|Wed June 26 2013 10:57:58|
What Would Get You to Try New eBay Rival from Square?
By: Ina Steiner
Many small sellers are blase about new marketplaces, having had their hearts broken many times before by companies' failed attempts to launch an eBay competitor. So what would get you to try a new one?
Square, a company that allows sellers to easily accept credit cards in the offline world, is expanding to the online world with the launch of an online marketplace for merchants. The move comes as PayPal expands its service offline through retail point-of-sale systems and credit card swipers.
Square has the advantage of lower fees - in particular, there's no 30 cent per transaction fee as many online payment processors have - an enormous advantage especially for sellers of very low-priced goods (30 cents is 15% of a $2 item!). And it ONLY charges payment processing fees - no listing fees, no commission fees. Compare that to eBay, Amazon and Etsy, and Square Market looks like a bargain for sellers.
On the other hand, Square only allows merchants to accept credit cards. Not only does that limit buyers' choice of payment method, it also means sellers are bound by the credit card chargeback process if a buyer contests a transaction.
Square is also limited to U.S. both in terms of sellers and customers, according to the Square Seller Agreement, which does not seem to have been updated to account for its new marketplace. (It does have an updated agreement for buyers.)
Another challenge is that Square thinks like a payment processor, not like a marketplace. New merchants looking into Square Market will want to know how they can easily upload their inventory and keep it synced across all of the channels on which they sell, how their listings will get exposure to buyers including on search engines like Google and Bing, and how the company will protect them from bad buyers.
In last year's EcommerceBytes Sellers Choice Awards for Online Payments, respondents who rated Square rated the service very highly, particularly on Fee Structure (8.1) and as a service they would recommend to other sellers (8.6). Its lowest mark was for Dispute Resolution (7.2). However, until today, Square was designed primarily for in-person credit card processing and the company did not make it into the final Sellers Choice chart because too few readers had rated Square. (PayPal was used by the most respondents.)
The launch of the Square Market will likely be a big draw to small marketplace sellers, especially Etsy where many sellers already use Square to process payments at fairs and shows. Square has a big advantage over other companies that have tried to gain traction as a marketplace - not only does it have an existing base of merchants, but ones who are motivated to drive buyers to their Square Market store thanks to the lower fees.
However, rival payment processor Dwolla charges only 25 cents per transaction, period, but it's been a challenge for the service to gain traction - low fees alone aren't a guarantee of overnight success.
EcommerceBytes is currently running its annual Sellers Choice Awards (you can click here to rate the ecommerce services you use, including online payments) - a sneak peek at some of the comments from sellers about Square include the following:
"LOVE Square!! They just charge the %. Wish PayPal only charged the % (even if it was another 1/10 percent or something to make up for the lack of a service fee. That 30 cents on small sales ($1 or $2) REALLY hurts!"
"PayPal is becoming more of a hassle to use their guarantee of a refund regardless of the situation is a major problem. Switched to Square earlier this year and it is working great with a lot more ease of use and lower fees also."
"PayPal requires a $30 monthly membership for Merchant Account, in addition to transaction fees. I've been stuck with it because I take orders from other nations and require PayPal's currency exchange. Now that international sales have dropped drastically due to USPS increase, I may be dropping PayPal for Square at the end of the year."
Peruse the Square marketplace, learn about setting up a Square Market store, and let us know if it's something you'll be exploring (and why/why not).
What odds do you give Square Market of surviving (and thriving), and which current player has the most to fear?