Nearly everyone I every need to pay is on Square Cash (and those who aren't soon are, the barrier to signup is very low) and the app is just a pleasure to use compared to the competition. It's second nature at this point.
Square Wallet was a big dud, as was the Starbucks partnership. That was their "greater plan" at one point.
Square Cash is easy to use.. but operates at a structural loss of over 20 cents per transaction.
There's plenty of issues when you look past the surface, particularly with the business model. They have not yet delivered a polished product that's enjoyable to use and makes lots of money.
If "proven ability to execute and release polished products that are enjoyable to use" is the bar for a high valuation and optimistic projections, we should maybe start throwing gobs of money at a lot of design firms and app consultancies.
The small business I work for recently switched to Square Register via an iPad and the Square Stand for all POS and it's pretty brilliant. It's a big step up from using a phone plus the regular little reader, and setup and use are quite simple even for our tech-illiterate employees. Judging by the popularity of the related receipt printer and cash drawers on Amazon, we're far from the only ones to make this jump recently.
I don't know how much money they're making per $100 stand, but they've made the barrier to a modern flexible POS system so low that I'd be surprised if their share of the payment processing pie isn't growing quickly.
Square does have a really good niche in the mom-and-pop shops where 2.75% is an ok price given the easy of signup and free POS system. But at the same time there may be significant customer acquisition and support and fraud costs in that niche.
However this debit mechanism is also what makes it so expensive for Square to operate (>20 cents per transaction in interchange fees).
By the time you unlock your phone, open the app, wait for it to locate you, check in, say "hey i'm paying with square my name is x", wait for the cashier to scroll down and find you (sometimes you take a few seconds to show up), and wait for them to tell you you're good to go... it's really at best neck-and-neck with swiping and signing. At worst, slower and more awkward. Auto check-in was super unreliable.
Apple Pay on the other hand is going to be a significantly faster way to pay (no signing/PINs) and also vastly more secure (no real card numbers!). Two real concrete benefits.
An easy way to see everything I've ever spent at a place.
Not having to share credit card details.
You can pay just by walking into the place and saying your name, you didn't have to have to pull your wallet out at all.
Don't compare it to the competition. I live outside SF and have never run into any square POS till now and don't know anyone that uses square.
I signed up for Venmo a while back to try their API at a hackathon. They then decided to freeze my account and send me a barrage of questioning. I didn't bother.
On top of that, Square Cash is instant - there's no paypal balance to deal with, it doesn't take 2-3 business days for the ACH deposit into your bank. When I square cash my friend $50, it's in his account and out of mine before our conversation is over.
I'd definitely imagine that improved customer feedback mechanisms would impact SMEs in a positive way.