With New Retail Deals, Square Doubles Locations That Sell Its Card Readers

Merchant processor Square Inc. doubled the number of physical stores at which its now-famous payment card reader for mobile devices can be purchased with Monday’s announcement that the reader is available at Walgreen Co., Staples Inc., and FedEx Corp.’s FedEx Office stores.

The three new merchants collectively add 10,000 locations: 7,000 for Walgreen and 1,500 each for FedEx Office and Staples, bringing to 20,000 the number of retail locations San Francisco-based Square says its cube-shaped reader can be purchased. Earlier sellers include Best Buy Co., Apple Inc., Target Corp., OfficeMax Inc., Wal-Mart Stores Inc., RadioShack Corp., and United Parcel Service Inc.

A Square spokesperson would not release numbers but indicated by e-mail that the retailer program is successful. “We do not disclose specifics, but we have seen very favorable reception from all of our retail partners and are eager to continue to grow those relationships and make it easier than ever for anyone to start their business using Square,” the spokesperson says.

While all of Square’s retail partners could easily have many small-business owners shopping in their aisles, the office-supply and services ones such as FedEx Office, Staples, OfficeMax, and UPS would at first glance seem to be more fertile ground for new merchant accounts than Walgreen, the nation’s biggest pharmacy chain by locations, or the other consumer-oriented merchants. But the Square spokesperson notes that Walgreen’s ubiquitous presence could work to Square’s advantage. “Walgreens has amazing distribution,” the spokesperson says. “A small-business owner could be hundreds of miles away from an Apple store, but will more than likely have a Walgreens store right down the street.” Deerfield, Ill.-based Walgreen did not respond to a Digital Transactions News request for comment.

Among the new breed of merchant processors catering to small businesses and part-time sellers who use smart phones or tablet computers as mobile point-of-sale terminals, Square so far is the only one to make a variety of physical stores a major part of its distribution strategy. Intuit Inc.’s GoPayment service has struck deals with telecommunications carriers such as AT&T and Verizon Wireless to distribute card readers to small-business customers. Most others, such as VeriFone Systems Inc.’s new Sail service, or services from a number of independent sales organizations, typically mail readers to new merchants after approving applications submitted online, as do Square and Intuit.

Launched in 2009, Square claims it has signed 1 million small businesses and individuals for its service and is processing $5 billion in annualized charged volume. The growing retail network complements its other services built around Apple and Android smart phones and tablets that besides the card reader include Square Register for merchants and Pay With Square for consumers.

“What eBay and PayPal did to connect consumers with goods to sell online, Square is recreating in the physical world,” Mary T. Monahan, executive vice president and research director, mobile, at Javelin Strategy & Research, tells Digital Transactions News by e-mail.  “Anyone can now accept cards … and now Square is available front and center where consumers and small businesses shop. Simple common sense, but Square is again the first to think out of the box.”

Square’s readers typically sell for $9.95, but Square rebates $10 to new users. Rival services also usually make the first reader free.