Square is introducing two new products today: protection to cover some disputed charges between merchant and consumer, and instant deposits, which are still in testing and will be rolled out in spring, according to The New York Times. These services will only be offered to small businesses that have a solid financial track record based on data collected by Square.
After losing $100 million in 2014, the payments startup is in something of an identity crisis, venturing away from consumer-facing products and the reportedly low margins it makes from credit and debit transactions (about 34% gross margin after giving credit card companies their cut.)
With the new services, Square is focusing its strength solidly on supporting small businesses as it tries to keep them loyal to Square products and away from competitors like Amazon, PayPal, and others that have their own credit card readers and accompanying services.
Square, whose strength lies in its wealth of data mined from transactions, has other data-harnessing services in the mix: Square Capital offers a tiny capital infusion to qualified small businesses ($4,000 to $10,000, according to the Times). Those businesses pay Square back at 10% to 14% interest. There’s also the Square Cash app, which lets users pay each other without a fee, and Caviar, the startup that Square bought last year that delivers food from restaurants that don’t offer delivery–both potential footholds for involved small businesses to use even more Square products and services.
These business-supporting ventures follow several high-profile failed experiments to ease the consumer experience, like Square’s unreleased credit card. Major retailer Starbucks dropped Square as a payment partner last December, opting for its own in-app payment system.
But Square has also carefully refined its relationship with small businesses, including allowing them to sell gift cards through Square, announcing a secure chip card reader to be released this year, and integrating Square service with the If This Then That (IFTTT) standard for syncing activity to Google Glass, Evernote, Google Drive, and others.
In other words, Square is putting its consumer products on the back burner and venturing into serving businesses directly with what it does best–data.
[via The New York Times]