From tech companies like PayPal to big banks like Bank of America, everyone seems to be gunning for a piece of Square’s business.
But Square CEO Jack Dorsey says there’s one major difference between his company and the rest of the competition that makes it better: its suite of services that cover everything from lending to analytics.
That’s what Dorsey told a Square customer who Bank of America approached with much better payment processing rates.
“The rate actually matters less to our sellers than we first imagined. It’s the suite of services and cohesion that matter a whole lot more,” Dorsey said during Square’s earnings call Wednesday.
Aside from its credit card reading dongle, Square offers a number of different services to its customers, including its cash-advance program, Square Capital, and a variety of software that handles everything from payroll and invoicing to analytics.
In fact, that part of its business, which is looped under the software and data products segment, saw the biggest growth last quarter, nearly quadrupling in revenue to $22 million. That’s still small relative to Square’s quarterly revenue of $374 million, but it’s the part that has the highest margin and growth potential.
“What we have seen from our competitors is they’re all going after parts of the system, and we believe that we’re the only one’s that are going after a cohesive whole end-to-end,” Dorsey added. “That is the biggest competitive advantage that we have.”
And it seems to be helping grow Square’s active seller base too. Square CFO Sarah Friar said it adds about 100,000 active sellers a quarter, and that it expects to see a “continuation of that trend” going forward. Square hasn’t disclosed the exact number of its active seller number, only saying it’s “over 2 million,” which is pretty much where it was last quarter.
Square had a solid earnings report Wednesday which exceeded analyst expectations. Its shares were up roughly 2.5% in after hours.