Today, Square  is releasing a few subtle but solid updates to both its Pay With Square app, which lets consumers make hands-free payments with participating merchants, and Square Register, its point-of-sale system for the iPad. Pay With Square users now get an in-app punchcard feature to collect rewards, as well as a new interface geared toward merchant discovery. Square Register merchants get more robust analytics and customizable options. Collectively, the features further bridge the gap between merchant and customer within the Square ecosystem.
The most interesting Pay With Square update is a new loyalties program featuring in-app punchcards that let consumers keep track of which rewards they've earned with different merchants. Pay With Square customers have always had the choice to opt-in to automatically open a tab with a particular store when they're in the immediate vicinity. That way, when they walk into a store, they can simply give their name at the register and the merchant can perform a seamless transaction without the customer ever having to pull out a phone. That's convenient, sure, but it also helps establish a subconscious emotional connection between the merchant and the customer.
"When we first launched the product, it fostered a natural sense of loyalty. You'd walk in and say 'Put this on Keith,' and the merchant would start a conversation with you," Square COO Keith Rabois tells Fast Company. "You'd be engaged in a human interaction as opposed to some mechanical, card-swiping, tapping experience. Now, we've added actual rewards to that emotional experience."
Pay With Square previously offered a lightweight version of rewards, but it required the merchant to go through a fairly involved process of tracking the number of visits a particular customer had made, then scheduling a reward to pop up the next time that person walked into the shop. A fully automated system helps the merchant in two ways: It eliminates the act of having to tailor a specific deal at the point of sale, and it plays on the consumer's desire to earn VIP-like deals. "Although there are some benefits to being surprised, there are also some benefits in knowing I'm very close to earning a reward," Rabois says.
Pay With Square is also introducing a parallel feature that allows merchants to offer specials to first-time customers. Square's most recent update  to the app, back in March, placed a heightened focus on merchant discovery, and the new first-time specials feature is an extension of that. Now, when a Pay With Square user searches for "pizza" or "coffee," merchants offering these deals will be highlighted in search results. "We're making the experience of discovery fun and delightful, as opposed to a chore," Rabois says.
Finally, an understated but useful tweak within the Pay With Square app is the change from the previous "Favorites" feature to something called "Your Cards." "Your Cards" acts much like the old Favorites feature did--it allows you to store merchant cards from your favorite shops, like a customized address book. But it solves one of the most tedious problems with the old Pay With Square: Having to opt-in to authorize individual merchants to open your tab when you walk in. Saving a merchant to your Favorites is similar to adding a card of static information to a catalog. But when you store a merchant's info in "Your Cards," that automatically tells Pay With Square those stores are good to open tabs for you.
It's a small shift, but it has the potential to change how consumers view their interactions with merchants, from a mechanical transaction to a running dialogue, in which the merchant can clue in the consumer on everything from the day's deals to whether or not their favorite item is sold out that day. As Rabois hypothesizes, merchants go into business because they enjoy making what they make well and building relationship with customers. Everything else, he says, is clutter that gets in the way of the merchant's purest role and goal.
"It's our job to make the rest of the stuff that helps you run your business so easy and delightful that it no longer becomes a burden but it actually becomes an asset," he says.
As for Apple's new Passbook  for iOS6, which lets users store loyalty cards (as well as other paper items such as boarding passes and movie tickets) on their phones, Rabois isn't too concerned. "Our merchant cards are highly interactive, so they have functionality around paying with your name, earning loyalty, and a communications channel to the merchant," he says. "Whereas, generally, passes represent static information. But I think there'll be a nice synergy between the two."