Square Inc. Steps Into the Payroll Business With Square Capital Priced at $20/Month

In a move to diversify its business, Silicon Valley-based payments and financial services company Square Inc. has added payroll services for small businesses to its roster of products. Founded in 2009, Square markets software/hardware products & services like the Square Register and Square Reader. The Square Reader is a small plastic device which plugs into a smartphone or tablet and reads magnetic stripes. It then uses the Square Register app service which allows individuals and merchants in the United States, Canada and Japan to accept card payments on their smartphones or tablet computers. On the iPad version of the Square Register app, the interface resembles a traditional cash register.

In the past Square has constantly looked at adding more value-added services to its portfolio, so as to keep its head above waters. It launched a scheduling and booking system, email marketing tools and a small business loan programme, the Square Capital last year.In addition to these, it has scheduling, inventory management and invoicing in its basket of reasonably-priced products aimed at the small-business segment. It even bought food delivery service Caviar and then another startup Fastbite to compete in the local food delivery service segment with a service called Caviar for customers in San Francisco.

However, not all its services have hit the mark. Its consumer-facing products like the Square Wallet, (which just required customers to give a merchant their name to pay for items) and Square Market (for businesses to create an online storefront) are now resting in the background. The company has a decent funding of more than half a billion dollars through venture capital, but according to critics, Square’s business has struggled with problems like lean margins, and expanding its customer base owing to a matured payments market and competitors like PayPal, First Data, Amazon, etc. Adding to its woes is the constant challenge of overcoming snags of the credit card processing business.

With all this in the background, its latest payroll service seems like a gambit to keep the ball rolling for the company. It hopes to help aggregate and expand Square’s customer base while competing with incumbents like ADP, Intuit Payroll and more closely with ZenPayroll which are already in the running. Priced at $20 a month plus an additional $5 per employee, Square Payroll will handle employee payment and accompanying taxes. Its core focus will be small-business owners who hire hourly employees. The fairly basic product, which was being sold for $10 a month during its test run since September last year, will now be available only in California post the launch. But once it garners interest, it is poised to branch out into other states soon. It remains to be seen how effectively Square raises its newborn while running its current diverse product offerings and strengthening its core payments business.