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Apple 'considered' buying mobile payment firm Square, but Google deal seen as more likely

post #1 of 127
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Both Apple and Google have reportedly had internal discussions about making respective offers to buy mobile payment company Square, though Google is seen as the more likely of the two to actually go through with a purchase.

Square POS


The apparent interest in Square from two tech giants was revealed on Wednesday by Re/code, which said Apple and Google both considered the deals within the last year. Google is seen as "the most likely acquirer," given its existing Google Wallet platform, and its propensity to engage in high-profile, high-dollar purchases.

Acquisition rumors surrounding Square have reportedly "run rampant" in recent weeks, with an offer of $8 billion or more said to be something the payment company's team would seriously consider.

But it was also said that a sale of Square to Google would disappoint CEO Jack Dorsey, as sources reportedly indicated that Dorsey believes Square's "design aesthetic and values" are more closely aligned with Apple than Google. Because Dorsey does not want to sell to Google, it's been speculated that Apple could swoop in for a purchase.

However, Apple has yet to make a billion-dollar acquisition, preferring to spend its cash pile on smaller, more strategic deals. And Wednesday's report suggested that "Apple has soured" on the prospect of making an offer to Square.

Square Stand


Apple Chief Executive Tim Cook hinted in January that his company is interested in entering the mobile payment space, something that could be done securely thanks to the Touch ID fingerprint sensor currently exclusive to the company's flagship iPhone 5s. Cook publicly said his company is "intrigued" with mobile payments, and revealed that such uses were one of the driving factors behind the introduction of Touch ID last year.

"You can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition, that it's a big opportunity on the platform," Cook said.

Apple already carries Square products for mobile transactions in its retail stores. Offerings from Square include the free reader, which plugs into the headphone jack on an iPhone or iPad and allows credit cards to be swiped into a corresponding application, and the Square Stand, a more full-featured point of sale system that utilizes Apple's iPad.

Square profits by taking a 2.75 percent cut of all transactions through the service.
post #2 of 127
Wait, so earlier this year Cook made a point of saying a high dollar acquisition is not off the table; Jack Dorsey would rather be scooped up by Apple (because he thinks Square more aligns with Apple's design aesthetic and values) but yet Apple has soured on the deal? Apple would be crazy not to acquire Square, especially with Cook suggesting one of the reasons for Touch ID was getting into the mobile payments space. I think it would be a mistake for Apple pass and easily let Google swoop in. The thought of Jack Dorsey working for Google makes me want to vomit.
post #3 of 127
Apple should buy Square just as long as it's not a ridiculous bid.
post #4 of 127
$8bn...

Are worth that ? If so, there is certainly enough cash lying around...
post #5 of 127

Does Square own any patents or would this purchase only give them customers? If the latter, then $8B is crazy.

post #6 of 127
The point is that Apple add companies that enhance their vision and enable new products to be made. Square has a product that is highly visible already and it would be hard for Apple to integrate that. They potentially could buy Square and run as a subsidiary (bit like Filemaker) and then learn from its technology and client base.
Alternatively they could make it part of a new type of store purchasing setup that could be applied to high street retailers.
I, for one, like the idea of Apple setting up a CC company, using its cash as collateral. It already has millions of CC info and being part of that chain may be profitable.
Unlike other acquisitions, the tech does not seem that special. Square simply made an ease of use approach for CC payments. Definitely very Apple like and already copied.
post #7 of 127

I would have agreed with you a couple of years ago, but this is today.

 

When I saw Apple introduce Touch ID at WWDC last year, I knew that Apple was not just looking at this for unlocking your phone and making iTunes purchases.  They were most likely thinking that they would try it out for iTunes purchases, work out the bugs, and then use it for their own payment systems.  They already have hundreds of millions of iTunes accounts with linked credit cards and a secure way for people to access them, with no dongle.

 

I believe it is a waste of $8B to acquire Square when Apple has already laid the groundwork for their own payment system.  I mean, really, what are they getting for that money that they already do not have in place now?

post #8 of 127
They should have bought them two years ago.

But they should still do it if they can pay $8B.
Edited by Ireland - 4/9/14 at 7:40am
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #9 of 127

If Google buys Square, I'll cancel that thing in a heartbeat. I've been using PayPal Here anyway, only because the funds are available immediately and I have the PayPal debit card. 

post #10 of 127
Quote:
Originally Posted by CMoebius View Post
 

 I mean, really, what are they getting for that money that they already do not have in place now?

 

Map data, and an entrenched base using its products. Currently, I have seen quite a few restaurants and stores using iPads with Square in their businesses. Google would like switch all that to Android tablets. With that said, 8 billion seems pretty high, but it is a seller's market. 

post #11 of 127

Maybe it's not so much what Apple is getting as keeping them from being swooped up by Google. I wouldn't mind having Jack Dorsey at Apple to provide some strategic thinking/vision. I'd rather have Dorsey working for Apple than Google, that's for sure.

post #12 of 127
What does Square offer Apple that Apple can't do themselves? Apple already has hundreds of millions of CC and debit cards on file; they just need a better infrastructure for allowing this to be used for mobile payments; but this means a solution with major vendors whereas Square is only for small operations.

I don't see Apple including a CC scanner directly on every iPhone and iPad, and the dongle doesn't look like something Apple would do. So what expertise or IP would Square have for Apple and how would it solve the real issue of being able to go into nearly any major retail outlet and pay with your Touch ID or "PayBook" app with their current system that doesn't use BT-assisted NFC?
Edited by SolipsismX - 4/9/14 at 7:41am

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post #13 of 127
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Originally Posted by Rogifan View Post
 

Maybe it's not so much what Apple is getting as keeping them from being swooped up by Google. I wouldn't mind having Jack Dorsey at Apple to provide some strategic thinking/vision. I'd rather have Dorsey working for Apple than Google, that's for sure.

If it is important for Apple to keep Square out of Google's hands then that is part of what Apple would be getting. Either way the decision will be strategic and long term. Aesthetically, and functionality wise Square is definitely a better match with Apple than Google, hat's for sure. 

post #14 of 127
Quote:
Originally Posted by SolipsismX View Post

What does Square offer Apple that Apple can't do themselves? Apple already has hundreds of millions of CC and debit cards on file, they just need a better infrastructure for allowing this to be used for mobile payments; but this means a solution with major vendors whereas Square is only for small operations.

I don't see Apple including a CC scanner directly on every iPhone and iPad, and the dongle doesn't look like something Apple would do. So what expertise or IP would Square have for Apple and how would it solve the real issue of being able to go into nearly any major retail outlet and pay with your Touch ID or "PayBook" app with their current system that doesn't use BT-assisted NFC?

Exactly.

 

On a slightly different note, I'd love to see Apple bypass the cc companies altogether and mainstreaming an alternative such as Dwolla. I can't see them doing it but it would be truly disruptive and upend the CC industry. 

post #15 of 127
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Originally Posted by paxman View Post

If it is important for Apple to keep Square out of Google's hands then that is part of what Apple would be getting. Either way the decision will be strategic and long term. Aesthetically, and functionality wise Square is definitely a better match with Apple than Google, hat's for sure. 
Yeah I do think it would be worth it just to keep a competitor like Google from swooping in. But if Apple is already thinking way beyond what Square is doing I hope we hear about it at WWDC. It's getting a little frustrating hearing rumors about all the things Apple is thinking about but not actually doing. I keep waiting for the thinking to become doing.
post #16 of 127
Quote:
Originally Posted by Rogifan View Post

Maybe it's not so much what Apple is getting as keeping them from being swooped up by Google. I wouldn't mind having Jack Dorsey at Apple to provide some strategic thinking/vision. I'd rather have Dorsey working for Apple than Google, that's for sure.

I don't think it would matter all that much. He'd be unlikely to stay there for any appreciable time anyway. Do any of the founders of companies snatched up by Apple still work for them? Maybe there's a couple but IMO entrepreneurs don't often make a good fit with large established companies and their hierarchy.
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post #17 of 127
Quote:
Originally Posted by Rogifan View Post


Yeah I do think it would be worth it just to keep a competitor like Google from swooping in. But if Apple is already thinking way beyond what Square is doing I hope we hear about it at WWDC. It's getting a little frustrating hearing rumors about all the things Apple is thinking about but not actually doing. I keep waiting for the thinking to become doing.

 

What would really make me dance is to see Google buy Square for >$8 billion and then have Apple unveil a killer system of its own.

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post #18 of 127
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Originally Posted by paxman View Post

Exactly.

On a slightly different note, I'd love to see Apple bypass the cc companies altogether and mainstreaming an alternative such as Dwolla. I can't see them doing it but it would be truly disruptive and upend the CC industry. 

I think Square charges a lot for these small business owners. Apple could do it as a value-added service for selling more iDevices and controlling the ecosystem better which would probably make people get on-board very quickly. Now what if they also applied this to major vendors so if you use "Pay" they might only loss 1.5% instead of 2-4% of that digital transaction. It would then behoove everyone to adopt to a BT-assisted NFC solutions quickly.

What do you need to become a financial institute? The iTS, App Store and iBookstore are tied together already (I'm not sure about my regular iTunes account that can be used at store.apple.com or with the Apple Store app for expedited check out).

PS: Imagine having your paychecks direct deposited into your iTunes account. (I don't think that is the direction they will go).

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post #19 of 127
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Originally Posted by island hermit View Post

What would really make me dance is to see Google buy Square for >$8 billion and then have Apple unveil a killer system of its own.
And the chances of that happening are??? We've heard exactly one rumor (from the WSJ) about Apple's mobile payments plans and it didn't sound like anything that would be happening soon.
post #20 of 127
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Originally Posted by Gatorguy View Post


I don't think it would matter all that much. He'd be unlikely to stay there for any appreciable time anyway. Do any of the founders of companies snatched up by Apple still work for them? Maybe there's a couple but IMO entrepreneurs don't often make a good fit with large established companies and their hierarchy.
Cook could give him a role like Bob Mansfield working on special projects. Apple has a pretty lean executive team. How much time do they have to think about big picture stuff? When Cook fired Forstall he didn't replace him, he just added more work to the existing executive team. I'm sure right now Ive and Federighi are knee deep in iOS 8, OSX (9to5Mac says one of Ive's top priorities right now is a redesign of OSX) and new hardware. Cue has all of iTunes, App Store, maps, Siri, Apple TV and Apple's professional apps. How much time does he really have to think about a future mobile payments system? And honestly I don't see Cook as the big picture guy, I still see him as the one making sure the trains run on time and everyone is moving in the same direction. I think Cook could find a role for Dorsey (if he wanted it).
post #21 of 127

It's interesting what Apple will do as they certainly seem to be interested in getting into payments, with the goal of having transactions through their network be counted eventually as card present vs. card not present.  So Apple has a pretty big uphill challenge to convince card issuers around the world that whatever they release (say touchID + your card on file with Apple) is strong enough to be considered card present to merchants. 

 

Square may help with eventually with the long tail of merchant acceptance of any new payment model, but doesn't help with the initial challenge of convincing card issuers to accept liability.

 

This acquisition doesn't seem to make much sense right now outside of "our products both come in white and kind of look similar". 

post #22 of 127
Quote:
Originally Posted by paxman View Post
 

Exactly.

 

On a slightly different note, I'd love to see Apple bypass the cc companies altogether and mainstreaming an alternative such as Dwolla. I can't see them doing it but it would be truly disruptive and upend the CC industry. 

Serious question - how does this help consumers? Dwolla is nothing more than a service that directly access your bank account and transfers funds. It doesn't extend credit AFAIK nor does it give the same protection as credit cards. For merchants, debit card processing (which isn't that different) is already cheap. 

 

How does not having credit (for responsible users) + strong liability protection help you as a consumer? 

post #23 of 127
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Originally Posted by Rogifan View Post


Cook could give him a role like Bob Mansfield working on special projects. Apple has a pretty lean executive team. How much time do they have to think about big picture stuff? When Cook fired Forstall he didn't replace him, he just added more work to the existing executive team. I'm sure right now Ive and Federighi are knee deep in iOS 8, OSX (9to5Mac says one of Ive's top priorities right now is a redesign of OSX) and new hardware. Cue has all of iTunes, App Store, maps, Siri, Apple TV and Apple's professional apps. How much time does he really have to think about a future mobile payments system? And honestly I don't see Cook as the big picture guy, I still see him as the one making sure the trains run on time and everyone is moving in the same direction. I think Cook could find a role for Dorsey (if he wanted it).

 

I'm not sure I like the sound of this. OS X is already a solid Unix system with a polished GUI. What needs to change?

post #24 of 127

I do not follow the payment processing industry, so my question he is how does Square make its money, do they just make the hardware and software to allow for a credit card transaction or do they also get a % of the transaction for processing it for the account holder. I believe Verifone today how have the majority of the POS systems which process you debt card and CC get a % of the transaction.

 

If Square makes money this way then it maybe worth $8B if not it another over prices deal for a software and hardware manufacture with limits market. Merchants usually buy once and use for a long time before upgrading. This is not a consumer product it is B2B not B2C which apple is in. 

 

Ops, did not read the last line of the article, looks like Square does get a cut, This could be very profitable.

post #25 of 127
Can't see any value Square would bring to Apple. Let Google buy them.

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post #26 of 127
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Originally Posted by d4NjvRzf View Post

I'm not sure I like the sound of this. OS X is already a solid Unix system with a polished GUI. What needs to change?
Dunno. I'm guessing more visual consistently between the two. Though Gurman made it sound like the redesign wouldn't be turning OSX into iOS.
post #27 of 127
Quote:
Originally Posted by Rogifan View Post


And the chances of that happening are??? We've heard exactly one rumor (from the WSJ) about Apple's mobile payments plans and it didn't sound like anything that would be happening soon.

 

... and, of course, the WSJ has been bang on concerning anything Apple.

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post #28 of 127
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Originally Posted by Ireland View Post

They should have bought them two years ago.

But they should still do it if they can pay $8B.

This is one thing that frustrates me about Apple. There have been so many companies they could (should) have bought but didn't. Many of those companies have either ended up in a major competitors hands, or are providing services for them that rival Apple's own, that came first.

The idea that Apple would buy a company to keep it out of a competitors hands would be old line business. Businesses have been doing that for two centuries. When I mention the list of companies, I almost want to cry!

This is another. All of their terminals use iPads. I don't even know how many tens, or hundreds of thousands use iPhones. If Google buys them, what will happen to that? Will they all move to Android?

People who are concerned by the cost of these companies forget that even $8 billion is just one quarter's cash flow for Apple, even less. It's hardly a hardship.
post #29 of 127
Quote:
Originally Posted by kevliu1980 View Post
 

Serious question - how does this help consumers? Dwolla is nothing more than a service that directly access your bank account and transfers funds. It doesn't extend credit AFAIK nor does it give the same protection as credit cards. For merchants, debit card processing (which isn't that different) is already cheap. 

 

How does not having credit (for responsible users) + strong liability protection help you as a consumer? 

For merchants debit card processing is cheap but not so for cc processing. Afaik online merchants tend not to take debit cards. In the end any cost incurred in the transaction chain will be paid for by the consumer. You are right about a service like Dwolla not extending credit and that is a worthwhile service I guess, though millions would probably disagree. The rate that Visa charges is about 19%. I am no fan of credit card companies and prefer to use my debit cards whenever possible.

post #30 of 127
Quote:
Originally Posted by island hermit View Post

... and, of course, the WSJ has been bang on concerning anything Apple.
When's the last time Apple announced something big where there were no rumors about it beforehand? I'd love it if Apple would throw a bomb at WWDC and announce something big that no one was expecting. But I don't see it happening.
post #31 of 127
Quote:
Originally Posted by island hermit View Post

What would really make me dance is to see Google buy Square for >$8 billion and then have Apple unveil a killer system of its own.

Not for me. Square is a very successful company. It exclusively uses iPads for cash registers. This is opening up a lot of areas for Apple. For Apple to have to do it all from scratch is mind boggling! And there's no need. Why give Google another advantage? This is almost petty cash for Apple. They shouldn't miss another opportunity.
post #32 of 127
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Originally Posted by Gatorguy View Post


I don't think it would matter all that much. He'd be unlikely to stay there for any appreciable time anyway. Do any of the founders of companies snatched up by Apple still work for them? Maybe there's a couple but IMO entrepreneurs don't often make a good fit with large established companies and their hierarchy.

Many stay for years. That's all Apple needs. They aren't needed forever. And once a company is established, with technology that works, it isn't the founder that's needed anyway, because Apple has a different direction for that company than the founder did as an independant factor. Sometimes, keeping the founder is a hinderance.
post #33 of 127

I can't see Square being a worthwhile investment unless they have some IP that Apple can't find an alternative for and Square wouldn't licence. Considering there are other companies doing the same thing and Square aren't suing, I'm guessing the IP is elsewhere and Square just licence it themselves.

 

All Apple need to do is package their version of PayPal Here, make it work nicely and they'll be away. If they could do a tie in with PayPal so you could iMoney to a PayPal account and vice versa, they'd have it all sewn up.

post #34 of 127
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Originally Posted by melgross View Post


Not for me. Square is a very successful company. It exclusively uses iPads for cash registers. This is opening up a lot of areas for Apple. For Apple to have to do it all from scratch is mind boggling! And there's no need. Why give Google another advantage? This is almost petty cash for Apple. They shouldn't miss another opportunity.

 

Mind boggling?

 

That's a bit of hyperbole.

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post #35 of 127

Square is too American. Just like Coin.  The tool only accepts CC swipes.  Rest of the world already uses chips to authenticate credit card transactions.  Apple is not going to buy a technology that is only working in one country, and even there will soon become obsolete.  

post #36 of 127
Quote:
Originally Posted by SpamSandwich View Post

Can't see any value Square would bring to Apple. Let Google buy them.

Nope! This would transfer all of the good will Apple has received from companies and individuals using Square with Apple products to Google. Bad idea. If Google moved everything g to Android, no matter what people here think of Android, all of those companies and individuals would eventually have to move from Apple products to Google related products, which is likely one major reason why Google might buy this. It would be a seismic shift. Right now, Apple is the one moving into the payments area through Square, but that will end. And when will Apple,s own solution be ready? Who knows?

But Square's is simple, easy and elegant.
post #37 of 127
Quote:
Originally Posted by melgross View Post

This is one thing that frustrates me about Apple. There have been so many companies they could (should) have bought but didn't. Many of those companies have either ended up in a major competitors hands, or are providing services for them that rival Apple's own, that came first.

The idea that Apple would buy a company to keep it out of a competitors hands would be old line business. Businesses have been doing that for two centuries. When I mention the list of companies, I almost want to cry!

This is another. All of their terminals use iPads. I don't even know how many tens, or hundreds of thousands use iPhones. If Google buys them, what will happen to that? Will they all move to Android?

People who are concerned by the cost of these companies forget that even $8 billion is just one quarter's cash flow for Apple, even less. It's hardly a hardship.
yeah I don't get why people are so eager to see Google buy everything up. I figured Apple would never acquire Nest because they don't need the hardware expertise and probably weren't interested in having Tony Fadell back. But if Apple was looking at Square there's obviously something they felt was valuable. And in the current climate you're not going to get a company for cheap. So you either pay up or someone else will.
post #38 of 127
Quote:
Originally Posted by leshik View Post

Square is too American. Just like Coin.  The tool only accepts CC swipes.  Rest of the world already uses chips to authenticate credit card transactions.  Apple is not going to buy a technology that is only working in one country, and even there will soon become obsolete.  
So that's why Apple is rushing to make iTunes Radio available across the globe.
post #39 of 127
Quote:
Originally Posted by island hermit View Post

Mind boggling?

That's a bit of hyperbole.

I don't think so. I see Square everywhere I go. I don't see another payment system anywhere. Every vendor I talk to about it is happy with it. Having it fall into Google's hands rather than Apple's hands would be a major shift. So yes, the implications are mind boggling.
post #40 of 127
Quote:
Originally Posted by leshik View Post

Square is too American. Just like Coin.  The tool only accepts CC swipes.  Rest of the world already uses chips to authenticate credit card transactions.  Apple is not going to buy a technology that is only working in one country, and even there will soon become obsolete.  

I doubt that. Even the EU says their system hasn't been very effective. And then, if they have to, you don't think Square could upgrade their hardware and software? Of course they could. I wouldn't be surprised if they've been investigating it for some time.
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