

Square's Disruptive Payment Service About to Get A Huge Retail Boost from Apple - Jsarokin
http://techcrunch.com/2011/04/16/square-apple/

======
VengefulCynic
As a former retail manager of a brick and mortar store, I have to say that
anything that brings competition to the payment processing industry would be
huge for retailers.

Obviously, a retailer of Apple's scale has that much more to gain from
disrupting the industry. Even moreso if they plan on having to negotiate with
payment processors when they bring an NFC solution to market.

~~~
thinkcomp
Apple isn't bringing an NFC solution to market anytime soon to the best of my
knowledge.

Sadly, Square doesn't actually bring any competition to the payments
marketplace at all. It just further entrenches credit cards.

I've written more about this here:

[http://www.quora.com/Aaron-Greenspan/Paying-With-Your-
Phone-...](http://www.quora.com/Aaron-Greenspan/Paying-With-Your-Phone-Is-
Awesome-Because-Its-Not-1960-Anymore-In-Reply-To-Farhad-Manjoos-Paying-With-
Your)

~~~
18pfsmt
I don't think that's a fair assessment . Square is coming from the merchant
acquiring side (traditionally strict B2B), and branding themselves to
consumers at the same time (theoretically, to breed trust). Square manages
risk, don't get distracted by the hardware.

~~~
thinkcomp
Well, maybe they bring some kind of competition in the world of merchant
acquirers, but they are raising interchange prices, not lowering them. True
competition lowers prices.

~~~
18pfsmt
Have you looked at the mess that is FirstData> ISO> ISO> ISO?

Sales has been difficult to scale in this market for so long, it has relied on
lots of layers of independent sales people. I would argue Square will bring
some efficiency to this market.

~~~
thinkcomp
I have. They don't seem to have changed much since they launched in 2009.

~~~
18pfsmt
I'm not sure you took my point. FirstData is the largest merchant acquirer in
the country; it's now privately owned, bought for $30B. It used to be part of
American Express, as an interesting sidenote. These are entrenched industries,
and you can't simply change them over night.

Out of curiosity, have you worked for a +$10B business?

~~~
thinkcomp
I guess I still don't get your point. What is it?

Also, no, I haven't worked as an employee for a $10 billion company, nor do I
have any desire to.

And yes, you can change entrenched industries overnight; that's the point of
technology entrepreneurship, and it's why many of the people who frequent
Hacker News bother coming at all.

Lastly, I've noted that in other parts of this conversation you claim to be an
expert on payments--so who are you, again?

------
rojosnow
Overall, I like it and it's a great idea. But...

Have you ever been a merchant accepting credit cards? So, that guy buys your
couch for $300 (in the promo video) and guess what, no $ gets deposited into
your bank account. In the merchant world, that's called a chargeback. 99.9% of
the consumers have no idea what this means...you don't get paid and it
typically costs you additional fees.

Merchant clearing companies ONLY provide an authorization and a money transfer
service for their vig. This means, consumers (and businesses) have nobody
working for them and no protection against the deadbeat or scammer.

So, you can buy that 108" LCD TV on your AMEX, have it delivered to a friend's
house, call the merchant back and claim you didn't receive it, and the
merchant will get the chargeback since they can't prove you signed for it.
Really.

~~~
mleonhard
The rules for chargebacks are better for card-present transactions. According
to their site, if you get a signature and "verify the signature matches, you
will usually win the chargeback dispute":

[https://support.squareup.com/entries/160990-security-and-
com...](https://support.squareup.com/entries/160990-security-and-compliance)

------
dr_
Although I hav no knowledge on the matter, why is there an assumption that
this means the iPhone 5 won't have NFC? I'd imagine if Apple were to introduce
NFC it would do so by bringing on board a few large retailers who would
support it and get key recognition at the iPhone 5 event. Square would still
serve a role with smaller businesses and for person to person transactions for
a while I'd imagine, on top of which one would assume that square would
eventually rely on NFC as well and drop the attachment. Or maybe Apple would
buy them outright - hence the reason to establish this relationship now.

~~~
pclark
More people have credit/debit cards than smart phones. There is no reason why
Square couldn't support NFC eventually, but I think for the next decade,
retail purchasing experiences, will involve consumers with credit/debit cards.

------
rm-rf
How does a retailer using Square manage PCI compliance?

Are retailers using Square automatically non-compliant? My understanding is
that PCI Council has not approved mobile applications under PA-DSS, and
merchants who accept card using software that is not PA-DSS are automatically
non compliant on PCI-DSS.

------
chromejs10
I think this is really smart. Think how insane garage sales can be now when
people can accept credit card payments. Or being able to split checks at a
restaurant (when the waiter/waitress wont do it) by charging the others at the
table while you pay the restaurant. Sure it looks like Square is losing money
on this, but I think it was on HN where I read that Square was already
processing $1mil a day. I'd also assume that this $10 credit won't be around
forever.

Either way, the simplicity of Square is what will make consumers interested.

~~~
bfung
I just came back from eating, and two people used paypal over their phones to
pay each other to split a meal... doesn't seem like carrying an extra gadget
around is as good as the "what's your paypal" method.

~~~
allwein
What I did was epoxied the Square reader onto a keyring. That way I don't need
to think about remembering it.

------
orev
FTA: "it appears that Square could be losing money on this"

What a naive statement. The author was doing some good reporting, then says
something like this? Obviously selling the hardware is not Square's business
model; collecting transaction fees is. Basic economics says they would want
the devices in as many hands as possible.

~~~
Samuel_Michon
I imagine Square would want the devices in as many hands as possible _that
actually accept credit card payments_. If Apple retail stores were to simply
give away the devices, there'd be a lot of people picking them up, with little
advantage to Square. People like free stuff, even if they don't know what to
do with it. By selling the product for $10, customers will think it is at
least worth $10.

On Square's website, it's fine to give the devices away, because many of those
visitors are already interested in accepting credit card payments. Not all
Apple retail store customers are. On every Square sale that Apple does, Square
is probably out $5 or more, but it's worth it, because it weeds out the least
serious customers.

------
stellar678
Is Square attempting to market consumer uses for their product? It seems like
a device and service to process credit-card payments isn't really right for
the masses of consumers that flood through Apple stores.

~~~
allwein
Count me in as one of the people using Square as a consumer device.

Ever been out to dinner with friends and when you go to split up the check,
everyone wants to trump because they don't have cash and only have a credit
card? Boom. Now I'll just trump and then have everyone pay me back with
Square. The convenience is worth the inexpensive transaction fee.

~~~
chopsueyar
Wow.

Awesome, Rube Goldberg.

------
showerst
I can't wait to be hassled by the first homeless person who's sign advertises
that they can securely process credit card transactions!

~~~
dhess
Relevant:

<http://www.youtube.com/watch?v=5tvuDxM7mdE>

------
twidlit
I think this increases the possibility of something like Square being built
into the next iDevice with Apple buying Square first. If Square doesn't sell,
then expect Jobs to build his own.

~~~
pclark
Build his own credit card reader into the iPhone?

------
duomo
Can't wait to start buying street drugs with a credit card.

------
callmeed
My project (which was rejected this YC round but I still think is promising)
will benefit from widespread square adoption so this is cool.

BTW is anyone from Square here on HN?

~~~
Aleran
I'm an engineer at Square. I'm sure most of the company is on here as well.

------
cletus
It's a great idea with a great team behind it and this is a huge win on the
biz dev side. Congrats to the guys.

One inconsistency from the TC post though:

> ... announcing that it is processing $1 million in payments per day

vs

> COO Keith Rabois told us in January that the startup is expected to process
> $40 million in transactions in Q1 of 2011 ...

There are more than 40 days in Q1, even if you limit it just to business days.
I'm confused.

~~~
Aleran
The reason the projection for Q1 was only 40M is because it wasn't until March
that Square reached the 1M/day milestone
([http://techcrunch.com/2011/03/02/square-now-
processing-1-mil...](http://techcrunch.com/2011/03/02/square-now-
processing-1-million-in-mobile-payments-per-day/)).

So in January and February they were doing less than 1M per day.

------
wonginator1221
Although, I was initially skeptical of Square's success, I have found Square
to be great for splitting small charges such as a dinner or a gas bill between
my friends and I. The little card reader gizmo is a great conversation
starter.

~~~
pakeha
What does the dongle thingy feel like when youre using it? I've never seen one
IRL, but all I can think about when I see the photos is that it would spin
around, be awkward to use, and maybe even wear out the headphone jack. Any
comments from your experience are appreciated.

~~~
Aleran
Square users only keep the device into their phones when they are taking a
payment. When it is not needed they will carry it in their pocket, backpack,
purse, or even put it on their keychains.

Even if someone were to keep the device in their phone all the time I do not
think it would wear out their headphone jack. It is no different than keeping
headphones plugged in all the time.

------
berryg
I keep wondering. How can you trust the app on the iPhone you are swiping your
creditcard through? Isn't this just a skimmers dream come true? Also, in
Europe the magnetic strip is quickly being replaced by a chip.

------
mynameisraj
Is the black model new? I hadn't seen that one before.

~~~
jws
_You can also purchase the device in black or white (previously the Square
devices were only sold in White)._

------
barredo
How this could/would affect Apple's adoption of NFC?

~~~
rkudeshi
To me, it suggests that the iPhone 5 will unfortunately NOT have NFC (or at
least not the built-in iPhone-to-iPhone payment system many of us expected).

This is a real shame, as the fragmentation of Android means it will be hard
for Google (instead of Apple, as expected) to truly make NFC the new "digital
wallet" standard.

~~~
18pfsmt
There are a ton more stakeholders in NFC technology than Apple and Google. The
way Mastercard and Visa look at it, they are taking away market share from
cash ($).

Currently, contactless payment terminals exist at 1% of merchants (the 1% is
from memory, but it is low): -Fast food (e.g. Mcdonalds, Jack in the Box)
-Convenience (e.g. 7-eleven) -Movie Theaters (e.g Regal Theaters) -transit
terminals (e.g. Las vegas, San Fran, Chicago, D.C.)

These two companies are not the make or break stakeholders in the NFC
equation.

------
jdrock
Am I the only one that feels that this will impede the adoption of NFC-style
payments?

~~~
rokhayakebe
I watched a documentary showing how hackers can get your CC number (and basic
info I think) simply by using an NFC enabled device and standing next to
someone with such credit card. I think the Square method is safer, for now.

~~~
18pfsmt
You watched a documentary?

I come to HN for expertise because there are so many knowledgeable people that
know a great deal about things in which I'm interested, but am only a
beginner. I've come to expect expertise on this site in almost any category.
As such, my only expertise is payment processing and mag stripe/ smart card/
contactless (NFC), both the technology and the business.

In short, your documentary was incorrect, and considering the technical nature
of this site, this topic needs more color.

NFC is a very low-level protocol, security is determined by the overlaying
pieces. Two of the most prominent security implementations (FeliCa by Sony,
and MiFare by NXP semi) operate by "security by obscurity." The contactless
national passports support FIPS 140 security (based on PKI). This is the best
security you can get, As long as the developer has access to the secure
element on the device, it should be straightforward how to implement good
security. Think of it as SSL, but the issue is doing it well with a data rate
so low (424kbps, typically, with 848kbps at most).

NFC technology has been at a stand still for 3+ years because everyone is
fighting over who has control. The carriers aren't going to sell phones with
their secure NFC elements "open." The carriers will extract some revenue from
phone payment transaction unless someone makes a nice NFC "phone sled."

~~~
thinkcomp
It is possible to be an expert on payment processing without being rude and
obnoxious.

If you don't like what you find on this or any other web site, no one is
forcing you to visit.

------
stevedc3
Here's the next step in this relationship:

<http://twitter.com/stevecheney/status/43042602668404736>

~~~
nickconfer
Please be respectful of all HN users time and don't link to your own Twitter
statuses. This could be written as a comment on HN.

~~~
stevedc3
the point of the status was that this was written 6 weeks ago. Predicting a
deeper apple/square relationship was right on

