Point of sale. They're building toward a monopoly on point-of-sale devices in small businesses. A lot of restaurants and locally owned shops have ditched their old registers in favor of Square registers, and Square gets a cut of all their sales. They can expand outward from there, getting into the enterprise market for chains, replacing the ugly, expensive bloatware.

Really complex retailers with broad product lines, like supermarkets and big box retailers, will continue with highly customized in-house solutions. But for retailers with only dozens or hundreds rather than thousands of products, and limited budget to buy fancy solutions, it's a godsend.

And, because the customers are making a major, high-risk, customer-facing commitment, they're going to be very sticky, very unlikely to switch. Basically, Square is entering a market where the established players are too slow and coarse-grained to reach a lot of potential customers, and then they'll have a terrific barrier to entry. That sounds like a good deal to me, from an investment point of view.