The new Square Terminal scratches at a persistent niche

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Square’s growth strategy has always been to aim higher with products and services that benefit larger businesses than the ones it originally targeted with its mobile card reader. Its newest product diverges from that path.

The handheld Square Terminal is much more feature-rich than its bare-bones Square Reader, but it also has a portable design that resembles what a lot of Square's competitors have developed for the restaurant niche. Square's new device supports card and mobile payments and has a built-in touchscreen and receipt printer, allowing it to take payments at a restaurant table or other retail environments that don't require customers to line up at a checkout.

"With other providers in this niche like PayPal, Stripe and Toast ramping up their services for merchants, it’s all working to disintermediate established players,” said Richard Crone, a principal with Crone Consulting LLC.

In restaurants and small businesses like personal services where traditional checkout lines are irrelevant or vanishing, Square Terminal offers a lightweight and secure alternative, Crone noted.

“It’s an improvement on Square’s tablets and other devices because it works in virtually every purchase venue, and both the buyer and seller can easily see the screen, unlike earlier, clunkier countertop devices that required swiveling the screen around to the customer’s view,” he said.

Many mobile point of sale providers have designed their offerings specifically for restaurants, where most payments are handled at the table by handing a card or cash to a server to take away to a POS terminal out of the patron's view. These providers include Punchh, MyCheck and Shift4 Payments.

The Square Terminal device isn't Square's first foray into the restaurant market. This year it also been offering a software package called Square for Restaurants, which handles front- and back-end operations through a single interface to remotely manage ordering and payments, update menus, and change floor layouts. It includes a feature that supports wait staff order placement, staff time tracking, tip splitting and fraud prevention.

Square is also active in food delivery. Square acquired Caviar, a mobile order ahead app, in 2014; it more recently bought Entrees-on-Trays and the corporate catering service Zesty.

Square for years has been pushing hard to crack the restaurant payment terminal market beyond counter-service cafes and food trucks, with big investments in technology for full-service restaurants, with mixed success, noted Rick Oglesby, president of AZ Payments Group.

“Square Terminal isn’t a restaurant-only product, but it definitely enhances Square’s opportunities in table service,” Oglesby said, noting that most restaurants with table service are still far behind mainstream merchants on EMV compatibility.

“This new terminals not only enhances Square’s retail offering but it provides a pay-at-the-table EMV offering that has been lacking in its product portfolio and has particular value for larger restaurants,” Oglesby said.

Square Terminal costs $399 and the company is offering a $300 credit for new customers, with processing fees similar to existing plans. Processing fees for Square Terminal are 2.6 percent plus 10 cents for each payment, which is slightly higher than its basic fees for the older Square Reader and a little less than the 2.7 percent businesses pay for the Square Stand and Reader.

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Mobile point-of-sale Alternative acquirers Square