Santa Monica, Ca., a coastal city situated west of Los Angeles, is best known for its gorgeous ocean views and the laid-back lifestyles of its citizens.

It’s also the home of DK’s Donuts & Bakery, a cult favorite of many Santa Monicans who need an early-morning pick-me-up or a late-night snack. The 24-hour doughnut shop — a family business — has been open for the past 30 years, and boasts a wide variety of doughnut flavors, such as “Maple Bacon Bliss” and “Devil’s Food.” DK’s also has a Yelp score of 4.5 out of 5.

Upon reading some of the reviews — “I finally found a place in LA where I agree with all the high ratings on Yelp. This place is a gem!!”, said one — it’s apparent that DK’s has a loyal, rabid fanbase and the potential to keep growing. This might be one of the reasons that Square reached out to DK’s and offered the shop early access to Square’s new “Business in a Box” package.

When DK’s “Donut Guru” Sean Tao saw the rates Square was charging and compared them to the rates of DK’s old processor, Mercury Payment Systems, the decision was a no-brainer.

“Their rates were becoming too expensive, so I decided to switch over once I heard the great deal Square was able to offer,” Tao explained.

“[Square] has saved me hundreds of dollars in merchant fees, as well as given my clientele the impression that we are up with the new technology.”

square-biabTao first received the Business in a Box package from Square back in December 2012. He immediately went to a nearby Apple Store to pick up an iPad mini and got to work setting up his new Square point-of-sale system. As it turns out, it didn’t take too long; Tao says that he was able to set up the iPad mini, as well as the Business in a Box package’s cash register and receipt printer, in a matter of minutes.

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“The change from my previous POS system to the one Square offered was seamless,” he said.

All in all, Tao claims that he’s seeing a 75% savings for credit card processing by using Square instead of Mercury Payment Systems. If that number is accurate, it could present a real problem for traditional merchant account providers. Square has already made setting up a point-of-sale system dead simple. If a touch-based sales terminal can be created with just an iPad, a cash register and a wireless receipt printer, and Square is offering better rates to boot, how do competing payment processors stay competitive?

The answer will involve innovation — something a 30-year old doughnut shop understands the importance of, but not many merchant companies have taken seriously. Nimble companies like Square can move more quickly, and that leaves many payment processors in the unenviable position of following more than leading. One thing’s for certain: these companies can’t afford to rest on their laurels. That’s how comfortable leads evaporate. Instead, they need to make the acts of creating point-of-sale systems and processing payments as easy as Square has done, and they also need to introduce new tweaks to the commerce machine.

Or they can do nothing and continue to let Square pick off their businesses one by one. Just like the company did with DK’s Donuts and Bakery.


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