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The End of the Credit Card? New Square app: Card Case (slate.com)
245 points by qxb on Nov 2, 2011 | hide | past | web | favorite | 133 comments

That is what disruptive innovation looks like. "Oh look, a multi-billion dollar problem people were trying to solve by getting two sides of the market to simultaneously ubiquitously install new hardware. How about we solve it with stuff they already own plus new software instead?"

What's even better about Card Case is that you don't need every retailer to have it for it to be useful. The example they show in their demo video is perfect: going to your regular coffee shop. If just that coffee shop supports it, Square is already solving a huge headache for both the customer and the merchant. The customer gets easier payments and a more personalized experience; the merchant reduces transaction friction and time, while increasing customer loyalty.


Because it's stupidly insecure, unregulated, won't reach mass adoption etc?

Credit cards are stupidly insecure. Last I heard, a few years ago you could buy blocks of thousands of valid, tested credit card with CVV2 values for about the cost of a coffee. Credit cards works because the banks are willing to stretch far to block fraudulent transactions or take them off the bill because having you trust the card makes them lots of money.

The same will be the case here: Unless the fraud takes on truly endemic proportions, far higher than for credit cards, they'll just eat the cost.

It's not out of goodwill that the banks will eat the cost of fraud or work hard to prevent it. Banks do this to protect their own pockets, because (US) law says that customer liability for credit card fraud is limited to $50 and anything beyond that is the bank's loss.

For a counterexample, see Paypal. Paypal's unresponsiveness to fraud situations is legendary, because it's not their money at stake and as legally-not-a-bank they can simply stick their customers with the loss. (Paypal's customers are merchants, I don't mean end-consumers here.)

Getting back to Square, as long as they're not regulated like a bank, they will in the long term become more like Paypal in dealing with fraud. The founders may be able to delay or mitigate this with a strong organizational commitment to customer service, but that would be pretty unprecedented in the financial industry; the bottom line always looks better when the corporation can push fraud costs off of itself.

Adoption I can see being an obstacle. But I don't see this being particularly insecure.

If the product is right, if it serves people well, adoption will be limited only to that which Square can support.

I respectfully disagree. This is what an investment from Visa looks like with really good design. Not everyone was trying to get both sides to adopt new hardware, either.

As long as Square uses cards for funding, it will be robbing the poor to pay the rich just like every other card company. To me, "disruptive" in the payments world means no cards, period.

You don't think moving people away from physically using cards for the transactions is a big first step?

With the transaction taking place without any physical handling of any paper or plastic, using a card as a payment source is just an implementation detail. It'll be trivial in the future for Square to add alternate funding sources without any pain to the user, and in the mean time it drives adoption because people are already used to the idea of giving Square their credit card info.

What were the non-hardware non-card payment methods attempted? I'm familiar with NFC, and somewhat intimately familiar with Square and its card-based rivals, but the only alternatives I know of are those pay-through-your-carrier attempts that are an even bigger can of worms than a card company. Were there others?

To reference your Visa point (which I suspect wasn't serious), Square was card-based long before the Visa investment.

Starbucks (for payments) and the airlines (for boarding passes) have done pretty well with barcode scanners. It requires hardware only on the merchant side than most merchants already have in one form or another.

Er. But unless you've given Starbucks direct access to your bank account, those are fundamentally card-based too.

Not quite. Starbucks uses its own pre-paid system that does use a plastic card, but one without any major network's logo on it. It's just store credit.

So worse than both cash and cards - suddenly you have to have small balances sitting on multiple proprietary cards. No thanks.

And in America (I believe - last I heard it was rolled out in some American cities but not others, nothing here in the UK) the iPhone/Android/Blackberry(?) apps let you manage your account balance, and you hold up your phone for the cashier to scan the barcode off your screen.

And why exactly do you imagine that Square couldn't debit directly from a checking account in the future (as the article mentioned)?

Because they don't have any money transmitter licenses and it will take them a few years to get them.

You're seriously still beating this horse?

Why couldn't they partner with another institution that already has the appropriate licensing? Or, alternatively, they seem well enough funded to be able to post the appropriate bonds.

I get your position, but with the constant whining, you're not winning over people.

First, I'm not trying to win you over. I'm trying to get a license, as is my right.

Second, a lot of people consider the particular fight I've chosen to pick fairly important, as it would do a lot to corrode the monopoly that banks hold on payment processing. So one person's whining is apparently another's heroic battle (not my words).

Third, the issue of money transmission licenses is also directly relevant to this particular topic.

I get it, I really do. I also think that freeing up the financial industry is needed. I'm not convinced that your way is the right one, but I'm not opposed.

But I'm worried that you are starting to get into RMS territory... that most of what I read from you here is on this one issue, from a very distinct viewpoint. I'm not saying you're wrong (or that RMS is), just that such a myopic view isn't always the best way to win people over to your viewpoint. Even worse, you risk people tuning you out.

Maybe I'm just getting a sample bias because your most recent posts and comments have been on transmission licenses.

Hence the phrase "in the future". There's no way that Square doesn't see this obvious step. It's probably already in progress.

Also I'm guessing that what Square currently does already requires a money transmitter license, since transmitting money is exactly what they do.

Square does not currently require a license, and they have not yet applied for one in California.

Out of curiosity, where are you getting this info?

From a cursory look, I was under the impression that they would need a license in every state that they'd do business in.

It's all public information.

Square is exempt from the California Money Transmission Act per FC § 1805(d) (see http://www.leginfo.ca.gov/cgi-bin/displaycode?section=fin...), since it's actually JPMorgan Chase Bank, N.A. that is moving your money.

Square does not have a license.


And Square has no plans to get one as of last month.



Would it not be possible for them to partner in the same fashion to do direct debit?

I love Square, and they are a classic disruptor. They started slow, at the low end, and created their own blue ocean before starting to chew at the heels of the entrenched incumbents in the payment ecosystem.

That being said, the payment ecosystem is a pretty messed up place, even though the ugliness is all pretty much abstracted from the customer. The interchange fees charged to the merchants at times rival their margins on the items they sell. And it got ugly because it was essentially a duopoly and the stakeholders including Acquirers (MC, Visa etc) and the Issuers (Credit Card Issuers) and the POS vendors all had a pretty good reason to keep things the same.

When things are messed up because we do not have enough choice, do you think it would be preferable to hand over the keys to this to a single player - in this case Square? If Square controlled both ends, owned the customer as well as the merchant POS, and cut off everyone else in the process (by going directly to your bank account), then how long before Square starts bumping up the fees it charges each merchant? Couple that with the fact that Square will own the customer, and is in control of delivery of targeted merchant offers, and you get a sense of the size of the pie they would like to own. Anyone agree if that is a good thing? I certainly dont.

The reality is, the ecosystem will be a lot more fragmented this time around than it currently is. The various mobile wallet initiatives (and there are over 70) will eventually coalesce around a few major players, but we will be using NFC driven mobile wallets (GWallet) and Cloud based mobile wallets (Paypal/Square) and the traditional plastic form factor for a long time to come.

Square is a disruptor. And they have created a beautiful customer experience and has spurred the reinvention of the check out process. They inspired several, including me, to see how the status quo was so messed up.

As a founder of new POS system company (Ambur iPad POS), I just don't see this as true. Most of the bigger POS companies might have reasons to maintain the status quo, but mobile touch devices are literally revolutionizing the industry, because it means there's opportunity for small players to build systems on commodity touch hardware, designing software that's actually easy to use and reasonably priced.

Square needs to allow other POS vendors to use their APIs to truly conquer this space. Their system is currently woefully inadequate for anyone except small businesses with literally no need to do anything except charge a customer right away, without any paper receipts. That limits their business market to essentially small coffee shop or retail vendors with technologically advanced customers. That's a...small market, to be polite.

> And they have created a beautiful customer experience and has spurred the reinvention of the check out process.

And if the customers were the ones footing the bill for the check-out process, it might have a market.

Until <newfangled POS> gives the merchants a financial reason to switch, they will keep doing things the way they've been doing things.

> Paying for stuff with your phone sounds awesome until you stop to think about it.

Uh, it doesn't sound awesome to me at all. It sounds annoying and frustrating. Swiping a credit card is already pretty simple.

> then tell the cashier your name

Yeah, because that works great. My name is fairly common, and cashiers still manage to get it wrong, especially if it's noisy. Also, what happens when three "John Smiths" walk in?

EDIT: They do address the multiple "John Smiths", missed that in the article.

> For instance, because Card Case can notify a coffee shop when you walk in the door -- and because the cashier can see your profile, and can see that you usually get a medium mocha and a croissant -- the barista can get your drink started for you while you’re standing in line.

If a restaurant's going to go to all the trouble to install a system like this and set it up so that my phone can pay them, why couldn't I just order on the phone? Then I wouldn't have to stand in line at all, and they won't have wasted their time if it turns out that I want something else instead of what I usually get.

> If a restaurant's going to go to all the trouble to install a system like this and set it up so that my phone can pay them, why couldn't I just order on the phone? Then I wouldn't have to stand in line at all, and they won't have wasted their time if it turns out that I want something else instead of what I usually get.

Because a smooth face to face interaction is much more pleasant than ordering via an online application. "Half-caff mocha, large, with extra whip cream" vs "open web site, look for mocha, select size, special request... extra whip cream, agree to pay..., submit". That's a crappy experience. The online order only makes sense if the face-to-face experience sucks worse, which shouldn't be the case.

Also because this system doesn't require you to get out your phone every time. Just once, and then it works transparently.

I agree with you about the face to face interaction - the people I see in shops at a daily basis generally know what I want, and just asks me to confirm, and we can spend that 30 second face to face time exchanging a few comments about other things instead.

And that is the thing I loved the most about this concept. It is one of very few recent technological innovations that actually enhances face to face social interactions.

By requiring you to tell your name, you now have an "excuse" to introduce yourself and get on a name basis with people you often see day out and day in but who most people might otherwise have a very impersonal contact with.

Just try giving shop assistants eye contact. Most places they're not used to people even looking them in the eye, and the entire quality of your experience and interaction with them go up tenfold if you make sure to make eye contact and smile. But we tend to mumble down into our wallets stuck in our own worlds and ignore that there's a human on the other side of the till. I used to do that as I'm strongly introverted normally, but a few years back I started forcing myself to focus on peoples faces whenever I pay, or enter the bus or whatever type of transaction it is, and it makes such a difference in overall degree of human contact (and it makes the response you get from the other person dramatically more friendly)

As an example, there's a bus driver who frequently drives my local bus, that I've gone to the same gym as for more than 5 years. I never even recognized him until I decided to start focusing on giving more eye contact. Now we greet each other warmly and talk whenever we see each other.

I thought this was "just me" before I took action to change it, but the more I did it the more I saw how taken aback a lot of the people I did it to were, and how out of their way a lot of people I'd give eye contact would go to do things for me - as it turns out even otherwise very social people often completely blank people in these situations. We "switch off" socially in large number of situations.

I think Square could have the potential to be far more important to the world for its possibility of disrupting social interactions than its mere impact on commerce...

Ordering a saved pizza order that we order frequently at Papa John's is incredibly easy -- certainly way easier than telling the order to someone.

I suppose it's possible that coffee is different in some non-obvious way, but I'm not sure how.

Pizza's different because it takes 15 minutes for them to make it. It's not really a choice of going to the store to order vs using an online form. It's a choice between calling and using an online form. Calling is already fairly impersonal, and on top of that you normally end up on hold, then you have to read them your credit card number, etc. Online ordering can indeed be less hassle than calling in an order (at least after the initial hassle of setting up an account).

Let's also not forget that Square is presumably not just targeting coffee shops and restaurants with this. You can take a sweater to the register and pay with card case.

Some of the places I order, they get my stuff ready when they see me walk through the door. Much more convenient for me than having to fiddle with an ordering system even if there's a saved order I can repeat.

  If a restaurant's going to go to all the trouble to install 
  a system like this and set it up so that my phone can pay
Well, the point of Square is that there isn't much to install. Download the app, they mail you a reader for free (or you could pick one up at the nearest Apple store for $10 if you can't wait), and you're ready to start taking payments immediately. Setting up Square is simpler than setting up a traditional merchant account to take credit cards, and then you get these niceties on top, too.

But I'll bet that tap-to-order is on its way.

You've missed the entire topic of this article - it's about a new Square system that detects when you are in the store because your phone is on you. Not just Square's basic card reader device/software.

I think you missed this line:

    and then you get these niceties on top, too
My point was that the entire Square package (including Card Case) is easy to set up and trivial to use. Figs was apparently under the impression that it was complicated for merchants to "install a system like this."

" ... why couldn't I just order on the phone?"

Like this?


<token dude posting about privacy issues>

This is amazing in terms of ease-of-use. However, the privacy implications are a bit worrying...

I don't really want to rubbish this, I hate the naysayers when something disruptive comes around (note that Japan rolled out pay-by-cellphone on their subway systems something like 10 years ago) but...

"She saw my name and photo on her iPad, tapped it, and I was done. A receipt was sent to my phone."

So all employees at stores using Card Case can see the name, identity and photo of every single person using card case within a 100 foot radius of the store. Completely regardless of whether they want to buy something or enter the store. What if you don't want random stores to know when you walk past? What if your abusive ex-husband is working at a store and sees your name come up on the list.. etc.

Additionally, if you use the app, Square knows exactly where you are at all times. I'm not at all comfortable with that. Apple had a massive scandal when it was revealed that it's technically possible to retrieve location history from iOS. This is legit human tracking - police and three letter agencies everywhere are probably throwing parties right now.

HN was up in arms when retail giant Westfield was tracking number plates entering their car park. Just number plates.

</token dude posting about privacy issues>

You saw the 100 foot radius bit, but ignore the sentence before. It's an opt-in solution -- If you don't want it, don't opt in.

First, you need to turn on auto-payments for each individual store where you’d like to use it—it’s impossible to tell Card Case to turn on auto-payments for every store in San Francisco.

Additionally, if you use the app, Square knows exactly where you are at all times.

That's absolutely not true, at least not on iOS. As mentioned in the article, Square is using the iOS geofencing APIs to wake the app when you enter a favorite area. The app isn't running in the background all the time.

Also, as mentioned in the article, you can turn this feature off and manually toggle the tab.

the privacy issues are negated by it being totally opt in. the other examples in your post are silent, unauthorized tracking. obviously there are privacy concerns with a system like this, but if that is something that worries you, you can control it.

I still would like to be able to buy coffee without having to announce my real name out loud to everyone around me.

Cash provides me that privacy. Heck, credit cards even keep the transaction between me and the merchant.

Oh for crying out loud...

I understand the privacy concerns, but this isn't a secret agent movie. I'm reminded of that scene from Jurassic Park..

Nedry: Ooh! Dodgson! he sits down Dodgson: You shouldn't use my name. Nedry: (loudly) Dodgson! Dodgson! We have Dodgson here! Nedry: Nobody cares. Nice hat. Trying to look like a secret agent?

I can think of several reasons besides being a secret agent that I wouldn't want my name announced.

Say I am meeting someone that I wouldn't want to normally be associated with - whether it's for a job interview or a personal meeting.

Or say I plan to pick up a Playboy magazine at the same counter.

Or say I'm a cute woman, and I prefer not to be stalked.

Or say I don't want that sales guy over there to come up to me and pretend to know me.

Or say I was just overheard saying that my kids are all alone at home.

Or say I just got out of an expensive car.

Or say I was having a bad day and complained loudly.

Or say I farted.

Or ...

I could go on and on.

OK so I don't announce my name. Maybe I can just hand the clerk a card with my name on it.

Perhaps a credit card.

Then don't "announce" your name. You're telling the cashier your name for payment purposes, not alerting everybody in $store to your presence.

yes. so if you like that privacy, don't this system. some people don't mind telling the people at their coffee shop what their name is, and they can use this.

No, the privacy issues aren't negated.

If you opt in, you have no privacy.

And if this does become ubiquitous (I suspect it won't, but that's just me), opting out will be painful. Very painful.

No thanks.

Opt in per store.

This also predicates having location disclosure enabled on your mobile device.

Thanks, but no.

A malicious cashier could order things in your name, whenever you were nearby.

This might not happen much in practice, because the cashier would be found out later (assuming they must login). However, the opportunity doesn't arise with existing transactions, where you must physically hand something over (cash/card), and usually get an opportunity to verify the amount, so there's no evidence either way. It will be interesting to see if this is actually a real issue, in practice, in the current roll-out.

Many, many cash-alternatives have been tried and failed, but this one has a new technology (iPhone geofencing) and smart founders. If it does work, they could quickly revolutionize cash - globally (not to mention be the killer-app for the iPhone).

It happens all the time with credit cards, the practice is known as "skimming"


But it would be so much easier with this new system, they're told all the information they need and will have to enter legitimately, rather than having to use 3rd-party hardware.

Then they get kicked out of the program.

It's better with this than with a CC. You get a notification on your phone immediately, so they are likely to get caught at the moment they do it. You could walk up to the manager and say, "Hey, someone just charged me for something I didn't order. With a credit card, they might take the credit card nimber when you buy something legitimately and then skim it and use it later. It's hard to know which time you used the card and it was skimmed and who purchased something later. This sounds more secure.

Nice point. A notification just-after is almost as good as authorization just-before.

An exception I see is that it works even when your phone is off, so you wouldn't be aware of the notification (or so I assume - do some phones buzz/beep, even when off?) Of course, it makes it riskier for a malicious cashier. I suppose they could check who has their phone off first, but the risk is certainly mitigated.

What I find the most fascinating is that the same company is running both the seller and buyer sides of the transaction. Without middlemen, they have a lot of flexibility to determine how the transaction should occur. Right now credit cards rely upon a fairly complex system of gateways and processing and so it's really complex and difficult to change the process.

I wonder if a security feature they could add would a two-factor authentication where your phone would display a one-time use auth code that you'd give to the cashier to approve the transaction, for those that are worried about automatic billing.

Rather than attempting to have minimum wage employees and average netizens understand what one-time use auth code means, how about we just pop a window on their phone saying "Krispy Kreme wants to charge you $5. Hit the big green button."

People understand debit card pins just fine. As long as they get labeled as such there won't be any confusion.

Exactly, that's simply amazing and a great business model, as well. If they end up like Paypal (I mean huge, not terrible :-)), it'll be pretty easy for everyone involved to send and receive payments...

i get alerts from chase within 5 minutes of using my credit card. Now if only that would ask my approval before paying, that would be even better. But what are you going to do about merchants billing you incorrectly anyway and sending you to collections or ruining your credit for not approving the transaction ?

This does look interesting, but TBH, I don't think its the end of credit cards per-se. One main reason:

What if my phone's battery is dead ? Does that mean I can't buy anything ? What happens in an emergency ? Credit cards are easy as they're quite low tech physically (a magnetic strip, a chip and some plastic).

Other things would be stuff like: not everyone has a phone, but would still like a credit card, etc. There are countries where phone penetration (and not even smart phone) is not very high, but the population still need to have credit cards.

Granted, I can see it being used as an alternative, but doubt it will be the "end of credit cards"

> What if my phone's battery is dead ?

Go to an ATM.

> There are countries where phone penetration (and not even smart phone) is not very high, but the population still need to have credit cards.

There are also countries where SMS payments are much more popular than credit cards. It's not a one-payment-system world.

> Go to an ATM.

Exactly, and you end up using a "card" anyway

Okay then smart guy, go to a bank teller.

Using a card on the extremely rare occasion that you forget to charge your phone is a world of difference from using it 10 times every day.

If this works, Square will join the narrow ranks of companies who I want to succeed because my life would be dramatically worse without them.

Please let it work.

I am the cofounder of a startup that builds an iOS/iPod/iPad POS Ambur, and it's absolutely astonishing to me to see people claim Square is doing anything useful for merchants.

Their software is far too simplistic for anyone running more than a very basic coffee shop with tech savvy customers to use. Even something as simple as most customers demand paper receipts, and Square's functionality is taking basic orders, one a time, with no conception of any business analysis functions. That does not cut it for any business bigger than a small coffee or retail shop, where customers pay and are served instantaneously. no matter how cheap Square is, or how many brilliant designers they hire, they're not going to get into businesses bigger than this without expanding what they're doing.

They really, really, need to launch a platform for people like us to innovate on. We're young, forward-thinking, and as an ex-restaurant employee I know how much CC companies and traditional POS companies screw businesses. 

We're trying to change that on the POS side, and I desperately wish Square would be less egotistical and let us use them to change the payment side. It would be tremendous for them, because it lets POS companies solve adoption for them, instead of them trying to engineer 1000 solutions for 1000 different types of business, and let's them focus on their core compotency - beautifully designed software for consumers.

Wouldn't adding a "Print receipt" button on a merchant's device solve the "cusomters demand receipts" concern?

And they are building a platform. They will likely to open it up sooner rather than later too, they just can't take on CC companies alone.

Nope, unless you want to integrate with a receipt printer manufacturer, and now all of a sudden you're beholden to that - there's many technical issues because now you need a preferred router manufacturer too, so the iPad can talk to the printer.

Sure, I've been hearing forever that they must be going to, eventually, etc etc. hasn't panned out and it's been literally years

Doesn't the Square solution work like a common separate-hardware credit card terminal? You run the flow on your regular POS system, including any receipt printing, and then just use Square at the very end to handle the payment?

No, at least not on the iPad, and even if it did most businesses would see that as pretty backwards. every second counts, in restaurants especially, and essentially maintaining two sets of books always leads to trouble.

Have you talked to them? If so, what was their response?

I asked them several times through email, no response.

But I heard that Square was totally irrelevant because they were only "innovating" based on the outdated paradigm of the credit card system.


Don't confuse where a startup is today with where they're headed. Sometimes you have to tack against the wind to get to where you ultimately want to end up. The best startups are those that can make money while also setting up for a huge play that no one else is positioned to pull off.

Very cool.

This also brings with it a new source of analytics and marketing opportunities (for better or worse?).

A coffee shop cashier could be told (through product suggestions on the iPad they use) that you've missed your regular lunch up the street and to offer you something to eat.

Online ads could now be targeted towards you further, based off what you purchased in the real world (that coffee and muffin) because the purchase was matched to you, and your iOS Device ID.

A new round of marketing is possible by tying in real world/daily purchases and being able to push that information back to retailers (in the form of product recommendations or analytics for them), as well as advertisers.

Is this really the end of the credit card? It sounds like an abstraction layer for payments. The backing money used to pay will still be some sort of payment source like a credit card or debitable bank account.

As you said, "credit card or debitable bank account"; you already mentioned one way this could avoid a credit card. Now consider that Square controls both ends of the transaction. So, any payment source Square chooses to support will work: credit/debit card, bank account, some pre-paid account, line of credit with Square for which you get a bill later...

I like the idea, minus the client tracking feature. I hope that they will add a opt-out for clients who don't want to be tracked (so basically every time you walk into a store, you are like a brand new customer, system-wise).

Also, I have some doubts about the human face recognition bit. Will it work in a crowded environment, with stressed-out clerks? Phones get stolen all the time and it doesn't sound too remote that someone picks your phone and walks into a shop with a big pair of shades and a 4 days beard.

My questions regarding Card Case:

1) How is it going to move away from being based on credit cards?

Most savvy people I know use credit cards wherever possible because of the no-liability fraud protections that are not present in debit transactions. Clearly, Square users are younger and savvier than the general population. No way should anyone use bank account-based payments on a mobile device that could be stolen/hacked/lost because you're not going to get the money back that is fradulently charged.

2) Do you really want to have a shopping experience where store cashiers and other customers standing around know your name?

Most people I know would prefer to remain more anonymous than that.

3) Where is the verification of customer payment (e.g. signature on CC receipt)? What happens when there are customer chargebacks?

4) Is it really that hard to pull out and use a credit card?

I'm all for improving the current payments environment where a few major companies (Visa, MC, AMEX) dominate and as such, are able to extract large fees from merchants (which get passed along to consumers), but I don't see Square (or anyone else) as having found the answer yet. Their attempts seem to be more "cool to have" and technologically impressive than actually solving the underlying inefficiencies in the payments industry.

And frankly, the major credit card companies are going to come out with their own NFC apps at some point and if Square is still relevant, they'll be just another player in the oligopoly (but still dependent on the others' back-end processing component).

The Square dongle is the most brilliant customer acquisition tool in the history of marketing to small businesses. But Square probably needs to also offer a swiping solution that makes more sense in a permanent location like a physical store. And it should also acknowledge that customers are going to ask for a paper receipt for some period of time. Not every retailer is Apple.

Getting rid of the flat fee that traditionally accompanies credit card transactions was also a smart move to further open up new credit card processing markets.

The Card Case? I'm not sold in its current state. This article, like pretty much every article describing the latest "wouldn't it be great" payment product story, describes a process that sounds quite a bit worse than a simple swipe of a 2mm thick plastic card.

I wouldn't say they "got rid of the flat fee". They are offering an alternative. The flat fee is not about to go the way of the dinosaur- it is still the more favorable option for clients processing large transactions.

I was referring to the $0.15 that Square used to charge for each swiped payment in addition to the 2.75%.

My problem with all of these systems is the same: I'm disorganized, I forget to charge my phone or bring it along, and so the chances of me having a fully charged, working, switched-on phone with me when I want to buy something are far lower than my chances of having a wallet.

This is certainly the case in the US, where you're most likely to have driven somewhere, so you're going to have your wallet/purse as you need your driver's license.

That said, there is still some friction when it comes to using a card... some places want you to sign, some don't, some decide on the day... people offer you a paper receipt for a $2 transaction ("No, I really don't need it.")... it's sometimes finicky trying to deal with a wallet full of cards... It's all not all that much really, but there is still room for improvement.

What I really like about this is the end-run around NFC. NFC really doesn't solve the problem, because is is just as easy to pull out a wallet as it is to pull out a phone. Here you don't need to rummage, you say what you want and go. That's 15-20 seconds of your life back per transaction.

So, this is cool, but...

Why do you have to have a smartphone to do this? If you're going to get businesses on board and use photo IDs to verify every transaction, why not just have the signup process be a webcam and a form?

There's a couple of cool usability things you can do with a smartphone (proximity pushes users that are there to the top of the list in case of name conflicts, whether it's from geofencing, manual inputs, or side-channel geo info), but the basic idea of registering for a store doesn't seem that novel. Why not slap a decent search UI on it and give all the cashiers iPads?

Is this idea so novel that nobody thought you could look up a name and photo via the web at point of sale before today? And if the idea isn't novel, why hasn't anybody successfully executed it?

Because you don't want a bunch of stores to be able to charge to your account when you're not there.

This reminds me of "The Future of eBusiness" from 1999 http://www.youtube.com/watch?v=xnwaFxFru5k Funny it took so long to get here, and that Square beat IBM to market :)

It's ironic to see this article coming from Farhad Manjoo.

I wrote a response to his original piece a while ago:


What Square has done with card case is pretty slick, but at present it doesn't scale. Paying with your name doesn't work at Wal-mart. And funding with your plastic credit or debit card doesn't work especially well for most coffee shops or other small businesses that want to save on interchange fees, not pay more of them.

I look forward to competing with Square again when I get my California license.

Why wouldn't it scale to Wal-mart? Even with a dozen people with the same name in the store, a cashier can quickly pick a matching face: everyone is good at that (except for prosopagnosics).

And that's without assuming Wal-mart adds any extra hardware that could narrow the position of handhelds to individual registers.

That's a pretty long scroll box to find the person in the first place. Or an added step as you key in the first few letters of the person's name. At large retailers or QSR chains that put a premium on fast checkout, neither option will fly.

I obviously appreciate the simplicity of paying with your face.

I doubt any firstname+lastname (or even just firstname+last_initial) situation would require a scroll box... you could fit 20+ recognizable faces on a screen. Sort them by age and in the few cases where there are that many collisions, cashiers would know just where to look.

Keying the name is a bigger issue... so I suspect terminals in larger retailers will eventually just detect the N nearest pay-eligible handhelds.

The additional hardware (plus integration cost) is something that reatilers don't want to spend on.

In contrast, barcode scanners are already there and they typically emulate keyboards, so no special integation is required.

I'm not convinced that paying with your name scales for most retailers. The retailers I've talked to aren't convinced, either.

Barcode scanning is another good option to speed the initial account-identification.

I suspect in coming years, multiple systems will all work together to train users to bring up barcodes on their handhelds for specific purposes (as with boarding passes or "Jonathan's Card").

Swiping a card is sounding a lot easier right about now.

A pretty obvious next step would be to pair this with facial recognition.

That'd cut down the search space dramatically.

With NFC, they could just limit the list to devices in close proximity to the point of sale. That said iPhone doesn't have NFC so they need to solve that problem some other way.

The general point of scale issues still is valid, but culling the list of payers seems surmountable.

I wonder how they'll keep people from putting products on someone else's tab.

As noted in the article and alluded to in my comment, the cashier visually verifies that the person requesting the charge matches the photo that appears on their screen. That's a whole lot better than the pretend 'signature verification' purporting to deter other kinds of card misuse.

Identical twins and celebrity lookalikes may still present problems.

> Identical twins and celebrity lookalikes may still present problems

Or just someone that doesn't care about their job that much putting their friends pack of gum on the same tab as the guy being 100 things.

It's also pretty interesting to see them build a whole new payment system using normal everyday tech like smartphones and tablets (plus of course remote servers). No expensive custom mainframes and ancient software. The trick now will be to get as many businesses to use it (preferably all of them and preferably worldwide).

I also think using photos is one of the most surefire ways of identifying the buyer, as well - it had a nice effect on credit cards (with photos on them, you can't just steal one and use it for whatever) and it can definitely help curb fraudulent purchases with Card Case.

You might also like FaceCash (http://www.facecash.com).

Card case is elegant and innovative. As a user, I love it. However, calling this a harbinger of end of credit cards is jumping the gun. If that would have been easy, PayPal would have already ended credit cards (for online purchases). I see no signs of that.

A completely different set of competency and technology will be required to replace the credit cards with their own payment solution (credit risk assessment, fraud prevention etc). Their impressive track record so far means they can certainly develop these; but it won't be that quick or easy.

Almost 100 comments, and no one mentions Bitcoin. I'm surprised.

Seems to me this same app could be built for Bitcoin, and you could eliminate or reduce the 2.75% service fee. Or you could make it 1% and give it back to the purchaser in the form of points (like credit cards).

Bitcoins could be instantly converted to cash, for a fraction of that fee (about 0.6% using a Bitcoin exchange).

When I turned 16 and was excited to drive everywhere, I would volunteer to pick up groceries for the house. My dad would give me his credit card so I could purchase the groceries.

How would a similar scenario play out in the Card Case universe? I wasn't allowed to have my own credit card until college and I would never use my debit card for common house purchases.

It's designed as an additional way to pay, not a replacement for cards. So in your scenario you still take your Dad's card, you don't take his mobile phone, and hey presto you can pay like you always could.

So every time I buy something I end up declaring to every-one in the shop that I have my smartphone on me, not only that but I publicly tell them everything they need to buy stuff from that shop if they did manage to get my phone?

Chip-and-pin means I rarely carry cash, I don't really see this as an improvement on putting my card in a reader and entering my pin.

I have to admit when Square first came out I didn't see what the big deal was. A little doohickey to plug into your iPhone to swipe cards - sure, sounds useful for certain merchants, but not something world-changing.

It's cool to see that there's a larger plan unfolding. Credit card networks are tough nuts to crack and it looks like they've found a way. Kudos.

The mind-blowing thing, I see, is that—with that little doohickey—Square has single-handedly broken bistromathics[1]. And yes, you can take this comment as a joke, or you can take it seriously.

[1]: http://en.wikipedia.org/wiki/Bistromathics#Bistromathic_driv...

Holy cow, Square is going to have all the pieces to build the ultimate restaurant-bill-splitting application of our dreams.

Card Case doesn't happen to have an API, does it? ;)

Do people really dream of such a thing? Some at PayPal thought bill-splitting would amount to something which was of course foolish.

The difficulty and hence lucrativeness of financial transactions depends on size, distance and familiarity. A large transaction across the world between two strangers is the riskiest/hardest/most expensive. A small transaction face-to-face amongst friends is the opposite.

On the other hand:

- anyone in the room knowing your name can get free cookies (or anything else) - signal travel through air, so physical hack is not necessary anymore - its still tied to your phone ;-)

the rest is pretty cool, but i'd like to confirm manually each transaction thank you very much. I want to keep control of MY stuff, my money, my phone. My my my.

Hmm, perhaps I need to find the time to become an Apple Developer and sign the NDA, for much the same reason that folks who want to write screenplays move to Hollywood: To find out what the industry is going to do, years in advance.

Geofencing is a big deal and I first heard of it... today. How long have iOS devs known? Since WWDC?

I'm pretty sure everyone that reads Engadget only on Big Apple Days, let alone more invested users, have known. I haven't coded a line of obj c in my life and I've known about it for a couple of months.

What happens when the merchant doesn't care he's paid by the right customer?

How does the system handle the common use-case where you give a third party (wife,friend,kid,..) the money to go and pay the bill.

Both Facecash and now Square Card Case have this problem, but maybe I have missed something.

> What happens when the merchant doesn't care he's paid by the right customer?

Same as with credit cards: There'd be lots of fraud complaints. Square will realize there's a problem and depending on what their contracts look like they'll either charge them heavy fees and/or fine them to fund having to deal with the fraud, or cut them off.

Credit cards has this exact same problem. Physical control of the card pretty much gives you free reign to pay for stuff - most shop staff can't even be bothered to look at the signature or ensure the name has any chance of being yours.

> How does the system handle the common use-case where you give a third party (wife,friend,kid,..) the money to go and pay the bill.

The article states the current app already allows you to press a button to pay, so presumably you just forgo the convenience and make them press the button if their face doesn't match up.

And/or add a way of adding additional authorized people whose images will show up.

Sounds interesting. But also a bit risky compared to a credit card, which to me isn't a hassle to use.

And does it offer reward points?

If not I'll stick with plastic.

Presumably it's still backed by a card of some form, unless Square are picking up the tab for anyone using card case, so you'll get reward points when the transaction gets processed by Square.

What happens when your chilling in a coffee shop and your arch nemesis orders a latte with your name?

the article specifically mentions this problem. you should try reading it.

Ok, so I'll raise the ante.

What happens when you're chillin' on the street, and your arch nemesis has hacked your favorite coffeeshop's PoS system, nabbing your account details, phone identifier, and photo, and proceeds to stalk you all over town from a distance of 100 feet?

What happens when your arch nemesis has hacked your favourite coffee shop's PoS system right now and proceeds to steal all the credit card numbers that go through it... how is the new scenario any worse?

As weak as credit card numbers are as a security measure, the countermeasure defense is largely for credit-card issuers (and/or the processing networks) to monitor traffic very heavily for anything vaguely resembling fraudulent activity. Cardholders are largely protected by law (though merchants aren't).

The special sauce here is the location tracking. The system seems to assume that vendors are at a fixed location, but there's probably no reason a mobile device couldn't be constructed that functions as a PoS, and with hacked data/credentials, it could be used for tracking purposes. Say, with a number of confederates (or a good make-up job), charging stuff to your account while you're in the area. Or insert intelligence, criminal, stalker, jealous ex, etc., scenarios.

I'm increasingly in favor of cold hard cash for transactions rather than divulging my personal information in ever increasing amounts and rates.

Carefully take out the blow dart gun...

I am looking forward to the IPO. I expect big things from Square.

They are really kicking butt.

I use card case at one of our local coffee shops in SLO. It's pretty slick.

What prevents competitors from creating their own app that does this? If this takes off and Square charges X percent, I assume that Competitor Y will develop a similar app and charge X-z percent. I'm having a hard time seeing the barriers to entry for this particular approach.

Because they own the POS. You can theoretically have multiple apps installed on your phone but a store is only going to be running one piece of POS software. Because Square got a toehold into the POS market, they can leverage this for network effects. Stores are going to want the POS with the most users installed, users are going to want the card case accepted by the most POS systems.

It's almost impossible to get slotted in to the point-of-sale. Anyone able to do it has a massive advantage.

Not that this isn't neat, but regarding the opening:

Wait a second: Why is this supposed to be any better than pulling out a credit card? It’s not faster, it’s not more convenient, and it’s not any safer.

Yes it is. Just having an RFID card + POS reader is awesome. Putting the chip into a phone is even more awesome. If you don't believe me, move to Japan for a few months and live the dream. ;-)

Are there really people that walk around with their phone GPS switched on all day? Security concerns aside, what a drain on battery life that must be.

Jack Dorsey is going to be one of the biggest innovators of our time. 2 huge companies already in his belt

I just bought buffalo wings from next door using LevelUp on my phone. It's fantastic how they offer that service, you'd never expect it because they're a little pizza shop. LevelUp uses QR codes and you can quickly scan it. They have this phone-looking thing set up with the camera facing out, and you just hold your phone in front of it to pay.

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