Square co-founder Jack Dorsey.
Photograph by Art Streiber

The digital payments company is expanding into new territory by introducing a new service that lets merchants send marketing pitches to their customers.

By Leena Rao
April 7, 2015

People who use mobile payment service Square to buy shoes, a coffee or cupcakes may soon get coupons by email. The company is introducing a way for stores and restaurants to easily send marketing messages to their customers, in what it hopes will make its technology more appealing to merchants.

The new service, announced Tuesday, pushes Square beyond its roots in online payments into more of a one-stop shop for retailers. The new service comes as the company tries to gain some momentum after some stumbles including the loss of an important two-year partnership to handle mobile payments for Starbucks’s customers and amidst reports of widening losses.

Square is letting merchants send three different types of emails to their customers: promotions, invitations to events, and news announcements. In addition uploading their own customer lists, merchants will be able to send marketing pitches to customers who have paid through Square’s app and entered their email addresses.

Merchants will be able to target specific customers based on how often they have done business with them and get data about the success of their campaigns. Business owners will pay 10 cents per email sent, or $15 per month for emails to up to 500 people.

Square says all the emails are anonymized so that merchants never have access to customer emails. Customers can opt out of receiving the messages

In a pilot of 1,000 merchants, Square said sellers who emailed promotions saw them opened and redeemed at rates that were two-times the industry average. Merchants generated nearly $1 million sales tied directly to promotion redemptions, according to the company.

This newest set of features is just another move representing the payments company’s evolution as a services company for small businesses. Kevin Burke, Square’s head of customer acquisition, alluded to the company working more features that would help small businesses with marketing.

Emails aren’t a novel way to target potential customers; Mailchimp and Constant Contact, among others, offer similar products. But Burke argues that merchants sending and tracking emails using information from the equivalent of digital cash registers – actually smartphones and iPads with Square credit card readers attached – is an easier way for them to reach real customers they’ve previously done business with.

Whether the features could be a revenue driver for the company, which was once touted as the next Apple, is still unclear. Square says that “millions” of businesses are currently using Square without offering any more specific numbers. If three million businesses use Square, and two million turn on email marketing monthly, that’s $360 million in revenue. But there are a lot of ifs in that math, starting with the number of businesses that actively use Square.

In addition to email ads, Square has recently pushed into a number of new areas under CEO Jack Dorsey, who c0-founded the company six years ago is now trying to restore some of its early luster. They include protection for disputed purchases, analyzing sales data for businesses and instant deposits for merchants using its services. Square has also started offering cash advances to businesses through a deal with Victory Park Capital.

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