Twitter co-founder's 'Square' comes into focus
A test 'Square' in action, and a screenshot of the geo-tagged receipt.
(Credit: Engadget)Well, we finally have a glimpse at "Square," the new mobile payments venture coming from Twitter co-founder and chairman Jack Dorsey. As expected, it's a little hardware add-on that can turn an iPhone into a credit card reader.
The funny part: Details about the small-business-oriented project have been on the Web for months. It was just that nobody had put two and two together until some eagle-eyed folks at Engadget realized that a URL on a screenshot of the "Square iPhone Payments Venture" first reported by Coolhunting matched a domain registered to Dorsey.
Dorsey, who stepped down as Twitter CEO almost exactly a year ago, is headquartering the company in New York, though we hear he already has employees in both Gotham and San Francisco. Its Web site will likely be located at SquareUp.com. Currently, that site is a collection of links to a smattering of businesses, including Sightglass Coffee, a new San Francisco coffee shop in which Dorsey has invested. (Wanna bet they're testing Square out there?)
From Coolhunting:
The innovation is in a small, plastic card reader that fits in to the headphone jack of an iPhone (or iPod Touch) and transfers the credit card's swipe data to the app. After the employee enters the amount to charge, the customer confirms by scrawling their signature with their finger and then either one enters the customer's email address to send the receipt to. The payment is processed by Square for a small percentage plus a fixed fee; the funds are transferred directly to the store's bank account, cutting both time and complexity on the processing side. The customer's receipt includes a map showing the location of the transaction which is handy for those who record, sort and file such things.
We heard that the venture is being called Square rather than "Squirrel," its originally reported name (according to TechCrunch's MG Siegler, this is because it looks kind of like an acorn) due to some unclear legal-copyright-licensing-whatnot issue. CNET News first reported the name change along with the news that Dorsey had been an angel investor in location-based mobile navigation start-up Foursquare.
Funding a hardware venture is typically more expensive than a Web-based one for obvious reasons: the up-front cost of production and manufacturing.
But two sources with knowledge of Square's logistics said that Dorsey believes he can keep production costs extremely low, possibly manufacturing a "square" at a cost of about 40 cents apiece. The company may then even give the devices away for free, making money instead on transaction fees. That's the old Gillette razor business model--make the razors cheap or even free, but replacement blades more expensive.
Regardless, we hear Dorsey has been working on a funding round.
Caroline McCarthy, a CNET News staff writer, is a downtown Manhattanite happily addicted to social-media tools and restaurant blogs. Her pre-CNET resume includes interning at an IT security firm and brewing cappuccinos. E-mail Caroline. 
The biggest problem is that you need to buy a physical accessory, and historically, you can't get the masses to buy an accessory.
Jay Jennings
The average person has little need for a card swiper but I own a small business and this would be brilliant. Compared to costs involved in alternative card swipers this will likely be very cost effective depending on how they structure fees.
The number of small businesses in existence is huge (how many shops and businesses are in your city?). There is a big market for this. Besides you forget that the device distribution is the smaller part of this scheme. It is the transactions themselves which are the ultimate product being sold and every device will hopefully make a huge number of those with a percentage being taken on every one.
BTW the article does describe the device as a "small-business-oriented project". The only way the masses are involved is that they will be making payments to businesses as before, but this device promises to simplify the process for the business and presumably lower costs. This is all part of the bigger process in which digital technology leads to reductions in prices for consumers. In the long run everyone wins with these sort of innovations.
If on the other hand the iPhone, the iPod, and Blackberries, Android mobiles etc can be turned into payment terminals that allow you to authenticate and pay at the check out counter it will be cool.
This is one of those products that sound cool and sleek but fails to solve any concrete business problem and is destined for the dust bin.
I think there will be a market for a product like this, especially for one-man-band or smaller businesses, but suspect it's level of success will come down to the fees being charged.
In fact, most ATM machines are now connected to their back-end using wireless network.
In Thailand, there is this sim card payment and mobile payment that linked to wireless provider and banks, so end user can make a payment thru phone (sim card toolkit) then seller can verify the payment using their phone.
I think the Bill Gate's Electronic wallet is slowly coming alive.
Amazing!
Think if the Red Laser technology was added to this and it could read the retailer's barcode database...This would be the killer app for the retail industry. No more cash registers, no more CC POS, no more security issues with cash thefts, et cetera.
On the other hand, if they created a customer-side version of the app to verify/authenticate the purchase on the customer's own mobile device that would be quite a trick indeed! Actually, one wouldn't even need a physical credit card swipe or hardware addon for this to work... Though both parties would need to be able to use the app on their own devices somehow.
- by sundayslacker December 1, 2009 2:47 PM PST
- I could use this for my new magazine sunday slacker. I deal with small businesses that would love to pay via credit card.
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