I don't know a lot about Square, but this article reads like a hit piece, wherein the author has an agenda to write a negative article about the company and to cherry-pick facts and bend descriptions to build the narrative.
All magazine-style writing is like this to some degree, but this one is just too extreme. It is basically junk writing.
Look, for example, at what Vinod Khosla says about the Starbucks deal, all of which is totally reasonable, but he is turned into some kind of guilty-person-in-detective-fiction with phrases like "he says defensively", which strengthen the desired narrative but have no relation to verifiable facts.
I'd be willing to bet that counting out Jack Dorsey and Square is going to look a lot like counting out Jeff Bezos and Amazon back while they were investing in AWS.
To me, it looks like Square used credit card readers as an entry to point-of-sale which was then an intro into vertical specific applications (Square Appointments, restaurant and delivery are 3 examples that immediately come to mind). These evolutionary steps all take time and investment.
As another commenter pointed out, looks like a hit piece.
Actually, I didn't think it was a hit piece. I interpreted the article the same way you did (Bezos/AMZN) use the payment data/merchant network for "products that Square is launching--Market, Cash, Feedback, Invoices, Order, Open Tickets, Capital, Dashboard, Appointments" In "THE SEARCH FOR NON-PAYMENTS REVENUE."
Once they build out the non-payment revenue, they will come back to building back the payment network to squeeze out Visa/Amex/Mastercard.
I think their initial plan was to directly build out the payment network but given the lower margins, they would have to wait a long long time. However, because of the hype/valuation trap, investors didn't have the patience. So, they have course corrected to add higher margin SAAS/software/financing products (open tickets, invoices....). Once the margins get built out, then they can get back to the payments business.
Surprising, that they are not anonymising credit card data and selling that to Hedge Funds. That could be a $25-50M EBITDA business. Majestic Research did that and sold to ITG research (for a "small" amount). But Square's data set will be more valuable than Majestic:
http://blogs.wsj.com/economics/2010/06/30/using-starbucks-du...
It's weird that they list Stripe as a competitor given that one is focused on in-person/retail and the other online payments. They currently aren't really substitutes.
That being said, I always thought Square should have offered an online API long ago.
"The following year, the company would lose $25 million from Starbucks transaction costs alone (and will continue to incur losses until the contract expires next year)."
I can't find the link but I distinctly recall Keith Rabois claiming that Square would make money on the deal. I thought this was highly dubious at the time -- it just didn't make sense when you considered how big Starbucks was already, meaning could already demand the best rates possible.
Not that that means it was a bad deal.. it was clearly a marketing move. "Starbucks uses Square". But that kind of marketing quickly loses its value once the public knows it was a result of loss-leader promotions, not intrinsic product value.
I didn't know Square was under the scrutiny of the tech press. Seems to me the company will continue to exist without major disruption (buzz-word) in the payment market.
If you are asking why you are being downvoted, it is because your post isn't very constructive. Instead of simply posting "Thanks." you should upvote the parent comment and move on.
If you already have an HN account, which I do, email is not much easier than posting with HN. Unless one goes through the trouble of creating a new email account, to some extent email can reveal your identity.
But I understand that what you are trying to say is you prefer to receive email for HN issues.
All magazine-style writing is like this to some degree, but this one is just too extreme. It is basically junk writing.
Look, for example, at what Vinod Khosla says about the Starbucks deal, all of which is totally reasonable, but he is turned into some kind of guilty-person-in-detective-fiction with phrases like "he says defensively", which strengthen the desired narrative but have no relation to verifiable facts.