By Andrew Nusca
Posting in Technology
A new service called Square allows your to swipe your credit or debit card with your smartphone to pay for products. The concept could help encourage small businesses to accept digital payments.
A new service called Square bridges the gap between the physical wallet and the digital smartphone by allowing users to swipe their credit or debit cards with their smartphones and pay for virtually anything.
The service is the brainchild of Twitter co-founder Jack Dorsey, and works like so:
- Download the free app (iPhone/iPod/iPad, Google Android)
- Sign up and order a free card reader.
- Plug the plastic cube into your device's headphone jack.
- Swipe someone's card.
- Have them sign the screen using their fingertip.
- Voila: you receive payment, and they receive a digital receipt via SMS or e-mail
The idea is to make credit card sales easier for folks who don't necessarily have stores.
For example, if I wanted to sell my couch before I moved to a new apartment, I could accept a credit card payment via square -- no credit card machine necessary.
Here's a video explanation of the service:
Like a real business, users have to pay a cut of profits, too -- but Square says it's far less.
Here's the breakdown:
- Card swiped: 2.75% + 15¢
- Card keyed in: 3.5% + 15¢
- Card swiped: 2.9% + 30¢
- Card keyed in: 2.9% + 30¢
Square settles transactions with merchants each night, and merchants have access to an online dashboard with analytics.
Approximately 1,000 users are currently using the service in a pilot program, including some high profile folks, including alt-rockers Spoon, charity Tipping Point and New York Democratic congressional candidate Reshma Saujani.
As you might have guessed, it's a brilliant way to raise small amounts of money going door-to-door. (Howard Dean must be thrilled.)
In a profile of the service, FastCompany says Square is "bringing the card swiping process into the mobile phone era." Innovative as it is, it's really just a way to compensate for peoples' resistance to moving their financial transactions entirely digital.
After all, debit and credit cards are just physical manifestations of a digital bank account, right?
No matter. It's the right tech at the right time. (To prove that, the project has received funding by Khosla Ventures.)
The question is whether Square can help foster widespread adoption of credit card payment. It's widely known that most small businesses won't accept credit cards (or require a minimum payment, a violation of their merchant's agreement) because they get gouged on fees.
But that shouldn't be a barrier to digitizing our financial infrastructure on the front end.
As you might expect, the service also has security measures in place. Unauthorized use will trigger a notification sent to the impersonated; moreover, merchants can associate a photo with the account as an extra layer.
Square says it doesn't keep your credit card number on file, and your e-mail or phone number isn't shared with the merchant, just Square. Credit card data is encrypted.
One more thing: the service also encourages repeat customers by offering incentives -- yes, just like your "show 10 stamps and receive a free coffee" card from the local cafe.
Do you think you'll be hip to be Square?
May 11, 2010
Well Square is a great technology coming in the smart phones that serves the purpose of credit card payments as well, I am impressed. http://goldiraguide.org/types-of-iras/invest-roth-ira/
Well Square is a great technology coming in the smart phones that serves the purpose of credit card payments as well, I am impressed.
I checked out this blog and I agree that square will help the transactions easier for folks to complete, I like my stay here. http://www.three-credit-report.com/
Not to mention the lameness of still requiring primitive, physical credit cards with magnetic strips. Ten years ago, IBM ran commercials showing how we'd all be buying sodas from vending machines at train stations with our phones. Before that, the prediction was that smart cards would replace all the other cards in our wallet. So this is our bold future? Fussily swiping a physical card through this plastic attachment dangling from a phone, then clumsily "signing" the face of the phone, then entering an E-mail address on the phone's keyboard so we can get our receipt. And what on earth is up with charging MORE if you enter the credit card number? No one should put up with that. LAME.
Your trancsaction "fee" on the illustration of $20 is 23.3%! on a payment of $20 the cash value should be $19.27 or $.73 fee.