This particular situation is more nuanced than the usual profit-from-the-poor story. Every bank and credit union receives these fees, and in the case of not-for-profit credit unions, the interchange fees truly support[ed] "free checking" accounts. Whereas merchants can lower their prices to pass the money back to the consumers (but won't), banks, conversely, have nowhere to recoup their losses except to charge the debit card users. I would rather see an honest fee like this than watch as overdraft penalties are raised to cover the lost revenue.
In the vein of "nobody ever got fired for buying IBM", no teacher ever got fired for storing all of their students' data locally, whether on a personal PC or a physical gradebook. I have worked with businesses that do not want to store data in the cloud (Amazon, Salesforce, etc) if the data is at all confidential. They have a point: the risks of local data storage are serious but intuitive, whereas the average person has only your word regarding the safety of the cloud. And teachers, like doctors and bankers, have auditors that they would have to persuade to accept the new technology.
I would not be surprised if the post mortem reveals that some teachers brought this app up with their administrators, who responded, "That app would be handy for you, but if there is theft or corruption of your students' data, how would we defend ourselves in the ensuing lawsuits? 'The developer seemed reliable?'"
I make my living selling software to teachers, and the privacy issue comes up about 1 in 20 sales. It is an issue, but not a deal breaker. If a teacher has an online grade book they can share with parents, and it gets results, then teachers will buy the software.
Irrational lawsuit paranoia is a real problem, but it is not the reason this product failed.
I'll bet that you're thinking that this will have to wait a decade or two, until every car on the road has a new generation of computers installed. Look up a Mercedes product called Distronics Plus and a company called Autoliv. These guys are already mounting stereo cameras and long-wavelength IR (heat) cameras on production luxury cars to detect turn signals, pedestrians, and license plates of other cars. When 50% of cars have radars linked to their cruise control, it's a matter of iteration to let them share data, then to characterize the remaining vehicles on the road based on the aggregate observational data.
Your '95 Civic may not be announcing its velocity, but when the car behind you and the car in front of you have both read your license plate and agree on your speed, you may as well be.
Prizewinning 2004 research by LC Davis of Umich showed that stop/go traffic jams were eliminated by adding in a certain percentage of cars with Adaptive Cruise Control (ACC.) It only took a little less than 1 in 5 cars.
Yes, and "if Captain Sully had been flying an Airbus he would have crashed because they don't allow manual control". The objective is to reduce the total number of crashes, even if that means that you feel like you have less control of when you do crash.
I am extremely surprised that cloud servers did not play a bigger part here. This Is What They're Perfect For: renting the equivalent of enormous datacenters for a brief period without much notice or prior/post capital investment. Password/hash cracking has always struck me as the archetypal use of Amazon/Rackspace/Linode/etc.
To beat the old drum: Email isn't intended to be secure anyway. Relying on email addresses to maintain privacy and authenticity is like relying on Caller ID to verify callers' identities. (See spoofcard.com.)
Yeah, it's still shocking to me how many fortune 500 companies still don't understand how vulnerable they are to simple hacks like this. I would've thought it would be SOP (standard operating procedure) to encrypt their email years ago.
I guess a normal level of paranoia hasn't quite reached those companies yet huh?
If I were the Square founders, and I was expecting conventional credit card processors to go on the offensive, I might offer them a red herring: a simple technical limitation, something on which the competition would focus exclusively. The trick is that I would choose this technical limitation such that I could suddenly correct it at a later date, leaving my competitors without any ammo.
If I were feeling really clever, I might choose this herring such that my initial costs were also reduced. For example, I could make my initial card scanner so simple that it doesn't even require a watch battery or Hijack-style power. Of course, I couldn't encrypt data passing through the jack ... until I decide to send out a new version of the card scanner with an extra $3 worth of microcontrollers and batteries inside. (Wait for it...)
P.S. - I doubt very much that I would have thought of that ahead of time. But, maybe the Square guys are smarter.