1. They invested in getting the pay-by-phone experience perfect from the start. That's why Starbucks adopted them. Their wallet app makes GoPago's look amateurish.
2. They invested in getting their processing fee simple and low for their initial targets, P2P and cafes/boutiques. It's lower than GoPago, and that's the biggest cost to the business in the long run. Starbucks noted actually saving money with Square. Starbucks!
3. They don't ship crap. It's true their register feature set is not yet sophisticated enough for more complex businesses like restaurants. But rather than overreaching, they're starting from the simplest businesses and working their way up.
Square would rather start with simpler cases and make a perfect end-to-end system, including the consumer's wallet app. It's really smart. I'm already paying with Square's app at my favorite cafes and local boutiques. I can't overemphasize the importance of their early focus on a wallet app to their long-term success.
BTW, the "it's just slick marketing" jab is one that was often used against Apple. Square is following the Apple playbook.
Their adoption of square speaks nothing of the competition in the not-starbucks market.
Just because starbucks is using square does not mean that it is the right fit for an organization that is miniscule by comparison. Where the company is so small they need to rely on the services of someone like this to augment their capability where they do not have the staff/resource/savvy....
Nobody is saying squares app is crap. We are saying that "business in a box" is pure marketing fluff and is meaningless.
I am saying that your starbucks example is exceptionally weak to say that "square won" this category.
Even assuming you don't have wifi, it's highly likely that paying for your own dataplan is smarter than going through a third party. GoPago uses Verizon wireless, but does not indicate how much of your monthly fee goes towards it. Small businesses get by on the skin of their teeth, so $1,420 in savings is $1,420 you can spend on something far more important.
I think this breaks down easily: 1) You DO have existing device and data plan, and need to be mobile: Square (or similar service) makes sense. 2) You DONT have existing device or data plan, and need to be mobile: GoPago
I think the evolution of phones tends towards people already carrying a smartphone with data plans, making square (or other service only -- no hardware solutions) somewhat more attractive with its rates.
That being said, after taking a quick look at the front-facing material on both sites, I have a question for you/GoPago: While the point you make about the initial cost being higher (about 1k with iPad) is valid, Square seems to run a pricing scheme where they charge a flat $275 per month and get rid of any extra cut they take.
Just based off some rough math, assuming the business processes $200k worth of transactions per year (about $550 per day, very reasonable) merchants will save about 2.5k per year if they use Square. For more slightly more successful businesses who process upwards of $500k-1m per year the delta grows even larger (upwards of $26k).
If the merchant runs a 1-man business which processes maybe $50k worth of transactions per year and uses Square's charge of 2.75% per swipe, he'll still be saving approx $300. And he'll own the hardware which inherently has resell value.
What specifically does GoPago offer over Square which is worth at least $300?
What's the value of GoPago over Square for that 50k merchant? Mobile Storefront -- which has been a fantastic discovery tool to connect consumers with merchants on GoPago. It allows people to place orders on their phone to the POS terminal itself, no phone-calls necessary. We also have a much more robust reporting suite, support for scanners, support for wireless chit printers (so merchants don't have to ferry order receipts to the kitchen), a modifier system (this is huge if you do any sort of volume -- on Square's software, you need to manually input modifiers and their prices every time you ring up an item with modifiers like condiments/toppings).
Also, the cost difference in Square's favor is not realized until the end of the first year. If you're starting a business, the outlay needed for Square is precious money that could go elsewhere in your organization.
Square Wallet also does business discovery via location and promotions/loyalty programs (i.e. virtual "buy 10 get 1 free" deals, etc) and gift cards.
Are they just addons? For instance, "add cheese" for $1 to an existing menu item? Or are modifiers something else entirely?
It's actually a quite interesting mapping exercise. I spent a couple of days watching how my friend handled his customers, and what they ordered. This was important because it comes down to decisions like do I make the menu item "Large Coffee" or "Coffee" with a size modifier group. The latter may make most sense to the developer parts of our brains, but it was completely the wrong thing for my friend, with the former, he could just stab "large coffee" and move on... Workflow trumps "correctness" in some sense.
I'm only familiar with the modifier system in BreadCrumb, which works okay, but would really benefit from conditionals, since modifier groups may have the same label, but have different pricing schemes. For instance, lattes had different price differentials between sizes than chai lattes, so two size modifier groups had to be created with those different price differences. It's not so bad until you go to create a new group, and try to find the right modifier for "Large" since you've now got 5 of them to account for all your menu differences.
Imagine two competitors. Mine got to market first, it had a better feature set, and was more similar to what the consumer was used to (based on similar products on other platforms).
But a competitor shows up. Their product had less features and was "different" to the established things. But their product was easier to use, it had better marketing, and people just flocked to it.
It literally took six months for the competitor to match my offering in terms of features but ultimately none of that matters because if the marketing is good and the UI is easy to use people will just work around everything else/put up with it.
By the time they matched my feature set the writing was already on the wall. Even if I had released an update matching their UI it wouldn't have made a damn bit of difference since they already had the reputation/user-base.
Since the start one of Square's major advantages is their deceptively simple user interface - their conversion rate of getting interested merchant's email / info is likely many multiples over competitor's contact rate.
Unsolicited free advice is worth what you paid for it, but feel free to drop me a line via my profile if you'd like some actionable recommendations for closing that gap . . .
My first thought was, hmm... no iPad.
Then I thought: "Zero information on the system, apps, features etc that this would offer"
I see a retail cashiers pedestal in a box and nothing more. Also, that receipt printer is $200?!?!?
----
A long time ago I wrote here on HN that I thought Square could kill if they really did offer "A business in a box" - but I was specifically talking about all the applications and features of an app that would allow one to run a business and would tie in everything associated with that [Sales, inventory, supply chain, vendor mgmt, financials, etc..etc.. etc...]
This offering looks really weak. Further, given the formfactor of the square reader - the "custom" designed ipad stand looks severely lacking; namely: I would have included a more robust card swiping shroud over the read to make it more sturdy and last longer.
This product appears to only serve to make people feel as though they are Playing Business because they have the cashier stand. This does nothing to actually enable your business/business processes.
The receipt printer is $300. I boggled at that too, and then looked around, and that's really what it retails for (or close enough). I have difficulty understanding why it's so expensive, but do keep in mind that it's designed to work for years on end in a retail environment -- it's got to be overbuilt to last.
Square is pretty late to the game. Their software is pretty, but it has a much smaller featureset than every other tablet-based POS software out there (including our own competitors).
Additionally, their prices do not include the cost of the iPad, which is another $500 on top of this 'business in a box'. They are selling a cash box, an ipad stand, and a card reader for $300, which is not a terribly great deal.
Their software does not include modifiers, which is of paramount importance if you're dealing with any volume of customers over a trickle. Their reporting system is slick, but bare.
Square works very, very well for P2P transactions. People at farmers markets, flea markets, garage sales, or anywhere where the volume of orders is small will find great value in Square's handheld offerings. But for businesses, it is sincerely lacking.
Comparatively, GoPago (my employer) sells GoPago Live, a tablet-based POS system that costs $99 a month, and comes with literally everything you need: stand, swiper, cash drawer, plus the tablet, printer, optional scanner/upc support, wireless chit printer, and a built-in 4G connection. And it comes with the GoPago Mobile storefront -- which allows your customers to send orders (with modifiers, instructions, etc) directly to your POS terminal.
I am obviously biased, so take all this with as much salt as you'd like -- but Square has a lackluster offering polished behind a veneer of masterful marketing. Their 'business in a box' is a misnomer, as it does not include the core component: the tablet. GoPago truly offers the complete system.