Square (SQ) Updates Payroll Product With Employee Benefits

Square, Inc. (NYSE:SQ) is leaving no stone unturned to expand presence in the digital payment solutions space on the back of its strengthening product portfolio.

The company has added some useful and significant employee benefits to its payroll product, Square Payroll. Notably, this product is especially designed for small businesses.

In order to include employee benefits in its offering, Square has teamed up with AP Intego Insurance Group, Guideline 401(k), Alice, and SimplyInsured.

With the latest move, the company will enable the small sellers or businesses utilizing Square Payroll to offer benefits like health insurance, pre-tax spending, retirement savings and workers’ compensation to their employees, consequently providing facilities like big businesses.

We note that the move will aid the company’s momentum across the small sized businesses.

Benefits from Initiative

The above mentioned endeavors of Square are not only enhancing its own product offerings but also expected to benefit the employers and their employees.

We believe the initiative will help the small businesses to deliver better work experience to employees. Further, these benefits are likely to aid the employee retention rate as well as prevent the attrition rate of these companies.

Additionally, the company is providing flexibility to these employers which are getting the option of selecting one or all the benefits for their employees based on their choice and budget. Further, they can diminish their payroll tax burden with some of these benefits.

All these benefits will aid Square in retaining the existing sellers as well as attracting new sellers to its platform. This bodes well for Square’s continued efforts toward expansion of its seller base further.

This will bolster the company’s gross payment volume (GPV) which remains the key growth driver of its top-line growth.

Coming to the price performance, shares of Square have returned 101.3% on a year-to-date basis, outperforming the industry’s rally of 1.4%.

Portfolio Strength: Key Catalyst

The company’s continued focus toward innovation of its product portfolio has been playing a significant role in shaping its growth trajectory.

The latest move has fortified the company’s product portfolio. Moreover, employee benefits in Square Payroll holds promise. With the increasing proliferation of internet usage, Payroll strategy is becoming a necessity for the businesses of all sizes. In fact, the online payroll services are rapidly gaining traction in this data driven world.

The seamless integration of these services and related apps reduces a firm’s administrative and processing time. This feature is causing the demand for these services globally.

Apart from the updated Square Payroll, the company unveiled a new payment service called Square Installments, a kind of point-of-sale lending service. Notably, this service enables small business clients to offer the flexibility of payment in installments to their customers.

Further, the company rolled out Square Terminal which will aid it in attracting new sellers to its platform. Additionally, the company introduced Square Reader SDK that is also helping the company in improving its reach to larger sellers.

Both the products bode well for the company’s growing GPV.

All these will help Square in reaping benefits from the global digital payment market which as per a report from MarketsandMarkets, is expected to reach $86.76 billion by 2023 witnessing a CAGR of 18% between 2018 and 2023.

Zacks Rank & Stocks to Consider

Currently, Square carries a Zacks Rank #3 (Hold).

A few better-ranked stocks that can be considered in the broader technology sector are Castlight Health (NYSE:CSLT) , Twitter (NYSE:TWTR) and Upland Software (NASDAQ:UPLD) . All the stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Castlight Health, Twitter and Upland Software is currently pegged at 22.5%, 22.05% and 20%, respectively.

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