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Square Banking on iPhone, Android Users' Loyalty

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Twitter co-founder Jack Dorsey’s mobile payment company Square has based their business around those smartphone-based card readers that plug into a headphone jack of your Android (GOOG) and iOS (AAPL) devices. Now, it’s giving merchants a way to reward people for using their system and apps.

The mobile card reader company is now coming out with tools for analytics, inventory, discovery, and loyalty. The last one is particularly interesting, as it acts like a punch card for frequent shoppers.

Just like some stores hand out club cards on your first purchase, Square’s loyalty tool will act like a digital punch card. Participating businesses had a feature like this previously in the business-centric Square Register app, which also let customers wirelessly open a tab at their favorite businesses.

But the Pay with Square app allows merchants to create a digital punch card. The app tracks customer progress toward their reward with participating businesses. The app also lets merchants setup deals to bring in new customers and rewards for the number of visits or total amount spent by regulars.

Square Register can analyze sales and provide breakdowns by item, time of day, and time of week. The app can also show how sales fair by specific employee shift.

According to Square COO Keith Rabois in an interview with GigaOm, these new apps are part of a larger plan to build Square’s services. The apps are made to require very little training or instructions for businesses to use them.

Pay with Square has been redesigned to help point out local businesses and those that accept Square. This should work well with Square’s Card Case app, which organizes all your digital cards from Square-participating merchants and hands-free payment on iOS.

Square currently serves 2 million businesses and individuals with its apps. The company processes $6 billion from businesses annually.

The loyalty program and other features give Square a competitive chance against its bigger competition. PayPal (EBAY), Groupon (GRPN), and Foursquare are building similar services for their apps.

There will be some interesting additions to the mobile payment markets when Apple launches its Passbook program, which organizes all your electronic passes and cards.
POSITION:  No positions in stocks mentioned.