Square Transforms Your Phone Into a Credit Card Machine – Now Handling $4 Million A Day!

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square on iphone

Square is pushing credit card payments into the final physical frontiers. Mobile money is at hand.

A tiny phone attachment is helping credit cards become a truly universal currency. The Square mobile reader allows anyone with a smart phone, iPod, or iPad to accept plastic anywhere. Just plug in the little square box to your mobile device, swipe a card, and the money is transferred to you just like it would be with any major retailer. With Square, even the smallest merchants can join the 21st Century of mobile payments, and it’s taking the US by storm. Started in 2009, Square has already reached some impressive milestones: more than $4 million in transactions each day, more than 1 million transactions a month, 500,000 readers distributed in the last year, $169 million in funding, and a value estimated at $1 billion. Watch a demonstration of Square’s many mobile monetary marvels in the videos below. In the race to revolutionize our wallets, Square is proving that a populist approach to payments could be one of the winning recipes for success.

What can Square do for you? Small businesses often have to contract with major credit card companies to allow them to take plastic payments at point of sales, and they sign over a healthy chunk of each sale to the credit company to boot. Merchants often have to rent the machine (or pay a monthly fee) and the device typically only works in your place of business. Square charges a single flat rate (2.75%), with no fees, and no minimum amounts. The actual plastic reader is free when you sign up, and it goes anywhere your mobile phone or tablet can go. In the following clip, we see how a doctor can take credit card payments even while making house calls:

Much of Square’s success is probably due to charging lower rates and making credit card payments more mobile. However, they haven’t stopped there. Square is using their iPad compatibility to replace registers entirely. Inventory, sales, and receipts can all be handled just with a tablet and a Square card reader. Even better, they’ve been making improvements on the customer side of things as well. Their Square Cardcase acts as a passport to each Square merchant, allowing you to store card information and pay quickly, just by telling the cashier your name. Watch both technologies in action in the following clip:

The tech behind Square is pretty cool – a tiny box that can read a credit card and handle real payments is just another reminder of the power of our modern mobile wizardry. What really is exciting about the company, however, is how quickly it’s caught on. In San Francisco, I’ve seen many street merchants using Square, and there are a few big brick and mortar places in my neighborhood that are switching over. (Hell, even the improv theater I perform with uses it.) Its penetration into other cities probably isn’t as deep, but Square is expanding very fast. In May, they were at $3M a month in transactions, as of late July they are well above $4 M. They’re hoping to move beyond the US in 2012, and their site features a growing list of partnered merchants across the country. Fittingly, the interest from investors is equally expansive – TechCrunch reports their latest round of funding easily raised $100M. Apple’s mobile products are featured heavily in Square ads and the lion’s share of transactions happen on those devices (21% iPad, 45% iPhone, 3% iPod, and 31% Android). Now, Square is sold directly on the Apple Store, making it even easier for merchants to adopt. On every front, Square seems to be attracting a lot of loving attention.

I’m totally in favor of that. Using Square is really unremarkable – which is part of what makes it so awesome! You just plug in an amount (or select previously entered items if you’re working on the iPad) swipe a card, sign with the touchscreen, and you’re done. Square makes paying with a credit card easy no matter where you are, meaning there’s very little reason for merchants not to accept plastic everywhere. Their fees, while probably not better than those negotiated by big retail chains, are certainly competitive for small business owners. In the next few years, Square could push credit card payments to finally become truly universal in the US. No merchant left behind so to speak. And no more need for minimum balances when paying with a credit card, either. It’s a great thing.

How long it will last, however, has yet to be seen. We’ve already discussed how digital payments (no plastic, just apps on smart phones and computers) will continue to claim a larger share of our economy in the years ahead. Visa, Google, PayPal – these big names are all pushing us be the first to have their finger in every virtual transaction in the digital marketplace. As that race continues, Square may find that democratizing credit card payments is more about customer based apps (like the Cardcase) than small mobile card readers. For now, Square represents a rising star in the retail world, and I’ve no doubt that many small businesses will leap at the chance to join the 2.75% plastic bandwagon. However far that journey lasts, I wish Square the best of luck. They have a great product, a great mission, and millions of happy users.

square on ipad

Goodbye registers, hello Square.

[image and video credits: Square]
[sources: Square, TechCrunch]

Discussion — 4 Responses

  • Joe Nickence August 8, 2011 on 2:17 pm

    Cool idea about using an iPad for transactions. But this means that http://www.ncr.com will need to rethink it’s own business model. Of course, just visiting their site now, it appears that they are already in process!

  • Olivier Lalonde August 8, 2011 on 7:27 pm

    Small typo in the title, it’s “Million” not “Milllion”

  • LutherianX August 9, 2011 on 5:39 am

    Until electronic cash can be used with the same level of anonymity as cash – there must be no consideration for implementation. In this respect, even the credit card has gone too far.

    It is with bitter resentment and dismay that people in Europe and elsewhere just lay down as they were forced to provide proof of identification when purchasing mobile phones… every use registered on the various respective networks. Now connecting commercial transactions to these mobile devices has compounded the problem.

    A torrent-like ala bitcoin independent non-centralized transaction medium is needed.