Square Wants to Make Mobile Payments Ubiquitous With Apple Payby
Company offers merchants $12,000 of Apple Pay transactions
Additional push for consumers to adopt mobile wallet payments
Square Inc. is giving merchants more than $12,000 worth of Apple Pay transactions for free over a year, another effort by the company to encourage consumers to pay for quick retail transactions with their mobile phones.
The electronic payments processor is betting the investment will boost sales of its contactless readers and entice new merchants to sign on to the system. The campaign with Apple Inc.’s digital payment technology will be targeted at retail businesses with counter tops -- as opposed to food trucks and street sellers that were among Square’s earliest customers.
Consumer use of mobile wallets such as Apple Pay “is still new, it’s early days, and it’s small,” Jesse Dorogusker, Square’s head of hardware, said in an interview. “But we think the opportunity is big if we can communicate the right story -- speed to get in and out of a business matter and it’s also a more secure transaction.”
The company last spring rolled out a two-month marketing blitz in Portland, Oregon, that featured display ads on trains, discount beer tasting, and yoga classes to persuade shoppers to pay with their phones. In partnership with Apple, Square is attempting to educate users across the nation about the value of mobile payments in the U.S., where they represent less than 1 percent of all transactions this year, but are expected to triple to $92 billion by 2020, according to Javelin Strategy and Research.
“Mobile payments are not yet ubiquitous and a lot of consumers don’t even think to use it,” said Emmett Higdon, analyst at Javelin. “What Square is doing to make contactless payments available at more locations is great. We need to solve that problem first.”
The partnership could also give a boost to Apple Pay, which has been facing stiffer competition. Though it’s the current leader in mobile in-store payments, many retailers from Wal-Mart Stores Inc. to CVS Health Corp. are rolling out their own services.
Most of Square’s revenue comes from charging merchants 2.75 percent for each transaction. The San Francisco-based company said the free Apply Pay transitions would be worth about $350 in processing fees for an individual merchant. Square, which has sold about 500,000 contactless readers, didn’t disclose the financial terms of the deal with Apple.
Joshua Kulp, a Square merchant and owner of Honey Butter Fried Chicken in Chicago, said Apple Pay is much more popular with his customers than credit cards, particularly as the cards have transitioned from swipe strips to embedded chips.
“Keeping the line moving and flowing is very important to us,” said Kulp. “When chip readers came out, we all noticed it took seconds longer than everyone was used to. With Apple pay it’s so fast.”