Square's sales pitch has largely been based on the ease of plucking its mobile card reader of a retail store's shelf and suddenly being able to accept swiped card payments. But for some merchants, it hasn't been so easy.

Square's new "Business in a Box" product, which starts at $299, aims to attract the merchants that have more complex needs.  It bundles in items such as a cash drawer and a receipt printer, which merchants would otherwise have to purchase separately.

The move has converted at least one Square holdout, the proprietor of a 30-year-old donut shop in Santa Monica, Calif. When asked if he'd use Square previously, Sean Tao, who owns DK's Donuts and Bakery, says: "No."

"Because I do need a cash register. I do need a printer. And I'd have to find my own [if I used Square], and you don't know if it's compatible with the iPad," says the 25-year-old, who inherited his business from family about three years ago. "It was more of a headache, [before] you'd have to go out of your way to make it work."

Tao first began using the bundle in early December, after being cold-called by a Square representative.

Now, he runs roughly 95 percent of his card payment processing through Square, keeping his old point of sale system (which he describes as more expensive) for emergencies, such as when the Wi-Fi in his shop isn't working.

"I try to process as many [transactions] as I can through Square," he says.

Square has struggled to win over other merchants its portable card reader.

Jack Azimi, who owns Rockwell's Restaurant in New York, was unable to accept credit and debit cards after Superstorm Sandy because his phone line was knocked out.  Azimi would seem like the perfect candidate for a mobile card reader, but he couldn't use Square because he did not own a smartphone to plug it into. "You don't think of those things when everything is going right," he said in an interview last month.

Even Starbucks, which famously invested $25 million in Square last year and uses the company for processing, never agreed to use its hardware.

Square's new bundle marks the first time it has charged for its hardware. The switch is a stark change for the Silicon Valley company.

"I think it's notable," says Brian Riley, a senior research director in the retail banking and cards practice at CEB Towergroup. "What Square is finding out quickly, and only because they grew so fast, is that you can't approach cards from a single angle, and [right now] that's kind of what the Square model does — it's a device that plugs into a phone."

Already, he adds, many others have copied that model, after Square legitimized the market -- TSYS, VeriFone (unsuccessfully) and PayPal, to name a few.

Others already offer bundles similar to Square's "Business in a Box."

For instance, NCR is selling its point of sale payment system — which costs $499, and comes with a $79 a month fee (waived for the first month after purchase) — at Staples.

The NCR package includes NCR's Silver card reader, a cash register, an iPad stand and a cash drawer.

"You can't be a one-trick pony in this business and survive," says Riley. "[And] you can't diminish that these guys [Square] have a million customers."

Indeed, the decision to bundle hardware and charge a price for that package is natural for Square, says Jim Van Dyke, the chief executive and co-founder of Javelin Strategy & Research, a division of Greenwich Associates.

"Merchant payment processing is one incredibly fragmented market, despite years of consolidation. Square will have to bet on achieving profitability that can only come if they achieve scale," he says. "And that means digging deep into their founder's [Jack Dorsey's] war chest."

The hardware might be valuable to smaller merchants — "not only simplifying payment options but also bringing in advanced technology," he adds. "Makes you wonder if and when Square will launch a significant foray into mobile POS payments that benefits consumer, merchant and bank."

Still, Square is infamous for its good PR. And, while this announcement surely is a stab at solving some of its real business problems, it has elements that appear to be more sizzle than steak, says Rakesh Agrawal, a consultant on mobile payments and marketing.

"It just seems like a hack," he says. "I don't see it as being meaningful to their business. They don't really have a business channel for this."

He adds that Square's retail relationships with Starbucks and others to distribute its dongles don't necessarily mesh with what small business owners want.

"They've tried to sell the Square reader at retail, and I don't know how successful that's been, but still that's not how small businesses go to buy payments services," says Agrawal. "They don't go to Starbucks hoping to pick up payments technology."

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