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How would you characterize the credit card processing industry today?
The credit card processing industry has triggered competition in today’s world. The increasing demand for efficiency in transactions has prompted innovations by various firms to simplify the complexities involved in reading credit cards. According to the study conducted by the “Federal Reserve Bank,” check transactions declined with a greater preference for credit cards. Eradication of check payment transactions remains impossible, although several persons fancy the use of credit cards because they are efficient.
Entities no longer recognize checks making their clients shift to the use of credit cards. In reality, only a group of people, probable persons beyond a definite age, write checks. Consequently, a significant fraction of people, probably below 30, prefer credit cards. Online banking has increased bank loyalty with the card transactions accepting an equal amount of money like the checks. The foremost disadvantage of the credit card industry is its inaccessibility by small businesses.
The scanning devices and the fees associated with the processing charges are so expensive that the small businesses cannot obtain them. The complications that exist in the use of credit cards motivated innovations that led to the initiation of itinerant banking through smartphones. These new products help small businesses to transact on-the-spot credit card procedures.
What are the key factors and trends that are likely to shape the industry’s future?
The desire to assume paperless processes thus become eco-friendly drives many into mobile banking. “The credit card reading devices” by Square app and other related firms have made procedures easier. The small entities cannot afford the free apparatus that read cards and proffer cheap transaction costs.
Is this an attractive industry, Is Square disruptive?
The market target by the credit card industry is appealing. The minimal products contending in Square’s space enhances its worth amongst consumers. The uncomplicated, reasonable, and accessible aspects of the device attracted significant persons. Despite this innovation, different concerns need tackling to ascertain customers’ contentment with products from Square. The unavailability of adequate hardware is a drawback to the clients. Concurrently, the simplicity of the product to a more social level like Twitter increases the risks and fraud encountered in credit processing. Despite the delays caused to customers by Square, the research carried out will lead to better performance for the faulty releases.
Five Forces Analysis
This analysis correlates with the “threat of new entries, the power of buyers, the power of suppliers, threat of similar products, and competitive rivalry.” After Dorsey introduced mobile transfers, a number of competitors joined the market, offering the same product. These entities incorporated Google, PayPal, and Apple. It is important to mention that such peril was not apparent. During the introductory stage, the claim was elevated because of the package.
However, the emerging difficulties made the clients reluctant. The availability of adequate hardware and the risks incurred in transactions required Square to seek immediate solutions. Some clients waited as their subscriptions were processed. Delays in delivery of the mobile-payment card readers made clients seek other options. Inconsistency made Square face competition from other firms. For example, they were depositing the photo of a check-in a PayPal account that affected business procedures. Conclusively, other firms such as Intuit launched iPhone cases that are efficient, offer low transaction rates with readily available readers. The substitutes offered by various firms’ causes a threat to Square.
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