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Apple 'considered' buying mobile payment firm Square, but Google deal seen as more likely - Page 4

post #121 of 127
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Originally Posted by melgross View Post

But they have what Apple doesn't seem to have.

Again, no one has presented any evidence of something Square has anything Apple needs, muchness something worth $8B.

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post #122 of 127
Quote:
Originally Posted by SolipsismX View Post

Again, no one has presented any evidence of something Square has anything Apple needs, muchness something worth $8B.

I disagree. I do think the links Marvin presented gives a good idea of what Apple could use. But we're really just going around in circles now. I'm willing to call it a day on this, since we're only just guessing anyway.
post #123 of 127
Quote:
Originally Posted by melgross View Post

I disagree. I do think the links Marvin presented gives a good idea of what Apple could use. But we're really just going around in circles now. I'm willing to call it a day on this, since we're only just guessing anyway.

That's too bad because I really do want to see what you two see, but I agree that it's probably not going to happen without a different angle on the argument or new information.

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post #124 of 127
Quote:
Originally Posted by SolipsismX View Post

no one has presented any evidence of something Square has anything Apple needs, muchness something worth $8B.

I don't think anyone claimed that Apple needed to buy them but to prove that would require proving that they couldn't replicate what Square has and nobody outside of Apple knows that. Similarly though, you couldn't say they don't need them as you couldn't prove they could replicate what Square currently has even if that's just securing the business contracts they already have such as with Starbucks.

The best we could assess is whether it would be a beneficial purchase and whether it would be worth the amount.

They haven't been valued at $8b, that's just what someone inside Square apparently said they'd consider for a buyout. The latest funding valued them at $5b but that's just based on what a small investor was willing to pay for their part.

Still, if they expected $8b minimum, would that be justified? Based on their current transactions, they are due to process $30b this year. Say they make 1% gross, that's $300m per year. Growth rate is high:

http://techcrunch.com/2014/01/13/putting-squares-5b-valuation-into-context/

so to get back $8b at 1% with growth rates scaling to $100b worldwide, they'd manage it in 10-15 years. The following site estimates that Square currently has high operating losses:

http://www.businessinsider.com/squares-growth-reveals-size-of-mobile-payments-opportunity-2012-3

so if that's accurate, they haven't quite got the business model right yet but that would be because they need to grow first using loss-leading tactics. Apple doesn't really need to do that sort of thing because they don't have to secure funding. When companies look to secure funding, that's always an indication they can't fund their own growth so a buyer would need to assess profitability down the line.

If the business contracts Square has are appealing, if Apple could apply a business model to gain more profit from transactions (e.g touch id), if Square's infrastructure and accompanying software and hardware was something Apple would take a long time to implement then it could well be a beneficial purchase. If those things turn out not to be the case then it's not worth it.
post #125 of 127
Quote:
Originally Posted by melgross View Post

It will take a long time for that to happen. And Square does more. I go to street fairs, and most vendors now use either a standard credit card reader, or Square. Smaller vendors almost all use Square. Apple's wallet app won't work under these circumstances. And it's not just street fairs. It's trade shows as well. Square is very easy to get, and set up. It's also cheaper to use over the long run for smaller merchants. And cash registers won't be going away for a long time either.

I know what you're saying, but simply because Square has established a niche product that beats the credit card companies in some respects does not give them a first-movers advantage against a potentially disruptive wallet system from Apple. Think of all the middlemen and hardware that would be eliminated. Square is an add-on for iOS devices. Do you really think people would be unwilling to get rid of the add-on?

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post #126 of 127
Quote:
Originally Posted by SpamSandwich View Post

Square is an add-on for iOS devices. Do you really think people would be unwilling to get rid of the add-on?

Yes, that's the whole point with Square. If people were willing to get rid of the add-ons, they'd already use Paypal or similar. The bottom line is that people keep their money in banks (or use credit supplied by them) and it's the banks that want you to process the payments using cards whether it's online or physically. Every payment system that comes along will have to build on top of the mechanism the banks use to take the money out of the bank. An Apple mobile payments system will be limited to Apple devices, which is not the majority of people and retailers don't have a stake in which device manufacturer succeeds, they want to be paid for what they're offering to customers by any means.

Even if Apple offers a touch id payment system, retailers can't implement that exclusively so they will have to use both Square and Apple's touch id. Square covers every buyer, touch id covers a fraction of them. Both together gives full compatibility plus the convenience of touch id when it's available.

Square can keep going it alone though. The only risk is that someone flush with cash like Google comes along and buys them and then the hardware gets replaced with Android devices. Then they have no hope of integrating touch id with those retail outlets and instead Google would come up with their own Android payment system.

Another part of the retail process that's often missing is the link to accounting software or it's not straightforward to setup. The ideal setup is to have a full inventory management system, payment tracking and then accountancy package that gives out real-time info on how well the business is doing and it can easily produce tax returns.

Inuit + Square + iOS would make for a very powerful business management system. If Apple made the decision to go into physical retail transactions then that's where the suggestion comes in about them bypassing Square and building their own hardware for it. Their iPhone/iPod credit card swiper looks better than Square's so it's a possibility but then they compete with Square who already have business contracts. Why would a retailer use Apple's products over Square's? The rates wouldn't be better so they likely wouldn't and then they don't get the adoption anyway and that's what success in retail depends on.

What's the harm in letting someone else dominate the retail sector? They let Windows devices do this for years. If it doesn't cost them hardware sales then it's not all that big of a problem but this is why things like Windows end up being so hard to shift out the market because it's everywhere and in everything. Android is going to do this from now on and while I'd say it's preferable over Windows, it's not preferable over Apple's software.
post #127 of 127
Quote:
Originally Posted by Marvin View Post

Yes, that's the whole point with Square. If people were willing to get rid of the add-ons, they'd already use Paypal or similar. The bottom line is that people keep their money in banks (or use credit supplied by them) and it's the banks that want you to process the payments using cards whether it's online or physically. Every payment system that comes along will have to build on top of the mechanism the banks use to take the money out of the bank. An Apple mobile payments system will be limited to Apple devices, which is not the majority of people and retailers don't have a stake in which device manufacturer succeeds, they want to be paid for what they're offering to customers by any means.

Even if Apple offers a touch id payment system, retailers can't implement that exclusively so they will have to use both Square and Apple's touch id. Square covers every buyer, touch id covers a fraction of them. Both together gives full compatibility plus the convenience of touch id when it's available.

Square can keep going it alone though. The only risk is that someone flush with cash like Google comes along and buys them and then the hardware gets replaced with Android devices. Then they have no hope of integrating touch id with those retail outlets and instead Google would come up with their own Android payment system.

Another part of the retail process that's often missing is the link to accounting software or it's not straightforward to setup. The ideal setup is to have a full inventory management system, payment tracking and then accountancy package that gives out real-time info on how well the business is doing and it can easily produce tax returns.

Inuit + Square + iOS would make for a very powerful business management system. If Apple made the decision to go into physical retail transactions then that's where the suggestion comes in about them bypassing Square and building their own hardware for it. Their iPhone/iPod credit card swiper looks better than Square's so it's a possibility but then they compete with Square who already have business contracts. Why would a retailer use Apple's products over Square's? The rates wouldn't be better so they likely wouldn't and then they don't get the adoption anyway and that's what success in retail depends on.

What's the harm in letting someone else dominate the retail sector? They let Windows devices do this for years. If it doesn't cost them hardware sales then it's not all that big of a problem but this is why things like Windows end up being so hard to shift out the market because it's everywhere and in everything. Android is going to do this from now on and while I'd say it's preferable over Windows, it's not preferable over Apple's software.

If at some point in the future the US switches to a digital form of currency (and there are arguments that it is coming whether people want it or not) Apple will be well-positioned to leverage their extensive patent trove for secure storage and transfer of said currency.

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