Square SWOT & PESTLE Analysis

Strength

1. Broad portfolio of payments related products and services: Square’s payment ecosystem is an all in one payments service with several managed offerings. Accessing Square’s service platform is both quick and easy, allowing sellers to be onboard the system Rapidly. Once that is achieved, they can then accept payments via a stored card, online or by swiping, dipping, or tapping a card. The company’s services are affordable as well as equipped with custom-designed hardware that is able to process all major card payment forms, including magnetic stripe, EMV chip, and NFC. Other services offered include a suite of integrated, cloud-based software solutions which sellers can access to better manage their business. Tools on offer like APIs (application programming interfaces) and SDKs (software development kits) allow third-party developers to combine the Square payment system with their apps, websites, and/or back office systems. Square also caters to the needs of restaurants through its food ordering platform, Caviar by offering a differentiated way to service the food and beverage vertical and allowing them to grow. Square Capital, which deals in financing through a partnership with an industrial bank, allows Square customers to get loans dependent on current payment and point-of-sale data.

2. Rapid growth with global customer base: Square’s customer profile is wide with millions of seller customers scattered all over the globe. These customers range right from small farmer’s market sellers to multi-location businesses in United States, Canada, Japan, Australia, and the United Kingdom. Square has been able to sustain continuous growth mainly due to its capability to easily add new sellers to its network and help them grow. Square’s Gross Payment Volume (GPV) amounted to revenues of $84.7 billion in 2018, achieved through 1.8 billion card payments transacted via 342 million payment cards. This was significantly higher than the $65.3 billion and $49.7 billion of GPV processed in 2017 and 2016 respectively.

3. Strong fraud detection capabilities for merchants: Square claims that its fraud prediction system is far better than that of its peers, as it uses its transaction data for the purpose. Payments to merchants can be completed with far shorter waiting times, generally the next day as compared to the several days required for a typical credit card transaction. This ability also allows Square to approve new merchants instantly, allowing them to accept payments as soon as they activate the Square device. This fraud prediction innovation has enabled Square to gain a significant advantage over its competitors.

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Weakness

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Opportunity

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Threat

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Political

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Economic

1. Deterioration of general macroeconomic conditions: World economy has witnessed a significant lull in 2019, especially with the unleashing of global trade wars and geo-political unstabilities. Square’s business is greatly dependent upon economic conditions as it affects the amounts that businesses and individuals are willing to spend. Also, as most of Square’s customers are small businesses, the chances of their being severely affected by low economic conditions are very high. Small and early stage businesses also tend to fail at a higher rate than larger or more established businesses. Therefore, if faced with lesser overall sales, these businesses will be the first to either reduce payment processing with Square or even stop using their services altogether.

2. Increase in use of digital payments driven by mobile and reduction of physical currency: Mobile phones, mainly smartphones, and the use of the internet, have become indispensible in the current rapidly growing global economy. The combination of these two entities has resulted in the rapid growth of the mobile payment market. This has been helped by the need of local governments to increase financial inclusion and reduce the use of cash. The desire of users in these markets is also a major factor that has helped in the growth of mobile and FinTech innovators into the payments market. Cash and personal checks, the erstwhile most popular means of payment are fast losing favor as consumers transition towards alternative forms of payment like debit and credit cards, digital wallets, mobile commerce platforms, and even cryptocurrencies. Automatic bill-pay options and even online banking are being increasingly used lading to a drop in use of services like checks and cash for large transactions. This trend is extremely beneficial for Square and uits business is likely to improve here onwards.

Social

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Technological

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Legal

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Environmental

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