Four years ago, when its little card reader attachments for phones and tablets began to show up in cabs and at farmers’ markets, Square was one of the coolest, most innovative companies in Silicon Valley. Building an infrastructure of card readers from scratch was a challenge—especially through small-business owners and word-of-mouth. Still, for people who couldn’t use checkout counters for their customer transactions, Square offered unparalleled convenience. That’s over.
Today there are more than 80 companies, including PayPal and Amazon.com, offering card readers that look a lot like Square’s, often for less and with more features. In August, Amazon introduced Local Register, a similar service that offered merchants a 36 percent discount over Square swipes until 2016 if they signed up by Halloween. (The company wouldn’t say how many have signed up.) In the market it pioneered, Square looks “a little long in the tooth,” says Nick Holland, an analyst at Javelin Strategy & Research. Even among its core market, businesses with $100,000 to $1 million in annual sales, the company’s share stands at 10 percent, according to Javelin data.