I'm not seeing people use it for splitting bills and the like as much, but I got the impression Square was making a conscious shift away from that market and toward small brick-and-mortar (or truck-and-van?) businesses.
Square reached too high a valuation off of low value business with merchants. They have burned through staggering amounts of cash, canceled high profiled products, and purchased payment-unrelated startups and made other changes. The high valuation they've had in funding rounds makes them an unattractive purchase because the business they have isn't worth what it would cost. To get new money they'd have to do something like foursquare did to raise money, which dilutes everyone's current equity to very little.
They probably can turn it into some kind of business but the growth has stalled, the equity employees have is at risk and they've all but lost the sparkle that excites the press when they talk about the company. They could gain momentum back, it's not impossible, and they have really, really good engineers and designers so that's a plus.
The key point about Square's business is that they're in a new market. Their primary users are small businesses that would not otherwise be able to accept credit cards. I just bought a bottle of vodka directly from a distillery using Square: they had no cash register, no front office, you walk up to the door and the guys who run it will sell you a bottle on an iPad. Last Christmas, I bought our Christmas tree directly from a family-owned tree farm in the Santa Cruz mountains using Square. I paid for Maker Faire with Square.
If you follow Steve Blank's Lean Startup thought process, new markets take an average of 7 years to reach profitability. It's not just a matter of convincing customers to switch; you have to wait for people to enter the new lines of business that you have made possible. That's finally starting to happen for Square: I see people on HN down on it, but I talk to their actual customers, the ones who pay money for it, and they are all very happy with it.
[1] http://www.forbes.com/sites/stevenbertoni/2014/04/21/why-squ...
[2] http://fortune.com/2014/05/14/squares-status-its-complicated...
I know an engineer who works at Square, they are not a lean startup, they have all the various excesses that people love to hate which is expensive catering, free shit, expensive furnishings. Square is not lean, and when you're losing $100,000,000 a year, I don't care if you're an ancient business like Ford or IBM, that's not good, and you wont have 7 years to reach profitability profitability, you got about half that, if you don't hire anymore. If Square stops hiring, that's also not good. They're going to have to let people go, like their recruiting operation, which is world class.
"Lean" in this context doesn't mean "cheap." http://steveblank.com/2009/11/02/lean-startups-aren%E2%80%99...
The key point from the article: "If you confuse Lean with Cheap when you do find a repeatable and scalable sales model, you will starve your company for resources needed to scale."
Your point about lean and cheap is fair but a bit confusing in context.
The reason this works is because once you have that repeatable and scalable business model, you can be fairly sure that hiring a person (plus all the other operational costs) at $X will bring in >$X in new business. So you spend money for growth; the expenses are booked this year, the revenue doesn't happen until next year when contracts are inked, product improvements are launched, more people hear about Square, etc. The number to pay attention to is gross margins (the amount of money they make off each transaction); the 2nd article I linked lists that at 34%, which is comparable to Amazon's 30% and Apple's 39%. As long as that is positive and high enough to cover fixed operational costs, Square can instantly get to profitability by laying off people (or, with current revenue growth, simply by slowing down hiring).
The risk with this strategy is that the market turns out to be smaller than expected, and your product appeals only to a small number of early adopters. Growth then slows down markedly right as expenses ramp up, and there's no way to jump-start growth again. I think this is what's happened with Quora. Square seems different, though: the customers I've talked to are decidedly non-technical, and yet they love the product.
Me, too. I live in Japan and it blew me away when I saw Square readers for smartphones in convenience stores the other day.