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Square-Merchant Relationship Deepens With New Payment Option


Square SQ is leaving no stone unturned to bolster presence in the online payment market on the back of its robust services portfolio.

Recently, the company unveiled a new payment service called Square Installments. Notably, this service enables small business clients such as hairdressers, car parts sellers among others to offer the flexibility of payment in installments to their customers. In fact, this is a kind of point-of-sale lending service.

With the help of the new payment option, customers will be able to pay for their purchases ranging from $250 to $10,000 in fixed monthly installments over a period of three, six and 12 months

The latest move of the company expands its services portfolio and enhances its key offerings to its clients as well as their customers.

Coming to the price performance, shares of Square have returned 162.5% on a year-to-date basis, outperforming the industry’s rally of 7.4%.

Strengthening Relationship With Merchants

Square’s strong efforts to strengthen its relationship with merchants will continue to drive business growth.

The recent launch will aid the company in retaining as well as attracting new clients to its platform, driven by its customer friendly payment options. Moreover, the service will benefit the clients and their customers as well.

Merchants who are basically the clients of Square will get the payment upfront at the time of transaction via Square capital. Meanwhile, customers will repay the installments to Square and in case of any default; the risk will be borne by the company and won’t impact the merchants.

This seems to be of great help for the merchants as Square Installments provides a risk-free payment option to the merchants to incorporate into their point-of-sale system. Further, the payment flexibility option will help these merchants to boost their sales and expand customer base.

Consequently, the company is likely to bring social benefits.

Notably, all these endeavors will help Square to expand its client base which in turn will drive its top-line growth.

Square, Inc. Revenue (TTM)

Square, Inc. Revenue (TTM) | Square, Inc. Quote

Growth Opportunities

The latest move of the company will help it in expanding its footprint in the point-of-sale lending services space. Notably, this space is growing rapidly as these services help the customers to purchase items with the ease of payment installments.

Further, it will help it to gain competitive edge against the likes of GreenSky GSKY, Klarna, Affirm which are also involved in these kind of services.

All these will continue to aid Square’s position in the growing digital payment market.

Per a report from Statista, the total transaction value in the global digital payment market is projected to hit $3.4 trillion in 2018 and expected to witness a CAGR of 13.9% between 2018 and 2022 to reach $5.7 trillion.

We believe Square is well poised to reap benefits from this market on the back of its of its expanding merchant base and Square Installments. Currently, the service is available in 22 U.S. states.

Zacks Rank & Stocks to Consider

Currently, Square carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that can be considered in the broader technology sector are Veeva Systems VEEV and j2 Global JCOM. Both the stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Veeva Systems and j2 Global is currently pegged at 19.28% and 8%, respectively.

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