Small business is big business for Square Inc.
Co-founder Jim McKelvey says the company’s multibillion-dollar e-commerce solution for smartphones and tablets has found a strong demographic base in small-time merchants, for whom the technology can be a saving grace.
“It turns out that the millions of merchants that we have who have never been in the MasterCard and Visa party before are really responsible people,” said McKelvey, who spoke in front of a crowd of about 250 at the keynote luncheon during Springfield Area Chamber of Commerce’s annual business-to-business exposition Oct. 3 at downtown’s Springfield Expo Center. “A lot of those small businesses are just exactly the people you want. They’ve been getting ripped off for years, so they’re a very loyal customer base.”
McKelvey co-founded Square in 2009 with friend and Twitter founder Jack Dorsey.
The company’s card reader – which plugs directly into mobile devices for on-the-go e-commerce – reportedly has been used in more than 500,000 local transactions, facilitating some $22 million in commerce throughout the Springfield area. Worldwide, the company handles some $15 billion in commerce a year, McKelvey said, pointing to year-old figures and noting he couldn’t disclose new numbers.
From the mouth of McKelvey, here’s the crux of the matter: “My attitude with technology is it ought to do anything I want.”
The idea behind Square is a natural evolution for a world of customers relying heavily on handheld devices and plastic currency conduits. For McKelvey, Square was built of necessity, as he was unable to take a payment for one of his businesses – a glassblowing factory in St. Louis called Third Degree Glass – because the Panamanian customer could only pay with American Express, which McKelvey couldn’t accept. It cost him a roughly $3,000 payday, but the byproduct clearly breeds dividends.
I have seen the Square reader used in multiple applications, most often at coffee shops, where the technology seems a good fit. Indeed, Square’s partnership last year with Starbucks had some analysts predicting a quicker end to cash-based payments.
However, smaller, locally owned shops – especially startups – can seemingly benefit the most. Small business is the bread and butter of downtown Springfield, where I live and work.
I may have $10 or less in cash in my wallet at any given time, so it’s simply a hassle to pay with paper currency. I will almost always take my business elsewhere if the opportunity exists, and I doubt I’m alone. But the low-cost Square option provides the means for vendors, at 2.75 percent per swipe of the credit card or a flat monthly fee of $275, according to Squareup.com. On the consumer side, the name of the game is convenience.
These days, most people already own Apple iOS or Android devices, and cash is becoming more of a rarity. Businesses have little excuse not to take credit or debit cards – although some still don’t, to their detriment.
The most interesting application of the Square card reader I have seen was with a traveling musician, who I invited to play a small concert to a handful of friends and family at my apartment a couple years ago. After his set, we were able to purchase merchandise from him right there, as he processed payments through his phone.
I wouldn’t have bought anything otherwise, and he probably made a decent chunk of change on top of his concert fee.
Capitalistic opportunities abound with e-payments, from taxis to travelers to out-of-country experiences.
Solutions are often right around the corner.
“The opportunities now to create things are greater than they have ever been in history,” McKelvey said. “Even a problem that was impossible to solve yesterday, may be possible to solve today. So I would encourage you to try.”
Springfield Business Journal Web Editor Geoff Pickle can be reached at gpickle@sbj.net.[[In-content Ad]]
