Square forges partnerships to add large sellers (SQ)

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Square is partnering with point-of-sale (POS) technology firms TouchBistro and Vend to give their merchant clients access to the suite of Square offerings, including payment processing, working capital, and other tools and services, without pushing them to the Square POS system.

TouchBistro and Vend provide POS software and business management tools to primarily restaurant- and retail-related clients.

The offerings will be available to a limited group of TouchBistro and Vend merchants immediately, with plans to roll out more broadly in the coming weeks, according to TechCrunch. The partnerships could help Square continue to push into high-growth areas.  

TouchBistro and Vend give Square access to a large, high volume addressable base.

• They give Square another entry point to high-performing verticals. Square has historically done well with retail- and restaurant-related clients, which comprised 39% of Square's Q2 2016 gross payment volume (GPV). As a result, it's likely that the TouchBistro and Vend clients in these areas will have the same or similar needs as existing clients, which means that Square is expanding a client base that they've already been able to serve successfully. 
• The firms target large sellers. Vend and TouchBistro provide software for businesses that require specialized POS software, according to Recode. It's likely that most of their clients, which for Vend includes over 15,000 stores and brands like Disney, NASA, and the World Wildlife Foundation, easily clear Square's definition of a larger merchant: over $125,000 in annualized sales. And though these sellers likely have more complex needs across the board than Square's offerings in its Register app, other services like Instant Deposit, contactless acceptance, or working capital could prove useful or attractive.

Forging partnerships could be an easy way for Square to continue its push into larger seller bases. Square’s overall GPV increase in Q2 2016 was driven by growth in larger sellers. This population saw a 61% year-over-year (YoY) increase in GPV and now account for 42% of the firm’s overall volume, up from 37% in Q2 2015 and 8% in Q2 2011.

The partnerships provide a way for Square to bring more of these merchants into its ecosystem without having to pull them away from current service providers, thereby giving them a low-risk, high-reward way to further growth.

Companies such as Square are helping mobile payments to become more popular, but they still face some high barriers, such as consumers' continued loyalty to traditional payment methods and fragmented acceptance among merchants. But as loyalty programs are integrated and more consumers rely on their mobile wallets for other features like in-app payments, adoption and usage will surge over the next few years.

Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile payments that forecasts the growth of in-store mobile payments in the U.S., analyzes the performance of major mobile wallets like Apple Pay, Android Pay, and Samsung Pay, and addresses the barriers holding mobile payments back as well as the benefits that will propel adoption.

Here are some key takeaways from the report:

• In our latest US in-store mobile payments forecast, we find that volume will reach $75 billion this year. We expect volume to pick up significantly by 2020, reaching $503 billion. This reflects a compound annual growth rate (CAGR) of 80% between 2015 and 2020.
• Consumer interest is the primary barrier to mobile payments adoption. Surveys indicate that the issue is less the mobile wallet itself and more that people remain loyal to traditional payment methods and show little enthusiasm for picking up new habits.
• Integrated loyalty programs and other add-on features will be key to mobile wallets taking off. Consumers are showing interest in wallets with integrated loyalty programs. Other potential add-ons, like in-app, in-browser, and P2P payments, will also start fueling adoption. This strategy has been proved successful in China with platforms like WeChat and Alipay.

In full, the report:

• Forecasts the growth of US in-store mobile payments volume and users through 2020.
• Measures mobile wallet user engagement by forecasting mobile payments' share of their annual retail spending.
• Reviews the performance of major mobile wallets like Apple Pay and Samsung Pay.
• Addresses the key barriers that are preventing mobile in-store payments from taking off.
• Identifies the growth drivers that will ultimately carve a path for mainstream adoption.

To get your copy of this invaluable guide, choose one of these options:

1. Subscribe to an ALL-ACCESS Membership with BI Intelligence and gain immediate access to this report AND over 100 other expertly researched deep-dive reports, subscriptions to all of our daily newsletters, and much more. >> START A MEMBERSHIP
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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of how mobile payments are rapidly evolving.