Monday, August 27, 2012

Are you a Square?- The merits of a mobile card reader

Being a small business owner is a lot like being a contestant in the Hunger Games. You feel like you’re in constant peril, all alone and your second book was not as interesting as the first. The last one may not be true but the other two kind of are. With the economy still in a severe slump and businesses that seemed like a great idea at the time (I’m looking at you Virgin Mega Stores) are crumbling under the weight of the no longer interested. The question then is what are some of the things that keep you ahead of the poisonous darts of bankruptcy and/or a lifetime of shame?

Mobility, in both small business and The Hunger Games is very important. Being available for the customer whenever wherever is edge that can make the difference between a lifelong customer and a grouponer. Mobility along with ease of access is a two pronged attack against becoming a worthless bum who once owned a thing. So how do you combine those things? You combine them, in the form of the mobile card reader.

If you have a smartphone/tablet you simply plug it into your phone and you can swipe debit/credit cards that then deposit directly into your account. The most popular mobile card reader is Square. Which funnily enough is a white square about the size of the keychain that plugs into the headphone jack of your device. The app downloaded gratis, from the company. The app does the rest.  They charge 2.75% a swipe for the privilege of using their service. But they are looking at just charging a monthly fee to customers so that those with small prices but high credit card volume can get in on the show as well.

This is the current hot ticket in the tech world that doesn’t create smartphones. Tons of companies are out there with different versions of this device. Even Paypal already came out with a triangle version of square. But they are not yet as popular due to the fact that many think that Paypal is the devil incarnate. But the big question is it worth it? Yea, the idea of it is great, but if it just gathers dust in the bottom of your bag it’s not much of innovation for your business.

The biggest positive to something like this is that you are ready for any kind of customer. If the little old lady that you spent two hours fixing her internet connection says that she can’t find her check book you can then whip out your card reader and direct her debit card towards it. A person calls and says he loved your jelly from the county fair two months ago you can easily look it up and send him ten crates without getting all his info again.

Another thing to think about is that you never know when you are going to meet your next customer. While meeting friends for coffee someone could mention that they have a job that they just can’t seem to get started. You offer your services, you have pricing and the ability to put their name on the dotted line right there instead of hoping they’ll call next week. Even though you let them eat your delicious pastry.

The negatives come from lack of use and the price of innovation. The percentages on each use will rack up every time you use it. So some profits will be eaten up by cost of using the service. For example every $10 swipe you lose $0.27. Add that up over a day and you have gotten $100 of profit and $2.70 of loss. Not a ton of loss but it does add up. Especially if you’re something like a coffee shop with people only wanting to spend $2.00 and pay with a credit card. That’s going to start to hurt. But not having it is a bit like being an armless zombie in The Walking Dead. You’re still gonna get fed but not before those with appendages. This is a fast moving innovation and they are working hard to make it almost completely free so the pros seem to outweigh the cons. This is a big way to help keep a business afloat as long as the risk is worth the reward for your company.