My thoughts on how Square will impact the startup ecosystem.
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- Ah gotchaNov 11, 2012
- Square is a dead end. I wound not invest in The Square.Nov 11, 2012
- why would you say that? please explain.Nov 11, 2012
- Why don't they just use chop and pin?Nov 11, 2012
- -- I can explain for if he doesn't mind (though I'm not sure I'd go so far as to call it a "dead end).
High level view: At this point, for every transaction under about $10, Square loses money. And that's about their average transaction. They charge 2.75 percent and pay about that same amount in interchange and fees. (If you really want to go in-depth on the payments side, there are reasons why they're not able to lower those costs, namely that they're actually the merchant of record so they really don't have any room to negotiate either.) What's more, they have no 'add-on' services to make the transactions they process a loss leader.
It's a very smart idea, and I give them credit for taking an idea that was already out there and turning it into something disruptive. (They didn't invent the dongle.) But considering there are now dozens of competitors who have other services to sell on top of simply processing transactions, Square may find themselves losing money while losing share in a market that is changing away from the mag stripe as well.
I wish them all the luck in the world, and they've got some very smart people there, but it's going to be hard to sustain that model.Nov 11, 2012
- My science teacher claims to have had the idea of a phone (card swiper)Nov 11, 2012