In Helping out Archrival Square, Intuit May Have More To Gain Than To Lose

At first glance, it looks like a lopsided collaboration between competitors, but the agreement by which mobile point-of-sale upstart Square Inc. will integrate Intuit Inc.’s popular QuickBooks accounting software may end up benefiting both parties equally, some observers say.

Under the deal, announced on Tuesday, users of the Square Register and Square Market apps will be able to flow business data automatically into the QuickBooks program, eliminating the need for tedious manual entry. Register is Square’s point-of-sale payment application for tablets and smart phones. Market is used for e-commerce payments. The program is not set to start until Nov. 19, when the companies say they will disclose pricing along with other specifics.

“Many Square customers talk about how accounting is an important part of their business, and many of them use QuickBooks. Our goal is to make it as easy as possible,” a spokesperson for San Francisco-based Square tells Digital Transactions News.

The deal surprised observers because Square’s iconic card-reading dongle and mobile point-of-sale app competes head-to-head with GoPayment, a handset-based point-of-sale payment solution Intuit introduced in 2009, just months ahead of Square’s founding.

Mountain View, Calif.-based Intuit also operates an acquiring business and offers a product called QuickBooks POS that integrates with GoPayment and can be seen as competing with Square Register.

Despite this rivalry, integrating QuickBooks, a product used by some 4 million businesses worldwide, will help Square, a fact some experts see as a sign of surrender by Intuit in the highly competitive handset-based point-of-sale market, even though Intuit insists it will continue to offer GoPayment. “This could signal another player retrenching from the cutthroat [mobile point-of-sale] space,” notes Nick Holland, a senior analyst at Pleasanton, Calf.-based Javelin Strategy & Research who follows mobile payments, in an email message.

Still, the deal may not be as one-sided as it first appears, and may indeed confer benefits on Intuit that outweigh any competitive risk. To begin with, observers point out that to the extent Square continues to sign up clients for Register, it will only add customers for QuickBooks. “Square has strong customer acquisition volume,” says Rick Oglesby, a senior analyst at Boston-based Aite Group LLC, in an email message. Square refuses to release numbers on its user base beyond characterizing it as in the “millions.”

At the same time, Square and Intuit may continue to serve separate and distinct customer bases, says Dan Wernikoff, senior vice president and general manager for Intuit Small Business Financial Solutions, in an email. For example, Wernikoff distinguishes between service-oriented businesses that operate on invoice-based income, which are an Intuit strength, and storefront retailers, which Square tends to serve.

“How we are playing in the [mobile] space continues to evolve, particularly in serving the needs of invoice-based small businesses,” he says. “Partnering with Square is complimentary to this strategy. With the Square integration for example, a local retailer or restaurant may choose Square, while an invoice or service business–like a travel agent or accountant–may select one of Intuit’s payment solutions, such as GoPayment or QuickBooks Point of Sale.”

Another consideration is that Intuit is likely to add more products from companies like Square to make QuickBooks more useful and attractive to potential users. “This is not a single-deal scenario for Intuit,” says Oglesby. “Intuit’s plan is to become an open platform where it can provide business-management solutions for a variety of third-party applications, so getting Square on board is a good win.”

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As for GoPayment, Wernikoff will not disclose numbers, but says it is “one of the fastest- growing organic businesses at Intuit.”