Square partners with inventory tracking service Stitch Labs

May 6, 2014, 4:00 PM UTC

FORTUNE — Late last year Square introduced Connect, an open platform that lets other companies integrate with its mobile payments system. Since then, the San Francisco-based company has announced several partnerships with key developers of software for small businesses, like Intuit (INTU), which sells QuickBooks, and a competing accounting tools provider called Xero.

Square’s latest integration is with Stitch Labs, maker of inventory management software for small merchants — one of Square’s core demographics. Customers who use both Stitch and Square will now be able to automatically sync inventory across different channels. (Think brick-and-mortar stores and stands — which can be powered by Square — and online shops like Etsy and Ebay (EBAY), which operate their own marketplaces and credit card processing services.)

The news may seem like small potatoes, but it’s a big deal for independent merchants who have to manually enter sales made via Square into their inventory management software. Sara Villari, owner of Girls Can Tell, a Philadelphia-based line of housewares and gifts, says that in the past she was afraid of overselling inventory because there was no easy way to keep track of what she’d sold in her store (and sync it with what she was selling across online channels). Now, Villari says she will not only be able to better track inventory using the same interface for both businesses — online and offline — but she also plans to add her towels and other goods to the Square Market, an online store created by the company. “Tools like this just didn’t use to exist,” Villari says.

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Stitch Labs caters to businesses who bring in anywhere from $100,000 to $3 million in annual revenue, but is working its way up to customers who generate upwards of $20 million with a soon-to-be-launched new product. (One of its top customers is Magic-Flight, which sells vaporizers and all sorts of marijuana “accessories.”) “Square was our top most requested integration that we didn’t have,” says Brandon Levey, the CEO and co-founder of Stitch Labs. (The startup already integrates with multiple other services, including Amazon.com (AMZN), Etsy, Shopify, Stripe, and Google (GOOG) Drive.)

The news is also significant because it shows early traction in Square’s newish and more inclusive strategy: a more open platform for third-party developers to build on top of and sync with Square’s offerings. Recently, the company has branched out into new products, like an online payment system for in-store pickups and yes, its own inventory tracker tool. But it can’t possibly provide an entire ecosystem of payment, accounting, inventory management, and the growing number of other software tools at small businesses’ disposal. Square says it is opening up its platform as a “great opportunity to make our customers’ businesses run more smoothly.”

Integrating with software tools used by its core demographic is a no-brainer for Square — even if it means it will sometime compete with the companies it partners with. And syncing with third-party applications not only makes Square more sticky and useful to its users, it can also be a way of acquiring new customers. The only question is, What took Square so long to formalize a partner platform and open up its APIs (application programming interface)? Now that it’s made the move, there are lots of other companies that would make sense for Square to partner with.

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