Square has become a key Apple Pay partner. The San Francisco-based company has made a big bet on mobile payments — it wants its brand to be synonymous with them — and is now offering incentives to merchants to encourage promotion and use of Apple Pay.
Square will enable local merchants to process $12,000 worth of payments for free if customers use their iPhones to pay. That’s worth about $350 in processing-fee savings to the local merchants. This new promotion follows a successful Square-Apple Pay promotion in Portland, Oregon, in 2016.
Square is providing marketing materials to help merchants educate their customers about Apple Pay and must have requisite in-store signage to qualify for the processing credits. This is essentially an incentivized national rollout of the Portland promotion. Square explained, “The percentage of card transactions from contactless payments at Portland Square sellers tripled over the course of the campaign.”
US consumers have been slow to try mobile payments because of concerns about security and privacy. Many people also haven’t understood the benefits of using contactless payments vs. a plastic card. However, now that chip-cards are pervasive, using a physical card has become painfully slow.
Square and Apple believe that merchants can be an effective channel to educate consumers. The assumption, which has generally been proven correct, is that once consumers try Apple Pay (or Android Pay), they will be more inclined to use it in the future. Millennial users are the most favorably inclined to mobile payments among demographic groups.
While mobile payments have been more slowly adopted than anticipated, they are clearly gaining momentum. Starbucks has seen enormous success and unanticipated volume with in-app payments. Major retailers such as Walmart and Target have also introduced mobile payments.
According to Bloomberg, Square has sold roughly half a million mobile payments readers, which is a subset of their larger merchant user base. The new program will likely generate additional consumer awareness and usage. The question is how much it will move the needle.
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