Square’s New Revenue Stream: Payroll (July 1, 2015)
Square continues to diversify its revenue streams, recently adding electronic payroll to its roster of services for small and midsize business customers. With Square Payroll, employees clock in and out at the Square POS. At the end of the pay period, Payroll calculates total pay and taxes and transfers the funds to employees’ direct deposit accounts, and employees can access paystubs online. For employees without direct deposit, Payroll calculates the net pay, so business owners can write checks. Businesses’ state and federal taxes also are filed automatically.
Typical of Square’s pricing, Square Payroll’s is simple: $20 a month plus $5 for each employee paid that month. Square Payroll also works with salaried staff and businesses can use the product even if they don’t use Square for processing payments. The product is available in California, but will expand to other states soon, according to the company.
“This move follows the growth strategy we’ve recently seen from Square,” Todd Ablowitz, president, Double Diamond Group, tells Paybefore. “After establishing a very large user base in payment acceptance, it started rolling out additional revenue sources to its customers. Some, like Square Capital, a merchant cash advance product, have been very successful, while others, like Square Order, were shut down rather quickly.”
Payroll processing is a well-established business with a clear need and wide user base. However, like payment acceptance, traditional players have not focused on SMBs, according to Ablowitz. “It seems like a picture-perfect opportunity for Square,” he adds. “The key factor will be execution, so I’d give them a good chance of success.”