As expected, Square has just launched a merchant directory, which already boasts 200,000 listings, the mobile payments company told us this morning. Its sheer size should be enough to grab anyone’s attention, but it doesn’t hurt that it also represents a major upgrade over what we’ve come to expect from traditional business directories. In addition to getting listed, businesses can use Square’s directory to provide customers with up-to-date information on their latest offerings, deals, specials, etc.
As the size of the directory indicates, the vast majority of the newly-listed businesses are not using Square’s payment processing services. Not yet. This new catalogue can prove to be the perfect marketing tool for attracting new Square converts, which is surely its primary function and the initial indications are that the payment processor may have hit the mark yet again. The number of would-be Square-killers may still be growing, but Jack Dorsey’s juggernaut’s chokehold on its section of the mobile payments industry seems to be stronger than ever. Let’s take a closer look at the latest developments.
So here is what the company has to say about its latest invention:
Square directory [is] the first web-based search engine that enables buyers to discover new places to shop, search menus by item, and find nearby loyalty deals and specials. Over 200,000 businesses have already listed themselves in the Square directory, making it easier than ever for sellers to showcase their offerings and for buyers to find new businesses in their area where they can pay with Square Wallet.
By the way, I think that this is the first time I’ve seen the phrase “Square Wallet” on the company’s website. Now, the start-up had introduced a mobile wallet-type of service earlier this year to compete with the Google Wallets of the world, but it had named it, somewhat awkwardly in my opinion, “Pay with Square”.
Square vs. the Clones
Semantics aside, the synergy of Square Register, the company’s point-of-sale (POS) terminal, Square Wallet and the new directory propels the start-up quite a distance ahead of all of its clones, PayPal very much included. Moreover, going forward that distance is likely to keep expanding, even as some of the copycats, such as GroupOn, have decided to start a price war, which I think betrays their desperation more than anything else. Even before the launch of the new directory, Square was growing at a blistering rate, as shown in the graph below. Nothing the clones have thrown at the original has succeeded in slowing it down.
And I expect that the new Square directory will help the processor put even more distance between itself and the competition. Why? Well, tell me, who will be using the directory? That’s right, all of those browsing it will be Square users, an increasing number of whom will have downloaded the Pay with Square / Square Wallet app. What’s more, as the company tells us, Square Wallet makes it even easier for people to
explore nearby businesses, browse menu information, and earn rewards, all on their phone. Customers can store their favorite places and digital punch cards in their digital wallet.
However, in order for the customer to collect her reward, the merchant must be using Square Register, so that its POS system can “talk” to the customer’s phone. And that means that the merchant needs to be a Square client. Hence, the business comes under pressure to switch its processing service to Square. And that is precisely what the processor wants.
In order for Square to be successful in utilizing the full potential of its new directory as a tool for attracting new merchants, the processor will have to convince its users to start downloading and actually using its Pay with Square / Square Wallet app, which, sources tell us, has been slow to catch on. But the directory can create a feedback loop whereby the merchants proselytize Square’s cause to their customers and vice versa. We shall see.
Image credit: Square.