Disruptive mobile payments company Square is making a number of announcements today relating to growth and new user features. First, the company is dropping its new user limits.
For background, Square offers an iPhone, Android and iPad app which allows merchants to process and manage credit card transactions with a handy little credit card swiping device that plugs into the headset/microphone jack. The device and service is the brainchild of Twitter co-founder Jack Dorsey and Jim McKelvey. In May, the company debuted a new service to replace the cash register and loyalty card, and in June, Square raised a $100 million in funding, which valued the company above $1 billion.
Historically, if a new Square user processed more than $1000 in transactions per week, anything above that $1000 will be held for a certain amount of time. This time period ranged from a few hours to as long as a month. How much was help was also a variable amount based on an algorithm that scored merchants. Users had the ability to negotiate and work with Square to raise these limits, but it was on a case by case basis.
Today, Square, which launched to the public exactly a year ago today, is abolishing those limits so all new businesses who use card reader will have funds triggered for processing the same day, the proceeds arriving in the merchants bank accounts the next business day. Clearly this ability to provide merchant money as fast as possible despite being a new user is just another way Square is trying to disrupt the payments space for businesses, especially small businesses who may feel the loss of these limits more than a large enterprise. As you may remember, Square also dropped its $0.15 per transaction charge for businesses a few months ago earlier this year.
Square's Keith Rabois also revealed a number of growth statistics for the company, including that the payments service is now processing $2 billion in payments volume per year. To date, Square has been activated by 800,000 merchants which is up from 500,000 card readers shipped in May. Rabois says that Square's merchants are now 10% of the reach of the Visa/MasterCard world.
Rabois says that the new user limit drop is part of Square's greater vision of eliminating the need for a merchant account, and giving businesses one simple and easy to use product without the fees, and limitations associated with most payments product.
“We're not going to sleep until we improve the entire experience of buying and selling,” he says. “Every month we'll have improvements to the product.” In August, Square updated its mobile apps for a more fast, and seamless payments experience.
With more products and improvements set to debut soon, it should be interesting to see how Square continues to innovate and build out its user base. Stay tuned.