Payment technological startup, Square, paired with Apple recently to encourage its merchants to accept Apple Pay. Encouraging in this case actually means allowing the merchants to accept Apple Pay for free for each transaction. How Square makes money is through a transaction fee per purchase incurred on the merchant. This fee is quite small and applies to all credit/debit card swipes that occur using their product. Square wants their merchants to accept Apple Pay and encourages them to do so by not charging them a transaction cost. Apple receives more awareness for Apple Pay for free and with the literature and campaigning for Apple Pay that Square is going to provide its merchants, usage for Apple Pay will increase as what happened in Portland, OR earlier. What Square gets out of this is the ability to provide a better service for their merchants and make them more marketable to other small businesses in the now crowded payment hardware business. I believe that Apple actually benefits the most from this partnership. While merchants in plugged-in communities like the Bay Area are more likely to have people use Apple Pay to purchase items, these areas are few and far between. As seen in Portland where a campaign to increase Apple Pay worked quite well, this campaign to encourage people to use Apple Pay will pay off in other parts of the country. Apple will get this usage increase without having to pay a dime, which makes them the big winners of this pair-up.
Article Link: http://www.pymnts.com/apple/2017/square-and-apple-who-is-the-big-winner-of-their-payments-pair-up/
Internet payment will continue growing and companies like apple and square will have more opportunities working together to come up with new products.
I definitely agree with you that Apple is the big winner between this partnership. I believe that we are heading towards a cashless society. By introducing and encouraging apple pay to merchants, more people will be exposed to this option, which potentially helps market Apple’s products.
I think this is interesting in the way that Apple is able to get such opportunities just due to their brand recognition. Companies such as Square simply want to be associated with Apple, and I agree with you that Apple got the better deal in this situation.
It appears Square is really increasing its market share, as I believe they also have arrangements with the Starbucks chain as well. The question I have, and would be interested in knowing is, how is this affecting the traditional card payment service market – Visa, Master Card, and American Express? They are all fee for service companies to the merchant, and I wonder how they are adapting their business plans to stay competitive. Great post!