Walk into a small business around Springfield, and there’s a good chance the proprietor offers a form of mobile payment.
In an increasingly digital world, the transition from cash often is answered in the form of Square Inc.’s (NYSE: SQ) mobile card reader.
However, consumer reviews to the Better Business Bureau identify the rough edges on the point-of-sale system. The worst cited offenses: suspending payment of funds for 90 days and deactivating user accounts. BBB.org gives Square an A-plus score, largely for answering some 1,460 complaints the last three years.
Trailspring Inc., the nonprofit operator of Two Rivers Mountain Bike Park, recently experienced its own collections issue during its SingleTrack Mind Festival held Labor Day weekend at the Highlandville complex.
Trailspring founder Matt O’Reilly said the organization used Square for event admission fees, jerseys sales and online registration for events and payments for clinics put on at the park. Because the rural park’s Wi-Fi signal often is bogged down, Trailspring processed festival admissions in an offline mode where transactions are logged and then processed later.
“That’s what we were doing and somehow a batch didn’t go through,” O’Reilly said, declining to disclose the amount of payments lost. “The sales transactions didn’t upload.”
O’Reilly declined to disclose attendance figures. Admission fees ranged from $5-$30 per day, with higher prices for competitors.
Although there’s still some mystery as to what caused the unprocessed payments and O’Reilly said Trailspring is trying to resolve the issue, he said Square’s licensing agreement likely puts the responsibility on the business to upload transactions. Square’s website states offline payments expire if they aren’t processed within 72 hours.
“We can back up that we have this many people, this much cash and the remainder is what didn’t process,” O’Reilly said. “I’m sure they get scammed all the time, so unless there’s actual evidence they can’t do anything about it.”
For O’Reilly, it’s the new version of losing receipts from a credit card carbon copier or a power outage knocking out a register.
“There needs to be systems in place with checks upon checks to make sure this sort of thing doesn’t happen,” he said. “We still aren’t at the end of the discussions with Square, and I’m not ready to write them off yet.”
Square representatives did not respond to inquiries by Springfield Business Journal news deadline.
Risk and reward
Despite Trailspring’s experience, O’Reilly sees Square and other systems like it, such as Venmo, Google Wallet and Apple Pay, as enablers for small businesses. Square, he said, also is useful for its ability to track sales, manage cash and synchronize with QuickBooks accounting software.
For that reason, he said it’s a valuable tool for the vendors at Farmers Market of the Ozarks at O’Reilly’s Farmers Park.
“We’re a very instant gratification economy, so you’ve got to have it,” O’Reilly said, noting 70 percent of market vendors accept mobile payments. “If you’re not mobile, you’re giving money away.”
Jane Ford, co-owner of Buffalo-based Red Top Oven, said the company started using Square in 2014, toward the end of its first season at Farmers Park.
“Matt at one point visited our booth and said, ‘Why don’t you accept credit cards?’” Ford recalled. “I thought, ‘Yeah, why wouldn’t we? We need to.’”
Red Top Oven now handles about $100-$150 in Saturday sales. Ford said the company settled on Square due to the low fee – 2.75 percent per swiped transaction – and initial costs. She purchased two card readers for $10 apiece, and then bought a chip card reader for $50.
Jars of jam, pickles and salsa sold by Red Top Oven cost $6-$7, and Ford said the company charges a 3 percent surcharge on card purchases to offset Square’s price.
“The jars are expensive, and we have a recycling program to get people to bring those back because that’s 75 cents per product,” Ford said. “I want to provide the convenience, but I don’t want to eat that charge.”
Fair and square
Mike Malas, a sales representative for Windwood Farm, relies heavily on Square’s offline mode working correctly.
The company sells goat milk soap at Farmers Market of the Ozarks and special events at Baker Creek Heirloom Seeds in Mansfield.
“That’s part of being tied to an electronic device,” Malas said. “If you run out of battery or have no connection, that will hinder your experience.”
For other small businesses, Square hasn’t presented connectivity issues, and the low cost of entry made the decision easy for Back Home Brewing Co., said Joel Horrell, who handles information technology for the Ozark bar. Horell said the Square system cost about $600 to outfit the bar with a tablet, readers, cash register, drawers and a printer for receipts. “Other POS systems are too expensive to use right off the bat,” said Horrell, noting a quote for Clover equipment came in around $7,000 but the competitor’s pricing can be negotiated.
Horrell said Square payments sometimes take an extra day to clear on holidays.
“That has to do with banks more than anything, if they are closed that day,” Horrell added. “It’s not Square’s fault. To me, that’s mostly the bank’s fault on whether they have good back ends or not.”
O’Reilly takes responsibility for the festival’s lost money.
“Cash and currency management are always a central loss area for business and a risk of doing business, regardless of the platform,” O’Reilly said. “It falls on the retailer to institute layers of protection and do their diligence on the processor.”
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