Square is adding global support for its Register merchant services app, a move that enables the company to measure demand in new markets before investing in the distribution of its hardware and other services.
Squares Register app is meant to interface with Squares card readers to manage swiped card payments, but it also enables merchants to accept keyed-in card account numbers, set up an online storefront and manage inventory. The apps latest updates on Google Play and Apples App Store indicate that Square Register now supports 130 currencies and is available worldwide beyond the three countries (the United States, Canada and Japan) where Square offers hardware.
[Square] is leveraging the free Register software as a means of making inroads into global markets and pinpointing where the service is seeing the greatest traction, said Jordan McKee, a senior analyst at 451 Research. Conceivably, it is testing the waters and will turn on payment processing and provide necessary hardware in markets where demand is highest and an initial merchant base has been established.
In this way, Squares strategy would resemble that of Alipay, which is expanding beyond China by first allowing foreign e-commerce merchants to sell to Chinese consumers.
Square has updated Register, adding data analytics, refunds and gift cards in the past few months. Square also reports momentum in its small-business lending program, which determines creditworthiness through sales history with Square.
It appears that theyve done a pivot to become a business services company and have broadened their product suite well beyond payments, said Thad Peterson, a senior analyst at Aite Group, who called Squares Register update a nose in the tent to establish its brand in advance of fully supporting new markets.
By making Register the lead of an international move, Square can acquire merchants, then in the near future sell its upcoming EMV reader or enable merchants to use Square Register to sell online through an integration with Square Market, the companys e-commerce product.
While Square Market is not available on a global scale, it would seem plausible that the vendor may soon extend this service to select international markets as the next iteration of its strategy, McKee said. With the hurdles to enabling payments in the virtual world dwarfed by that of the physical world, its reasonable to believe that Square Market will precede in-person payment enablement, at least in some markets.
Those in-person hurdles abound. Square already faces challenges convincing its clients to upgrade to its upcoming EMV-chip card reader in the U.S., and an international deployment may raise added hurdles. Most of the world complies with EMV, which may require Square to upgrade as it expands.
Squares EMV card readers accept only signature-based transactions, but to expand to new regions you need an EMV reader with a PIN pad, said Richard Crone, a payments consultant, adding that the PIN pads have the Triple DES encryption generally required in Europe to protect data.
Squares activities in Canada are also worth watching, Crone said. Though Canada is an EMV region, Square entered the country before it designed an EMV version of the its card reader. But even without EMV, Square is building a merchant base that it can tap into as it develops more payment offerings, Crone noted.
Even in Canada, cards still have mag stripes on them, Crone said, adding the benefit for Square is its largely paperless model enables it to accumulate consumers through email and mobile phone numbers.
It was always only a matter of time before Square attempted to go international, so the move is not surprising however it will find a crowded and fragmented market, said Zil Bareisis, a senior analyst at Celent.