Payments

Competitors: Square And Intuit Agree To Work Together.

Today Intuit has announced a dramatic change in the way startups can integrate with the data that over 95% of small business create, an open API. Although Intuit has had many APIs and developer relationships in the past, this is a much deeper integration and it includes the very popular web based Quickbooks platform. The API relationship will be active after November 19, 2013.

With this announcement any developer can leverage the huge amount of financial data that businesses create inside of Quickbooks.   Of course it has been the dream of countless startups to “disrupt” Quickbooks, billions of dollars and countless companies later, Quickbooks place with small and medium sized businesses just becomes more cemented.

Intuit’s API premise is centered around the same premise that built the huge ecosystem around Salesforce.  QuickBooks is positioning itself to be a small business operating system.  This is a rather big move for Intuit and will allow the company to continue to play the central financial role in the new landscape that highly creative and nimble startups have created.   I think Intuit will meet with great success with this open API and there will be a very rich and diverse ecosystem that I think will one day be as popular as the Salesforce ecosystem.

Major Changes In Square’s Business Premise

Today Quickbooks and Square declared a bit of a truce, perhaps even a “white flag” of surrender.  The “disruptor” is working with the legacy “disrupted”.  They announced an API partnership that allows Square merchants to easily integrate most of the data that Square collects on behalf of the merchant, directly into Quickbooks.  This is really a monumental shift for Square.

[caption id="attachment_1137" align="alignright" width="300"]intuit square Intuit and Square are clearly competing intensely for the micro-merchant transaction business using smartphones and tablets.[/caption]

Two things have dramatically changed at Square:

  1. Square has opened up API access to Intuit’s Quickbooks products.
  2. Square has accepted that Quickbooks plays the central role for Businesses.

Square has allowed but just a few very minor API relationships to it’s merchants.  Square has rejected and resisted a number of very high profile companies that requested API relationships.  I have spoke to countless large and startup companies that felt frustrated by this position.  This new relationship with Intuit allows for sharing of merchant data in a manner that many observers assumed would be where Square would earn income. This is a major philosophy change for Square.

Raising The “White Flag”

Since 2010 I have had countless conversations with very well informed VCs, Founders, CEOs, COOs and tech writers on how Square is not about the merchant account, where they are really not earning a great deal of income but on a new “big data” insights on all aspect of a merchant’s business.  I received a great deal of criticisms for taken a contrarian view of a more deeper and complex merchant relationship.

Now of course Square will still have the dashboard and data for merchants and I do think it will become more useful over time, however this shift shows that in many ways Square has given up on a “land grab” for a more deeper relationship with the merchant and the data they create.  This change removes many potential profit opportunities for Square as it tries to grow beyond micro-merchants.  None of this is surprising to me as I saw this issue in 2010 in the middle of “disruption fever”. Even the brightest and most talented did not understand just how deep Intuit’s roots were into small and medium sized business and they continue to misunderstand why.

Sending Business To Your Competitor

Clearly Square is competing with Intuit’s Go Payment smartphone payment system.  Although PayPal Here (it costs $0 to use) has had a dramatic impact on Square’s 2013 growth, Intuit’s Go Payments has also impacted the company’s growth.  By raising the “white flag” and accepting that Square may not control the central relationship with the merchant’s “small data” and “big data” and accepting that Intuit will play this central role, directly and indirectly Square may slowly erode a number of existing Square merchants into Intuit’s more highly integrated Go Payments platform.  Adding insult to this is Square merchants may have to pay Intuit a fee to have access to this feature, although this is not yet clear.  This is revenue that could have been fully in Square’s pocket.

To many who saw Square as one day eclipsing Intuit as a business operating system, those dreams may have taken a bit of a major setback.  I have recommend a complete different approach to how Square positioned itself since 2010, sadly the results of the positioning it took is now surfacing.  You may need to read the quote from Square a few times as it is very hard to believe what they are saying, publicly.

“Square is focused on helping businesses grow. Our customers tell us often how important it is to have accurate and in-depth information about their business. Integrating with QuickBooks gives sellers another powerful tool to help them run their business more efficiently.”-  Francoise Brougher, business lead at Square

A powerful tool” that Square could have supplied, don’t get me going about the rest of this statement. This was taken directly from the Press Release for the announcement and it is a regrettable statement.  I mean this in the best possible way: I would pay Square for the pleasure to walk in and fix this utter ridiculousness.

To be crystal clear,  Square could have much to lose from this relationship.  Intuit has nothing to loose and gains quite a bit on so many levels.  To be sure it took guts on Square’s part to allow this relationship and I am certain they are betting on a horse race, they think they are running in, and the rest of the really informed world, just can not “get it”.  I hope they are right.

I remain vigorously optimistic on the future Square could have.  There are really so many things they should do today to stay relevant and vital. This is not about iteration, it is about empirical praxis and how it has informed the way Practical and Pragmatic businesses really operate.

Brian Roemmele

Brian Roemmele, is a mobile payments expert and an avid blogger at Quora. His profile can be found at http://www.quora.com/Brian-Roemmele. Brian is an Apple enthusiast and has deep interests in writing about new technology in payments.

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