Square is getting back in the on-demand delivery game.
Less than a year after announcing the sale of its food delivery service Caviar, the payments company announced a new option for restaurants and retail stores using its payments hardware to have their products delivered to customers' homes.
"In this challenging new business environment, it's more important than ever that sellers have access to the tools they need to sell online quickly, efficiently, and affordably," Square said in a press release Wednesday. "On-Demand Delivery is just the latest feature we've built to help sellers take their business online."
Square announced the sale of Caviar, to DoorDash for $410 million last August. At the time, CEO Jack Dorsey, who is also the chief executive of Twitter, said in a statement the move would allow Square to double down on investments and focus in its core payments businesses.
Wednesday's announcement underscores Square's effort to beef up online offerings for small businesses that are being hit especially hard by nationwide shutdowns. The coronavirus-related shelter-in-place orders have forced many Square merchants to close their doors and quickly shift businesses online.
The move also highlights the elevated attractiveness of delivery models as brick-and-mortar stores remain closed. Instacart, for example, told CNBC that demand in March was the the highest in the company's history, and that customer order volume is up more than 500% year over year. Meanwhile, Grubhub announced this month that it would merge with European food delivery company Just Eat Takeaway after merger talks with Uber fell through.
Square sellers can dispatch delivery drivers for orders placed on their websites. The service is through a partnership with delivery companies, with Postmates to start and "additional delivery partners coming soon," the company said. The buyer will get a text message update and links to see delivery progress in real time. Sellers should save "a significant amount on per-order costs," according to the company.
Merchants pay a $1.50 flat fee per order to Square and a fee to their delivery partner that is "calculated based on distance and other factors." Sellers can pass this fee entirely to the buyer or offer custom delivery promotions, according to Square. Unlike ordering through a third-party app, it also allows the merchant to receive the customer's contact information and maintain sales history.
Square's stock hit an all-time high Tuesday and has been on a tear this year. The shares are up nearly 60% year to date, compared with a 5% drop in the S&P 500. The stock was down 3.5% to $101.24 midday Wednesday. This week, Barclays raised its price target on the payments company, and said resiliency of Square's merchant base may be stronger than investors fear.