Square's announcement Wednesday that it
will finally release an EMV reader into the wild can be viewed one of two ways:
Either it is too little, too late or perfect timing.
For the United States, it is perfect
timing since the infrastructure for EMV merchant acceptance is still in the
early stages as the liability shift deadline is October 2015. Once that passes,
merchants will be on the hook for purchases made with stolen cards.
Square, however, could run into issues
expanding its business overseas as it will face stiff competition from
established companies such as ROAM, iZettle and payleven.
Meanwhile, Square is preparing U.S.
merchants for the transition to its EMV reader on the website
https://squareup.com/emv and will make periodic updates on the official company
blog at https://blog.squareup.com.
"Square saw the writing on the wall
[with EMV]," Thad Peterson, a senior analyst for Boston-based Aite Group,
told Mobile Payments Today. "They couldn't have a device-driven payments
business without an EMV-capable device, particularly since they're trying to
move up from micromerchants."
Square will not change the form factor
of its very recognizable dongle for EMV acceptance.
Merchants will "dip" the card
into the reader chip-first and it will remain there for the transaction's
duration. Consumers confirm their purchase with a signature on either the
smartphone or tablet screen. The dongle will still accept mag-stripe cards.
Square's chip-and-signature approach is
fine for the U.S. where that will be the standard, but chip-and-PIN is the
standard elsewhere as companies in this market offer merchants devices with a
built-in PIN pad.
"Right now, we're focused on
building a chip-card reader for U.S. merchants," a Square spokesperson
wrote in an email to Mobile Payments Today. "That said, the EMV technology
that we're designing is definitely a step toward building the solution for
other international markets."
Up until this point, Square's lack of
EMV support was an issue it dodged whenever industry analysts and reporters
broached the subject with the company.
Earlier this year, ABI Research ranked the expanding mobile point-of-sale market based
on a number of categories in implementation and innovation. Square did not
place in the top 10 based on missing EMV support, which limits its growth
potential worldwide.
"In terms of market share, they
have that going for them," Phil Sealy, the report's author, told Mobile
Payments Today in April. "They are doing very well in the States, which is
a hotbed for mPOS deployments at the moment. But they fall short in EMV
support. That has limited their potential, and that will have to be
addressed."
Sealy Wednesday was whistling a
different tune about Square.
Square's EMV reader will prevent other
vendors from swooping in to try and steal the company's current business, he
said.
"It will help them protect the
legacy business that they've already established," Sealy said. "The
other vendors out there would have been potentially targeting that business as
the U.S. migrated to EMV. This a way of protecting their base, particular in
the States where they have a strong foothold."
Square vowed in its press release to
release the reader at a price that is much cheaper than its competitors. The
company now offers its mag-stripe reader free to merchants that order it
online. Apple and other retailers sell Square for $10, but there is a $10
rebate.
A heftier price for a Square EMV dongle
is not necessarily a bad thing, Sealy said.
"If they charge per unit, it gives
people a reason to reuse it instead of using it once and putting it in a
drawer," he said. "That might help them get more consistent business
from each device.
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