The mobile payment market has been heating up as companies try to find ways of turning our smartphones into all-in-one payment devices that eliminate the need to carry a wallet. One company that has returned to the effort to replace the billfold is Square, creator of the flagging Square Wallet payment app for smartphones and tablets. Despite some struggles with Square Wallet the company hopes some new developments will reverse its fortunes.
Founded in 2009 by Jack Dorsey, one of the co-creators of Twitter in 2006, Square's payment system was an early entry into what would become a popular and competitive market. While the company has been valued at as high as $5.2 billion and obtained some early successes with Square Wallet, most notably with a 2012 deal with Starbucks to implement the technology at nearly 7,000 locations, Square posted significant losses in 2013 and has since struggled to gain market footing. Despite Square Wallet's early promise, users have reported seeing little benefit over other payment methods, particularly given increased market competition with payment apps and card collating programs like Apple's Passbook.
Facing the prospect of continued decline and rumors about talks of a sale to a company like Google, Square has started to explore other options. Its most recent development is a new app called Square Order. Taking over from the struggling Square Wallet, Square Order again focuses on the user shopping experience, this time by facilitating take-out orders. Rather than focus on ways to pay at the register, Square Order allows users to place an order for food or other goods ahead of time and receive notification when their items are ready for pick-up.
While Square Order is only available in New York City and San Francisco at the moment, Square plans to expand availability.
Square seeks re-entry to a market of mobile payment transactions with a burgeoning worldwide potential, expected to hit $720 billion by 2017 with 450 million users, according to 2013 estimates by research company Gartner.
Analysts anticipated worldwide growth in the volume of mobile transactions to be 35% from 2012 to 2017 with purchases of merchandise accounting for 23% of the value forecast.
Unfortunately for fans of Square Wallet, the announcement of Square Order also carried a death knell for the struggling payment app. Square Wallet has been pulled from both the Apple App Store and the Google Play market, and the company has noted its intent to phase out the service. Current users will continue to receive support from Square until Order is available everywhere but the company will not allow additional users.
By releasing Square Order, Square enters a growing yet competitive market in major American cities. Companies like Seamless and GrubHub already offer users the ability to order from a large list of local restaurants and pay by credit card, including tip. To compete with these companies, Square will have to offer something they don't. While Square Order does build on the idea of picking up food, as opposed to ordering for delivery with Seamless or GrubHub, Square will have to build a support base of enough restaurants and cafés to convince users to adopt their service rather than simply popping in and waiting in line.
It's too soon to say if Square Order will help its developers gain some much-needed market share, but the trial runs in its two starting cities should give a useful prediction of national appeal.