Updated 9:57 AM pacific with comment from a Square representative
Payments processing company Square is hungry for new revenue streams — and the food business looks appetizing.
The San Francisco, Calif.-based firm today launched Square Order, a food ordering and payments app. Available for iOS and Android, Square Order lets folks order and pay for food that they’ll pick up (there’s currently no delivery option). Square is launching the service in San Francisco and New York, with plans to expand to additional U.S. cities over time.
“We’re starting small,” Square representative Semonti Stephens told VentureBeat. “This is phase one, [so] you’ll see a lot more functionality in the coming months.”
Simultaneously, Square has pulled its three-year-old mobile wallet app from the Google Play and iOS app stores — an acknowledgement that it didn’t prove as popular as Square had hoped. It only took Square two meetings to decide to kill its mobile wallet initiative in favor of Order, a more focused approach, Square director Ajit Varma told ReCode.
Square is not completely shutting down its wallet app: It will continue to operate for existing users.
“We’ve removed Square Wallet from the app store because we want to give customers one [mobile payments] experience,” said Stephens. But “it’s not like we’ve unplugged it and walked out of the room.
“It made sense to be able to just start fresh on this new platform.”
With Order, Square is entering a crowded market — food ordering platforms like Grubhub Seamless are already extremely popular in metropolitan areas — but Square has some advantages. It already handles payments for a ton of merchants, many of whom sell food, so those businesses will be more inclined to enable pre-orders through Square. And because Square processes the payments itself, it won’t have to pay service fees to a third party, saving Square (and, perhaps, hungry foodies) some cash in comparison to most other food ordering platforms.
Square is charging merchants 8 percent for order-ahead transactions, rather than the standard 2.75 percent it charges for credit card processing through its platform. The company reasons that online orders will bring the merchants new customers, so it makes sense to charge more.
Some competing vendors charge even higher rates: Grubhub Seamless fees start at 10 percent and can rise to 14 percent if participating merchants receive a high volume of online orders. There’s also a $150 monthly marketing fee to list a restaurant on the platform. Those costs may make Square Order an attractive alternative, if the company can build up a sizable user base.
Square Order arrives at a turbulent time for the company, which reportedly shelved prospective IPO plans amid growth concerns.