Square
May 29th, 2011, 4:33pm by Mike
I can’t figure out why I’m so interested in Square, the sort-of new system that allows anyone to swipe physical credit cards on their mobile phones and accept payments. Interestingly, this tech would have been a Board-killer — we would probably have had a different name for this blog if Square had existed 15 years ago (wow).
So, for the uninitiated, there are two basic uses for Square:
- First, the above — a free magnetic stripe reader that plugs into the headphone jack of iPhones or Android phones. You download the app, sign up for an account, and start swiping. A day later you get cash in your bank account, minus the 2.75% commission, which I understand is less than what most credit card processors take.
- The second use is a setup between a buyer and a seller/store, whereby the buyer has a “tab” with the store. They can set this up on their phone, and when they order (a coffee, say), they can have it charged to their tab, without using their wallet. Hard to explain, this video may help.
The technology seems awfully cool, and I’m tempted to sign up and get my free reader. Two hangups, though:
- Accepting credit cards, and getting money deposited to your bank account, requires giving Square your routing and account number information. Their FAQ even states that they will verify that they can deposit and withdraw money from your account. First, I can’t figure out why they might need to withdraw money from my account (disputed charge?). But more importantly, it seems like giving this information to Square is about 10x as risky as giving your credit card number to a website. Square will have a repository of verified, validated bank account information, and the ability to withdraw money at will. This, along with the high-profile nature of Square, will make it an attractive target to hackers, and this seems pretty dangerous to me.
- Second, the card case. Did you watch the video? Did it seem like that was easier than using a credit card? Not to me, either. And it sounds like you open a tab for an hour when you do this, which can’t be too secure — apparently, anyone could walk up to the register and order, say “Mike’s paying,” and that’s that. It’s just like a bar tab with a real credit card, which isn’t the most secure thing around. Works in a bar, though, I guess. My feeling — NFC will win out, here — with either Square or NFC, you need your phone with you.
What do you guys think of this? Is this the future — personal credit card transactions? Or is this just another bubble waiting to burst?
June 1st, 2011 at 7:34 am
The card case seems unnecessarily complicated, but it does look like you get a text message confirming each transaction so you can dispute spurious charges. As for personal credit card swiping, it’s not as cool as Paypal’s old beaming money method or their current bumping money method. And the Board managed to survive those threats… Seriously, enabling individuals to set up credit card processing easily is pretty huge. Imagine where Big Day Snapshots would be if we offered that at the point of sale :). I know a few taco trucks that are using Square for credit card payments. There’s almost no excuse for cash-only anymore. I do wonder how they are able to undercut Visa/MC. Presumably, they have to turn around and pay the cc companies their normal cut right? And what shows up on your credit card bill as a buyer? Square or MikeD?
On a related note, no one I know actually uses Pay Pal for personal transactions. Jake and I were just talking about this. There needs to be a way to avoid that 5% fee; maybe if you only funded transactions with cash (debit only accounts). Maybe they have that for people that have somehow avoided the permanent upgrade to Premier status. Maybe I should start a new account– I’d love to bump money back and forth with friends without incurring a charge…
June 1st, 2011 at 7:50 am
Looking over the paypal website, it does look like they draw a distinction between “receiving payments,” which incur a 2.9% fee for me, and “Personal Transfer,” which only get charged a fee for credit card funded transfers. Maybe I’ll load up my account with $10 of play money and try it out.
https://www.paypal.com/us/cgi-bin/webscr?cmd=_display-fees
June 1st, 2011 at 11:28 am
Funded my Paypal account by taking a picture of Jake’s Sprint check for this month (seemed appropriate). Now I’m ready to dole out some money. Anyone want some? Do i owe any of you any petty cash?
June 3rd, 2011 at 9:16 pm
Guess readership is really down at The Board if you actually offered free money and it took 2 days for anyone to write back!
On a not-really-related note, my bank now accepts photos of checks for deposit. Not sure what I think about that.
June 3rd, 2011 at 9:23 pm
It just struck me that that’s the real way to send money to friends really fast, for free! Just write a check to them and send the picture! If you can upload from your “camera roll” on the phone, then it’s really easy — otherwise, you have to print it out (or display onscreen), and submit that picture.
Awesome!
June 3rd, 2011 at 10:10 pm
Yeah, cashing photographs of checks seems rife with pitfalls, not the least of which is that, at least with Paypal, you can’t be sure it’s been accepted for 5 business days, during which time you have to keep and guard an endorsed check in your possession.
Emailing a check image is a cool idea, but it probably does needs to be ADC’ed on the senders’s end, then DAC’ed on the receiver’s end, if only to endorse it (unless the sender forged the signature or the receiver can sign it convincingly with digital ink).
Coincidentally, Lance tweeted a few days ago about Venmo, who seems to be taking up the grass roots torch of paypal’s early days. No charges, send money between friends, even fund it with a credit card if you like. Maybe I should lend you all $1000 from my credit card for an instant $10 profit :).
June 3rd, 2011 at 10:55 pm
PayPal tries to have the same thing, as far as connecting bank accounts to PayPal. I’ve intentionally never connected any bank account with substantial money in it precisely because of PayPal’s clawback feature. Their terms are written such that if Person A sells an item to Person B, then buys something from Person C, but Person B claims they never got their item, if PayPal can’t get the disputed amount from Person A, they’ll come after Person C.