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.

Goodbye registers, hello Square.

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

Finger goes in, Coke comes out. Easy, huh?

The biometric sensor in Hitachi’s new vending machine uses light to scan and read the number and orientation of veins in your finger tip without directly touching a sensor. This provides a unique code for access to a credit card account that has to be established independently of the vending machine. While the machine is only a prototype, and Hitachi hasn’t yet decided whether or not to make a commercial version, the concept itself is more than enough to be causing a buzz. It’s far from the first use of a biometric sensor, but it has the potential to be the most commonly seen application of the technology.

Even if the vending machine industry doesn’t jump on Hitachi’s band wagon, the biometric sales option is ready to be explored. With credit card companies like Visa and Mastercard already providing a “tap and pay” system for cards, consumers may become more confident with payments that don’t require signatures or even human-human interaction. This means that finger scans could very well become a break-out technology. If you’re willing to tap a card, why not just point your finger instead?

Hollywood movies often portray biometrics as added levels of security for very expensive items or collections. Eye scans to enter bank vaults spring readily to mind. The speed of biometric verification, however, makes it just as sensible to go in the other direction. Need to pay $5? Just let the machine count the veins in your index finger. It’s faster than reaching for your wallet. Which may or may not be a good thing. It’s unclear if the hassle of paying for things has a profound affect on the way we spend money. There may be a lot more impulse purchases when you can pay for things by just tapping your finger.

Amazingly, this isn’t the only way that vending machines are getting complex. There are vendors with LCD display and touch screens, and others with conveyor belts or claws instead of those twisting springs. I think that they serve as a good testing ground for emerging commercial technologies. After all, like new high-tech ATMs, they are one of the few public machines that interact with hundreds or thousands of people each day.

With biometrics looking to identify you through your ear, or even your brain, the finger vein technology from Hitachi seems like a more acceptable option. It will be interesting to see if the concept of linking credit cards to a biometric scanner becomes widely popular. Perhaps it will be adopted somewhere else. iTunes? Kindles? Pay toilets?