Industry News

Square food delivery acquisition worrying sign mobile payment firms losing focus

caviarAs we head into the lazy days of August, we can expect to see a slowdown in news about mobile payments, just as in almost every other industry. So with little happening aside from the latest rumors about Apple finally getting set to dominate the space there was lots of excitement on Monday when Square announced it had acquired a food delivery startup called Caviar for a reported $90 million.

The San Francisco-based Square, whose best-known product is a mobile card reader and associated cloud service which allows small merchants to accept credit and debit cards, explained the deal as something that would help it expand its services to merchants. As its name suggests, Caviar – which is also from San Francisco – is aimed at the higher end of the market, carting food from restaurants that don’t offer delivery to well-heeled diners who don’t want to leave their homes or offices.

“By making delivery such a fast, friendly, and easy process, Caviar gives time back to restaurants so they can focus on what they do best — cooking great food for their customers,” Square CEO Jack Dorsey said in a statement announcing the deal.

Dorsey is 100% right about how services like Caviar can give their clients the freedom to better focus on their own products and customers. Why should a restaurant have to worry about running a delivery service, when its core mission is, as he says, cooking great food?

But this raises the question of why a payments firm like square would want to operate a delivery service like Caviar, when its core mission is – or should be – making seamless payments. Even though Caviar will remain a separate operation, and Square will doubtless find some value in the purchase, driving pasta and steaks around a very select number of towns in a few countries is hardly the core competency of one of the world’s best-known next-generation payments technology firms.

Compare this with a firm like Cellum, which for more than a decade has focused exclusively on creating and implementing world-class, bank-grade m-commerce systems. Or, as the company’s mission statement puts it, “our goal is to create the perfect mobile wallet.”

With the initial hype around mobile payments wearing off, the temptation to make a splash via a non-core acquisition or partnership is strong and getting stronger. But those firms in the mobile payments space that want to go the distance will discover that it pays to focus tightly on helping people pay and get paid.