investment was successful and that is what began the message boards.

Your post brings great value to others and it is also so old school. I love a view from the boots on the ground.

Great job.

Also long SQ
Explorer Supernaut
You can see all my holdings here: http://my.fool.com/profile/TMFJebbo/info.aspx


Thank you Jordan. I only use Square as a customer of companies using Square. It is great to hear from someone with firsthand knowledge.

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“and the paperwork was so arcane and confusing you needed to have an MBA to figure it out.”


I do have an MBA and I cannot figure out their statements. I have stopped trying. I see $1000 fees coming out every once in a while and I have no idea what it is. I also have no time to figure it out. So I put it in a pile of to do later stuff that I of course never get to.

I do have Square, just have not used it in the longest time. A credit card processing company that provides great service, open and understandable fees, and is merchant friendly!

I just handled a chargeback. Only $625, not a big one or anything. But I never got their paperwork, but when I read my emailed daily update I saw that $625 was taken out of the account as a dispute. It did not say who the dispute was from or anything, but I had a good idea and confirmed it.

I therefore wrote and faxed in my chargeback response (not that difficult, just need to show my contract, my invoices, and some of the work I did on their behalf). I used my merchant number as I did not have the case number as of yet. And I faxed it in on Feb 22.

I finally got their chargeback packet late last week. And I followed up by fax on the chargeback. Turns out it was due back by March 3, and I turned it in on March 5.

I have heard nothing back as of yet. WE SHALL SEE IF THEY IGNORED MY FEB 22 RESPONSE that referenced the case, my merchant number, and details as to why chargeback request is absurd.

I hate to go through the hassles of changing providers as I have mine built into my website and my billing emails. But what you described sounds as DISRUPTIVE to this market as any technological innovation that we call disruptive.



the chargeback problem must be a lot worse if you had ten $62.50 rather than single $625.00 one . So maybe the type of business is important here.

Thank you Saul and Jeb for your kind words, I’m just glad that I finally had something I could add to the board that was of some value.

Tinker, I’ve had that experience with chargebacks too many times in my 25 years, nothing is more annoying than having to do MORE work, to re-collect the money you were already paid, for work that you already did (or something like that). Even if Square is as ineffective as I was is recouping my funds the time I save in not having to do it all myself is worth it.

I’ve only been with Square for about 3 months now, I’m still learning about what they offer, how to maximize all the info they provide, and will be trying some of the extra services soon (marketing and loyalty). I will report back with my opinions of them as well as what my experience with Square as a whole is after a longer sample size. I’m optimistic but time will tell.

One final note (then I’ll get off my soapbox) it’s a small thing but it’s an example of the small things that they think of at Square that add to the total experience. It’s the receipt. Typically when a customer pays with a traditional processor they get a paper customer copy that in many cases gets lost or tossed in the trash. With Square, you can still print them a copy, however you also typically email them one. The email receipt is interactive and has links to my shops website, facebook and instagram accounts. It allows me to customize a message that can be changed depending on whatever specials or events we have planned and it has happy face/sad face icons that the customer can use to offer feedback on their experience (and add details if they choose). This info isn’t made public but it goes straight to me and I even have the option of responding to them on the Square site if I need to. As any small business owner knows, it’s nice to get a good review but it’s even more critical to be aware of a dissatisfied customer and have a chance to respond quickly and effectively before they are lost to a competitor.

Thanks for reading,



Thanks Jordan, It’s really important for us to get a report from the field like that. And I can hear the excitement in your voice in having a service that actually works, and that thinks of things it can do to make your life and business better. As I wrote on another thread, you inspired me to add a little to my already large position.



Thanks so much for your posts today! Please keep us updated in the future (good or bad) with any pertinent information. Great stuff!

Long SQ


Thanks for the informative posts. Every time I’m in a shop with Square (easy to spot) I always ask if they like the service. So far, only one negative response. It was from the owner of a small coffee shop on Maui. I didn’t engage with her very much because she was Japanese with a very heavy accent (my wife is Chinese with a heavy accent, my parents were both Austrian with accents - so when I say “heavy accent” I know what I’m talking about). Anyway, her complaint was that the Square terminal slowed down her transaction time, as opposed to what, I’m not sure. At the time I was in the shop, there was a long line of customers, so maybe it was true, but it kinda seemed to me that the pacing item was the equipment she had for making the drinks.

Anyway, every other Square user I’ve talked to, from very small, like a guy at a garage sale or my wife’s hairdresser to somewhat larger restaurants or whatever have all reported being very happy with the system and the company.

Square is now an outsized 15% of my portfolio. It got that way largely by growth (my cumulative purchases across three accounts are up over 100%). Everytime I consider cutting back I have to consider where I’ll reinvest the funds. So, I just let it grow.