Square Stand to Change Payments ... Again

SAN FRANCISCO ( TheStreet) -- Square, the company that helped bring the mobile payment and digital wallet industry to the forefront of consumers minds, is at it again. This time, the company is taking a slightly more traditional approach to payments, but in a whole new way.

Square Stand, which the company announced earlier this week, is poised to disrupt the traditional point-of-sale (POS) hardware and software that merchants use. Small and medium-sized businesses that use Square to process their payments either used an Apple ( AAPL) iPhone or iPad married with a hap-hazard piece of hardware to hold it down, in a custom solution. Stand marries the holder to the iPad, but does much more.

Square Stand, which retails for $299 and will be available at Best Buy ( BBY), Square's Web site, and other yet-to-be-announced retailers, combines all the software and hardware accessories a business would need, including a receipt printer, kitchen printer, cash drawer and a scanner.

I recently sat down with Jesse Dorogusker, who helped develop Stand, at Square's headquarters, to discuss the product and its impact on businesses and consumers alike.

Chris Ciaccia: Tell me a little about Square Stand and where you see it.

Jesse Dorogusker: The evolution of the register software product including most recently just a few weeks ago for quick-serve restaurants, including items on fire and enhanced ticket printing, really focuses on those kinds of items. Then a few days ago, we followed that up with Square Stand. Again, the hardware plus the software coming together to make a whole solution. When businesses are running their business, they don't say "Well I need some hardware and I need some software." They kinda say "I need something that looks like this points to Stand and I don't really care about the low level detail. But we know, that the hardware plus the software is the best thing for them.

Ciaccia: It's priced at $299. That seems a little aggressive. Is Square making any money on this, or is just kind of a piece of hardware to get people to use Square software?

This question was followed by a demonstration of Square Stand and how it works.

Dorogusker: We demonstrated with our free card reader, which isn't free to make, that we will put the value where we think it's most effective to tell the best story and give the best product for the customer. The hardware we think is priced stunningly low compared to the tens of thousands of dollars systems people are burdened with today. Yea, we definitely want them using Square. We want them using all of it, not just the hardware, but also the software, the services, the analytics, the directory presence.

Ciaccia: Is there any training that Square would have to provide for older businesses, mom and pop businesses, that don't have a Square reader or a payments system set up already?

Dorogusker: This is the part that we have to break the industry of. We provide a set-up guide, we have some great videos that explain how the product works. But it doesn't come with a massive service contract and a fleet of installers that come out and have to educate you. A great story from one of our merchants who runs a deli in Texas. She got our product set up, and was going to train her staff, and she had to go run an errand. The staff had set it up before she got back. It's software running on an iPad. People know how to do this. It's not elusive or mysterious. There's nothing crazy about it. You download the app, and set up your items. When you're setting up an item, and you want to know what it is, it's just so readily accessible and available. We don't do that. We don't need that. The industry doesn't need that, but they don't know that yet. For all they've known, the point-of-sale doesn't have to come with a burden.

Ciaccia: It's coming out I think June 8th or July 8th.

Dorogusker: July.

Ciaccia: Is there a reason why considering it's May 16th, that's kind of a wide gap, that it's not available immediately?

Dorogusker: We have two methods of distribution. We have direct through our Web site, and we have one through our retail partners, starting with Best Buy ( BBY), and other select retailers starting in July. We want to make them available at the same time, but know we actually have to build them, put them in trucks and boats, and get them distributed. We wanted to make sure that this thing is gorgeous, and we didn't want to see blogger pictures of it. We wanted it so where we could actually talk about it, and tell the story about hardware and software together. We wanted it to get out in the world, where we could do retail and online together.

Ciaccia: You mentioned retail. You mentioned the single distribution from your Web site. Are there any other retailers that you've announced or plan to announce?

Dorogusker: We haven't announced any yet. We'll have more information and put it in the market.

Ciaccia: You have the reader, now you have the Stand. I'd assume there are additional plans for more hardware to come. Can you talk a little bit about where you see that going? Where else does the payments industry move in terms of hardware?

Dorogusker: I think we have a lot of opportunity in the two spaces we're in: super mobile and brick and mortar with our beautiful counter top. I think we have a lot of legs there, so we'll continue to pursue in that space. If you look at commerce out in the world, everywhere, transportation, health, beauty and spa, there are a weird collection of dinosaur types of hardware that are meant to facilitate commerce. I'm a hardware guy by background, I want to fix all of that. I can't build everything at once, but if you go in the world, and look at objects of commerce, you'll see they all need some fixing.

Ciaccia: You were at Apple. How's your Apple background and the fact that Apple is well known for making aesthetically pleasing products played into this?

Dorogusker: I collect all of my experiences together, and kind of brought them all here. My first job was at an industrial design firm. I was an engineer, a small number of engineers alongside a large number of industrial designers that were tuned into how design can lead a conversation on how things work. It's something you've looked at for a decade, and it just doesn't have to be that way anymore. Let's go do it this other way. I was doing most of that design in the medical business. I think there are some high-end pieces of consumer at Apple and even my medical experience in aesthetic and precision that have morphed themselves into this great combination of consumer and enterprise. Apple sets a very high bar for design and manufacturing expertise, and precision, and it's great to have that experience.

Ciaccia: You touched on the fact that you're trying to make commerce more social, with Stand being able to swing around. It makes it more of a conversation than just buying something and walking away. How important is the social factor for Square, in terms of commerce?

Dorogusker: I think is not what's more important for Square, but for our merchants. They have these great relationships with their customers. They know who their repeat customers are. You get really in tune with them. You know their needs, you know when they're sick, you know what they need credit for. A lot of that has been lost. What we hear very clearly from our merchants is, and we're interested in providing, is getting that back. What we do with Square Wallet and Square Register, you can open a tab. If it's a place you've been before, a tab will open for you automatically. You used to go to the general store, take a sack of grain, they write down your name, and someone collects it at the end of the month. That feels like very familiar commerce, and so many transactions out in the world today are anonymous. Even high-value customers who don't connect with the merchant who have a lot of loyalty, the buyer and the seller aren't connected to each other. We can do that with this kind of platform.

Ciaccia: The relationship with Starbucks ( SBUX) is obviously a great one. You've put the readers in the stores. Can you touch a little on how that's going and could we eventually see Stand entering Starbucks stores, whether it's six months, a year, etc. down the line?

Dorogusker: Sure. Starbucks has been a great partnership. What we talked about early on is that we wanted to do something big, and we wanted to do it fast. From our very first conversation of "What if," 90 days later we had accomplished the "what if." The "what if" was making use of a great piece of hardware they already have on their counter, which is a 2D barcode scanner, and then we were able to build in the Square Wallet experience. From there, we wanted something that could be read by their scanner. If you think about it, with their 70,000 stores in the U.S., and the massive infrastructure investment they have to put into point-of-sale, this isn't something they're willing to disrupt that quickly, with a massive amount of training. It's a huge capital investment of a public company that couldn't happen in 10 minutes. You know Howard Schultz is on our board, and has seen this for quite a bit of time, and has been excited about it. We'd love to see it in their stores sometime soon, but nothing specific to announce.

-- Written by Chris Ciaccia in San Francisco

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