
Visa Makes A Strategic Investment In Disruptive Mobile Payments Startup Square - Straubiz
http://techcrunch.com/2011/04/27/visa-makes-a-strategic-investment-in-disruptive-mobile-payments-startup-square/
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dmitri1981
Sorry to be pedantic, but I think half the buzzwords in the title are quite
unnecessary.

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michaeldhopkins
All of the buzzwords are unnecessary.

"VISA invests in Square" tells me everything I need to know. I can tell Visa's
strategy from the title. The investment actually makes me doubt Square is
disruptive, but throwing a buzzword in there won't change my mind about it.

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pyre
Square isn't disruptive to VISA. It's disruptive to credit card processors
(i.e. Authorize.net).

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michaeldhopkins
Yes, that is true as it grows. However, I thought that Square planned to make
their systems ubiquitous and use that leverage to lower fees and pressure Visa
to make changes to merchant guidelines and offerings that benefit Square's
goals. Yes, this is speculation as I'm not involved, but Jack Dorsey has an
expansive mind and the fact that his ambitions for Twitter included its
current role in exacerbating political revolutions suggests he wants Square to
have similar power in business.

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pyre
Perhaps VISA is willing to take a smaller cut so long as the total number of
credit card transactions that flow through them increases quickly enough.

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michaeldhopkins
The goal of a disruptive technology is to force the establishment to take
smaller cuts to avoid losing market share, not to get them to agree to a fair
exchange.

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pyre
But how is 'more ubiquitous credit card processing' going to eat market share
away from credit card companies unless Square starts issuing its own credit
cards? At some point the gambit would have to be "I'm going to drop VISA and
start issuing my own credit cards... or VISA can just take a smaller cut."
That doesn't seem likely.

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michaeldhopkins
I see it going down in three ways.

First, Square might avoid needing a traditional credit card with their
products somehow. I realize mobile payments and other methods have been tried
before but eventually it's going to work. This would have the effect that
Craigslist and Ebay had on newspaper classifieds by reducing the market for
VISA's products for banks and merchants.

Second, Square can definitely compete in the cardspace. What's impossible for
them now could change with a big enough operation.

Third, Square can use their ubiquitousness to lower fee structure as has been
said. That will reduce market share of the fees in the payments 'stack' only;
VISA/MC will still exist everywhere. I think this will be necessary for them
because their biggest competitor right now is cash, because they want to do
every financial transaction in the world.

Since all of these 'disruptions' would probably boost the other I predict a
combination from them from the company that gets as big as Square wants to be.

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trickjarrett
While I am over the moon for Square and the investment from such a giant in
the market, it is also one of those things which irks me. As if Google were to
invest in DuckDuckGo, or something like that. Would this investment (Visa in
Square) affect or turn the direction Square is heading?

Obviously Visa is a powerful friend to have in your corner, and financially
wonderful as it likely further improves Square's rates for processing Visa
cards, etc.

Maybe I'm being overly sensitive since they are not direct competitors, I
think perhaps my concern is that it seems that Square could have been and this
investment makes that path a bit more politically difficult.

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Dobbs
I think this would be much closer to Google investing in Mozilla (pre-chrome).

My understanding is that Visa makes most of their money on credit card
processing fees. Square is extra infrastructure that strengthens the use of
credit cards. Particularly in a market that was mostly untouched before.

Low end mobile payments where limited to cash before. With Square visa is part
of the game.

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Groxx
This, coming after VeriFone's FUD, is fantastic. I can't imagine how happy the
Square people are right now, they've just about guaranteed their success.

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zethraeus
Anyone else feel that the reliance on a credit card on hand is just a stepping
stone in Dorsey's eventual vision?

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JCB_K
crosspost:

This is a very good, and to me a very surpising move by Visa. Instead of
ignoring innovation (like brick&mortar bookstores and cable companies did),
they embrace it. Something I definitely didn't expect from a corporate mogul
like Visa.

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jcampbell1
Bookstores and Cable companies don't have the same relationship with
"innovation" as Square and Visa. Square is replacing cash payments with credit
card payments, thus enhancing Visa business.

If you started a web video company that increased cable company revenue, I am
sure the cable companies would endorse you as well.

The cable companies, bookstores, and visa, are all behaving rationally. There
is nothing unexpected.

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badmash69
Interesting application. But it begs the question : how comfortable would you
be handing over your credit card to a small business like a hot dog stand or a
farmer's market vendor ? My credit card was "cloned" once and since then I
never use my credit card with small shops and restaurants.

Will this service ever take off when there is a perfectly good substitute --
petty cash ? The bigger shops already have a cash register.

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erikpukinskis
_how comfortable would you be handing over your credit card to a small
business like a hot dog stand or a farmer's market vendor_

You don't need to speculate. Go down to your local farmer's market and see how
many vendors are using Square. This week I've paid for coffee and a burrito
with it. And I live in Phoenix, not San Francisco.

Are you unaware that all major credit cards offer no-questions-asked fraud
protection? That were someone to fraudulently impersonate Square to steal your
credit card info that you could simply reject the charges and get a new card?

 _Will this service ever take off when there is a perfectly good substitute --
petty cash_

Petty cash and credit cards have drastically different properties:

* Petty cash is only obtainable at specific locations (ATMs, banks). Credit is instantly available at nearly all payment locations.

* Petty cash offers no fraud protection. If someone steals it, it's gone. If someone sells you something under false pretenses, you have no redress.

* Obtaining and transporting large amounts of cash for a large purchase (a nice couch, for example) is time consuming and dangerous.

What do you mean by "perfectly good substitute"? I can't think of any way to
parse that phrase that makes sense in this context.

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badmash69
Maybe I am not in the right demographic category to appreciate this. I like
using cash for small purchases. I like the anonymity, the convenience and easy
availability ( I typically carry some in my wallet). Most of all , I would not
feel comfortable handing out my card to small shops or vendors that I hardly
ever visit. For large purchases, like the couch example, most such stores
already have cash registers that support Credit cards. I don't see them as
using this service.

Please note that I am not saying this is a bad idea. I am saying that it is
positioned as an alternative to small cash transactions for small businesses.
That would be hard to beat.

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ceejayoz
> Most of all , I would not feel comfortable handing out my card to small
> shops or vendors that I hardly ever visit.

Why? Fraud protection is the same, and smaller vendors are more worried about
their reputation in the community than, say, Target or Best Buy.

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joshu
Congrats! (I'm an investor in Square)

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pitdesi
Does anyone else find this ridiculous?

"And on Square’s homepage, the company depicts a user swiping a credit card on
Square’s mobile reader using a Visa Signature card. It is telling that Square
chose to feature Visa, when the reader accepts MasterCard, American Express
and Discover, which are all widely used across the globe."

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Timothee
Ridiculous in what sense? That it probably has nothing to do with it?

Yeah, this is likely. However looking at said picture
(<https://squareup.com/>) I wouldn't say that there was necessarily something
to it, but at least it's somewhat odd to use a card that is clearly a VISA
from Chase. It wouldn't be very complicated to design an image that is clearly
a credit card without putting other companies' logos.

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chc
Eh, it's not really any more suspicious than depicting somebody using Windows
rather than mocking up a generic OS. Visa is the most common credit card and
Chase is the most common credit card issuer in the US. It could hardly be more
ordinary.

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Timothee
Don't get me wrong, I'm not saying it's suspicious. What I mean is that, had
it been me in, I would have probably picked a "no name" representation of a
credit card.

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jsavimbi
So, Visa didn't believe the VeriFone video?

