David the Disruptor… Oops, we meant Square

Square is disrupting the payment processing industry. Only a three-year-old payment processing startup, they now process more than $10 billion worth of transactions annually, which has got the payment processing industry asking “how was Square able to accomplish so much in so little time?”. Not to mention Square’s exclusive deal with Starbucks that will use Square payment processing technology in every one of Starbuck’s 7000 US locations.

What makes Square different?

Square is fast, easy, and mobile. The first thing customers of Square notice is that it only takes 15 minutes to get set up with an account. Compared to traditional payment processors, which take up to two weeks to onboard a new customer, it’s often a WOW moment. Signing up with Square can be done over the internet and requires only a few account verifying questions. Signing up at a bank would typically require filling out over 5 full pages of paper documents. Finally, Square’s card reader transmits information over mobile devices, which means payments can be processed almost anywhere and with little fixed cost. Comparatively, most competitors’ devices are tied to phone lines or internet access. And those that do take advantage of the mobile network cost up to $80 a month to rent.

Square has innovative business processes

How does Square manage to accomplish of all of this? The key lies with Square’s ability to deliver a superior user experience through agile business processes. By rethinking the purpose behind paper forms, and taking advantage of technology, Square is able to create a much faster and simpler customer on-boarding experience. With today’s technology gathering information is made easier through automation. Merchants love Square because instead of spending their valuable time filling out tedious (and often redundant) forms, well designed onboarding processes and smart process software do much of the legwork. In a Merchant’s eyes Square is demonstrating that they care about their customers’ time, and at the same time, casts a shadow on their competitors’ business processes.

The deal between Square and Starbucks is not only a major milestone for Square, but also a statement of where the payment processing industry is going. Merchants and their customers care about experience. Within any sales process, the most crucial step is always closing the deal, and the payment process is an integral part of that step. By partnering with Square Starbucks is incorporating Square’s agile business processes into their business. Seamless merchant onboarding is becoming more and more important, as mobile payment processing is becoming an expected standard. Payment processing service providers who fail to impress customers with their application and setup process will signal to their customers that they are falling behind in general. And if that happens, they are likely to fail to remain competitive in this evolving industry.

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This post is the first of a four part series on how Square is disrupting the payment processing industry. Using innovative business processes they provide a better customer experience to their customers at a lower cost than their competitors. We’ll discuss our thoughts on what makes Square different, how Square has achieved success, and what payment processors, acquirers, and super ISOs can do about it.