Targeting NFC latecomers, Square exports contactless terminals to U.K., Japan
To eke out growth in the mature payments terminal market, Square is taking its newest NFC-enabled hardware to markets outside the U.S. with heavy contactless card penetration, where some merchants are likely to be behind the technology curve.
Square has launched its Square Terminal—a portable NFC-enabled device with an EMV card slot that also prints receipts and rolled out a year ago in the U.S.—in the U.K., targeting sellers using older hardware with no contactless capabilities.
The U.K. has achieved broad usage of contactless, with more than half of all transactions occurring through tap-and-pay terminals, particularly in urban areas, led by Transport for London’s integration of NFC on trains and buses in recent years and nearly all major merchants embracing the technology.
But certain smaller and midsize businesses still lack the new generation of portable contactless-enabled terminals, and Square hopes to exploit this niche.
“Many U.K. businesses are using outdated keypad card terminals that come with unfair fees and long-term contracts,” said Jesse Dorogusker, Square’s head of software, in a press release.
Square hopes the strategy will drive incremental revenue growth in an area where hardware has become a commodity business and many merchants are moving to digital and app-based payment acceptance.
Through the same logic, Square earlier this month launched its Square Terminal in Australia, another market where contactless cards have been the dominant payment factor for a couple of years, but some merchants still have not yet have adopted newer NFC-enabled hardware.
The San Francisco-based company plans to roll the terminal out in Tokyo soon, another market where contactless cards are available, according to a Square spokesperson.
Merchant adoption there could be a tougher prospect, as Japan is seeing a resurgence of cash usage from consumers cooling on card use.
In the U.K. Square is selling its Square Terminal for about £199 (US$250), with an option to pay in 12 installments of £12. Square is charging U.K. merchants 1.75% for chip-and-PIN and contactless transactions.
Merchants may add any of Square's business operations software modules to the service.
"This is a simple, turnkey product that eliminates a lot of the hassle for SMB merchants, and with the ongoing evolution of Stripe and their movement into the physical world, this is a competitive offering," said Thad Peterson, senior analyst with Aite Group.
One reason it’s likely taken Square about a year to roll out its newest terminal in other countries that in each market it enters, Square must customize its hardware to synchronize with the local language, taxation and tipping customs.
In major markets outside the U.S. including the U.K., Australia and Japan, credit and debit cards both require PIN entry through Square Terminal’s touchscreen.
Square Terminal is designed for restaurants and store environments where a smaller, portable terminal with a longer battery life is required. These merchants are often larger than Square's traditional micro-merchant base, and need a portable, all-in-one payment terminal that staff can use for point of sale, taking payments and receipts, according to Square.