Don’t worry, it happens. Even the best of the best get duped every once in a while… For example - launched in 1995 by two former Harvard Business Review editors, Fast Company has positioned itself as the world's leading progressive business media brand. In their March 2013 issue’s feature article titled The World’s 50 Most Innovative Companies writer Austin Carr positioned Square (credit card reader) as the third most innovative company in the WORLD. In the world?! Sorry Austin, I’m going to have to disagree.
Unlike the 47 other companies further down on his list who are making actual breakthroughs in science and technology, Carr claims Square’s innovation bombshell is simple; they “enable credit card transactions on mobile devices.” Unfortunately for Carr, this is not the case. Companies like Charge Anywhere and Apriva enabled credit card transactions on mobile devices long before Square came on the scene. I think Carr may have missed the mark here on what Square is actually doing right as well as the definition of “innovative.”
Processing more than $10 billion worth of transactions annually, Square is obviously doing a few things well. Unfortunately for its business customers, processing credit cards is not one of them. Fast Company and Austin Carr have fallen for the same powerful force that has ACTUALLY driven Square’s popularity – a good marketing strategy.
Catchy television ads, slick packaging and software interfaces or perhaps its relationship with Twitter have all created a very attractive brand image for Square despite their real lack of innovation in the payments industry. Good for them.
They have created a great product for person to person payments, which is nice if you have a lot of friends that owe you money. But for actual businesses looking to process any kind of real volume(aka make money), Square has frequently been a nightmare.
“Don’t Use Square! They stole from me. They do not answer phones. They hold funds for 30 days they make one deposit of $2,000 out of $35,000 of mine they are holding. They will not call or email me back,” one irate customer comments on their Facebook page. (This is one of MANY)
The issue of holding funds is one that gets business owners most heated, making for an interesting read on their social media pages. But one thing that often gets overlooked is their flat 2.7% processing fee. Anyone that has any basic knowledge of credit card processing fees should realize quickly, a flat 2.7% fee is DEFINITELY not innovative. Not only is it not innovative, it’s just plain a bad deal.
Typically, consumers influenced by marketing and advertising buy products because they are trendy, they look good or people they know are using them. The problem with just “trending” towards Square as a business tool is the potential financial losses as a result of poor customer service and flat rate fee structures.
Square’s marketing strategy is impressive, although as a marketing tool their Facebook page, wrought with complaints, is not helping them much. And they have certainly driven innovation in effecting other mobile payment developers to be more competitive, there is no doubt about that.
But as they make their shift towards point of sale and software interfacing some might raise the question – When are they going to sit at the table with the big boys and start to pay attention to things like security and PCI? Or are they just going to continue to get merchants started in the credit card space and then lose them to the “real” processors once they have grown out of their volume limits…. I wonder. Sorry Fast Company.