Square is breaking rules again. Just in time for the Holidays, the company best known for turning iPads and iPods into cash registers is changing the way we buy gift cards.
Log in to Square Wallet -- the company's alternative to Google's (GOOG 2.00%) Wallet and eBay's (EBAY 1.94%) PayPal -- and you'll see a directory of nearby businesses which accept Square. Activate search to find a specific store or browse by category.
Click on a business and you'll be presented with details, directions, and the option to "add to wallet," which effectively bookmarks the business as one you'll frequent. You also have the option to buy a gift card without swiping a credit card at the point of sale. Here's how that part works:
Investors will rightly point out that rising interest in Square correlates with the company it keeps. Starbucks (SBUX 3.42%) is both a partner and an investor. Yet I see a broader opportunity here.
Gift cards tend to favor big brands because of distribution. Your grocery store may sell a variety of options for Amazon.com (AMZN 1.66%) and iTunes, but you'll have to visit the local craft store if you want to purchase a gift card for your sister who wants knitting supplies. Square makes it possible to execute this same transaction with a few clicks.
And that's important. At the very least, it means local businesses could come to see Square as an ally rather than an expensive merchant whose marginal services and unwanted fees get in the way of profits. In fact, some already are.
