Apps & Software

Square and OpenTable Eye Each Other's Niches


Square and OpenTable began their lives by using technology to solve a specific problem faced by small businesses—offering, respectively, an easier way to accept payments and an easier way to accept reservations. That gave the companies a foot in the door. With initial successes under their belts, both immediately began looking for other targets, a tendency on full display Monday as each moved into the other’s territory.

Square said it would begin offering a new service called Appointments that allows businesses to offer online booking. In a pilot, the company says that most of the 200 companies it surveyed claimed to make more money while saving time, and 108 of them now get 10 percent or more of their appointments per week through Square. Appointments will cost merchants between $30 and $90 a month, depending on their size.

The idea is part of a wider push by Square to develop ways to make money other than passing out dongles for simple credit card swiping. That service has been very popular among small businesses, but it also fetches low margins, and Square faces lots of competition. (The basic economics of that business may get even more challenging as the U.S. moves way from credit cards with magnetic stripes, a future that Square is just beginning to prepare for.) In recent months the company has rolled out interactive receipts and a GrubHub-like delivery and takeout service. If Square can cobble together enough products that merchants will pay for, it might be able to reverse its history of large losses.

OpenTable (OPEN) is moving in the other direction. The company said it would expand a pilot project in which diners can pay with their phones. Mobile payments have been a tough sell for customers, because credit cards are pretty convenient already. Square actually shut down Wallet, a service that allowed customers to walk into participating stores and pay without having to take out a credit card. But restaurants are a special case. To use a card, a diner has to wait for the waiter to come to the table twice. This happens at the exact time that diners are itching to escape dull dates or ready to keep good ones moving along. Now at 45 restaurants in New York, diners can use their phones to pay and set a tip, then get up and leave.

This isn’t a new idea. A company called Cover already offers it in the Bay Area and New York (where 85 restaurants participate), and it is a pleasure to use. OpenTable is in good position to be much bigger. It already has relationships with 31,000 restaurants worldwide, and it plans roll out the service to 20 cities by the end of the year. Neither restaurants nor diners have to pay to use OpenTable’s mobile payments. The company says it expects the service will pay for itself by bringing more traffic to participating restaurants, which pay by how many people OpenTable helps seat.

These moves don’t necessarily bring the two companies into closer competition with one another, because they serve different kinds of businesses. But each company seems to feel the need to move far beyond its initial vision.

Brustein is a writer for Businessweek.com in New York.

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