
    Square's On-the-Go iPhone Credit Card Scanner Will Cost $1 - jmonegro
http://www.readwriteweb.com/start/2010/02/square-iphone-scanner-1-dollar.php
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jamiequint
I don't get what Square understands that merchant account providers do not.
There are tons of merchant account providers whose best interest is to give
you an account, yet they still make you jump through all kinds of hoops to get
one because fraud is so costly to them. (Chargebacks are expensive).

If it was profitable to make it easy to get a merchant account it seems that
this market is developed enough that it would have figured it out by now.

Square makes it sound like they are effectively "merchant accounts for
everyone" Makes me wonder what they have figured out on the fraud prevention
side that nobody else has.

~~~
crux_
One possibility from the video (n.b. I had it muted): Requiring a photograph
of the buyer, as well as their signature, might help quite a bit with fraud
prevention...

~~~
jim-greer
Sounded like you only get the picture if the buyer has a square account as
well. Didn't seem to be required.

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mprime
"For just $1, anybody can have the functionality of a full blown credit card
reader on their phone."

This will not end well.

~~~
DenisM
Why? Anyone can already type in credit card number,ccv,etc by hand for zero
dollars - surely it's not a disaster?

~~~
blasdel
But without a hurdle-laden merchant account they can't process them.

~~~
arfrank
From the video on the square site it seemed like person to person transactions
are encouraged. I'm guessing turn around time for money transfers are going to
be longer and maybe a secondary online approval process for some transactions
for non-merchant accounts.

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alastair
I really like the idea behind Square, but are customers really going to trust
a dongle hanging out the end of someone's phone? Whats to stop someone reverse
engineering the dongle and creating a spoofed client that just records the
data instead of performing a charge?

~~~
gte910h
Who cares? This is already a solved problem with credit card laws (the very
limited liability you suffer by some random dude stealing the number)

~~~
KWD
But what about those that use debit cards. Not the same protection, and much
more chance for harm.

~~~
gte910h
I would say that's probably why you shouldn't.

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invisible
So then when I pay for my meal at dinner and the suspicious waiter pulls out
their iPhone to swipe a $5 transaction I might never notice? Not that I'm
especially bad at watching transactions, but I am sure that this could be a
problem.

Edit: Not that I don't like this idea as a business invention, because it
really does ease taking payments for service-based companies.

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wallflower
Interesting perspective from American Banker. If anything, Square is shaking
up the established market and getting established industry veterans working on
true mobile payment.

> Beth Robertson, the director of payments research for Javelin Strategy and
> Research of Pleasanton, Calif., said that if Square is able to allow
> merchants and consumers to accept card payments without a conventional
> merchant account, that may be a bigger selling point for the system than the
> technology itself.

[http://www.google.com/gwt/x?oe=UTF-8&client=safari&q...](http://www.google.com/gwt/x?oe=UTF-8&client=safari&q=square+iPhone+%2B+PCI+compliance&hl=en&ei=9m57S7iRAouIgQei-4sH&ct=res&cd=iz&source=m&u=http%3A%2F%2Fwww.americanbanker.com%2Fissues%2F174_233%2Ftwitter-
vets-square-1004821-1.html)

> The app, as Kevin says, will even upload GPS information, so you can make
> sure that payments are happening in the right place.

~~~
wmf
_allow merchants and consumers to accept card payments without a conventional
merchant account_

Isn't that called PayPal? Square is PayPal, but on the iPhone; it doesn't seem
hard to understand. And it's surprising that PayPal themselves missed this
opportunity, given that they started on the Palm.

~~~
wallflower
My understanding is that PayPal originally was intended to be that and now is
the most sophisticated fraud detection and combatment system ever created.

> Just as Napster allowed people to directly share music online, PayPal
> enables people to exchange money instantly without having to open expensive
> merchant accounts to accept credit cards. Yet to Levchin's surprise,
> advanced cryptography has had little to do with PayPal's success. Rather,
> the company's rapid adoption by millions of small businesses and individuals
> operating chiefly on Internet auction site eBay is largely credited to
> Levchin's more recent obsession: developing financial surveillance software
> that closely monitors PayPal's customers and almost instantly alerts both
> the company and law enforcement officials to any suspicious account
> activity. "We mine millions and millions of transactions in real time,"
> Levchin says.

<http://www.paypal.com/html/mit-1201.html>

~~~
pyre
> _now is the most sophisticated fraud detection and combatment system ever
> created._

That's not saying much about fraud detection systems then. Seems like every
other day there is some story about someone whose PayPal account was frozen
without any chance for appeal or even a solid stated reason as to _why_ it was
frozen.

~~~
MaysonL
A little bit of selection bias there: you don't read about all the valid
transactions that go through, and all the fraudulent transations that get
frozen.

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AFerenci
Traditional credit card processors are able to settle accounts daily. It
remains to be seen if Square will offer a similar service. Many established
merchants (especially restaurants) desire what is called "real-time billing"
or getting cash in the bank once the card is swiped rather than waiting for
payment to be deposited or settled.

The other problem is that Square accepts anyone. The reason its difficult to
get a merchant account through other payment processors is because chargebacks
ARE EXPENSIVE. (payment processors will not accept a merchant that is above a
2% chargeback rate). This means that Square will be susceptible to a larger
amount of chargebacks (which means that most of their angel funding will
likely be in an escrow account to protect against chargebacks).

Great idea but we'll see how these issues are handled.

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unwind
How is the reader powered? Their copy on the home page (as well as in the
video) says:

"Read payment cards from any device with an audio input jack, including your
mobile phone."

From the image on their page, the reader is using a 4-pole 3.5 mm plug, which
might mean it's powered from the host device. If not, I guess it needs a coin
cell which would have to be replacable unless the entire reader is disposable.

I searched for a pin-out of the headphone jack, and it seems the 4th pole is
for the microphone which (of course!) is used to send the credit card data. Is
their app playing some sound, thus allowing the reader to power itself from
the audio outputs?

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didroe
Isn't this just Paypal? But instead of giving someone my email address to
transfer funds, they have to get their dingle-whatsit out and I have to get my
card out and mess around?

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danielpiqqle
I am interested in seeing how paypal will move into the mobile space. I think
they have a great opportunity as more and more people use multi-media mobile
handsets.

~~~
jodrellblank
A while ago I bought gas and forgot my wallet. I had to call someone to come
and pay for me.

If only I could have gone to a website on my phone and paid by paypal. Or
phoned someone and asked them to go to a website and pay for me, and the
cashier give me the receipt as it happens.

Guess that's as much down to the garage as paypal though, eh?

~~~
danielpiqqle
It would be cool if the attendant was there and he/she had a paypal merchant
account to accept a payment there on the spot where you can log into your
phone and send a 20 dollar payment (or whatever the amount) and the attendant
will start up the gas machine for you. Paypal could make it so fluid that
everyone will be compelled to sign up for at least the mobile app, even if not
everyone uses it all the time. Just like everyone really should have a sign on
for Skype, even though they might not use it on a daily basis

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pistoriusp
Did anyone else notice that in this picture:

[http://www.readwriteweb.com/start/images/square_usage_feb10....](http://www.readwriteweb.com/start/images/square_usage_feb10.jpg)

The square device is on the wrong side of the iPhone? Shouldn't it be plugged
in to the headphone jack?

~~~
CrazedGeek
That's an iPod touch.

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proemeth
$1 + 2.9% : "Square can afford to give away the dongles because they will be
banking 2.9% of each transaction." Not so cheap.

~~~
joezydeco
What's the typical Visa and MasterCard vig these days? Isn't it around 2.5%?

~~~
dhyasama
Visa and Mastercard charge merchant account providers a set percentage (called
interchange) and then the providers mark up from there. Interchange is
different for every industry because of varying fraud and chargeback rates.
Also consider the risk of card present versus card not present (or ecommerce).
So I guess this is a long way of saying it depends. For card present
situations like Square will always be, you can get an account under 2% if you
are in a low risk industry and hammer your sales agent.

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ROFISH
The Youtube video says Square is available, but it isn't? How do I sign up?

