11 March, 2011

Now you too can swipe credit cards

Melbourne Herald Sun, Friday March 11, 2011

My favourite columns start with the words: "Remember where you first heard this". Well this is one of those, remember where you first heard the word Square, because in the future you'll hear a lot more about it.

I'm sure you've stood impatiently at a supermarket checkout while the customer in front goes through all the credit card rigamarole for just $20 worth of purchases.

So how will you take it, at your coffee shop, when the purchase is a $3.50 latte? There again, you can take your lunch partner's credit card and swipe it for their half of the bill - paid straight into your own account.

Yes, you can be the merchant too once you have Square. Forget all the bank paraphernalia and tax file numbers, this is an attachment the size of half a matchbox with an earphone-type plug sticking out. You just plug it into your iPhone or Android mobile.

It has a slot on its side. Run a credit card through it, and enter the sum, which is credited to your account. They sign for it using the touch screen. Currently the limit is $60 but that is in the process of changing.

How is it different from a shopkeeper's merchant facility? It isn't, that's the point. Except - to join the facility, just go to their website at squareup.com and fill in the application form. A few days later the dongle will arrive, ready for use.

And that's it, no ASIO checks or interrogation by the bank manager, no joining fee, no membership fee. No bulky contraption - just your iPhone and a little plastic cube. The flat charge is 2.75 per cent of the transaction.

Ah but there's a fly in the ointment, of course. Currently it's only available for US bank accounts and can only handle a limited number of phone models. But all that is being worked on.

What's remarkable is that The Square was launched just 16 months ago. The idea first occurred to James McKelvey, a glass blower in St Louis. He lost a $3,000 sale because he did not have credit card facilities.

This set him thinking. What was so complicated about reading credit cards? Why can't you do it with a mobile phone? He took the idea to Jack Dorsey, founder of Twitter, who jumped at the idea.

With money behind it - the last whispered estimate of Twitter's worth was $10 billion - the idea did not take long to be developed. By November 2009 the first betas were being trialed.

The point is, your mobile phone is a very powerful little computer and can perform complex tasks. You swipe the card through the Square dongle. Up pops an entry screen with keyboard. Fill in the amount and any explanatory note.

With a couple more button touches the money is sent to your account and a receipt is sent to the payer's mailbox. This contains the transaction details, your name of course - and even a map showing the location where the purchase was made.

Just last month a group of girl guides had a fund-raising cookie drive. The only difference between these nine year olds and your own daughters is that they live in Silicon Valley. In fact one dad is a manager with Facebook and he heard the girls complaining that people were coming to their stall without any cash to buy the biscuits.

Well he fixed that in a day. He downloaded a Square account, sourced a dongle, plugged it into his phone - and pretty soon the girls were selling box-fulls of biscuits to their very impressed, nerdy neighbours. Watch out for a girl guide near you, soon.


1 comment:

Anonymous said...

I checked out that credit card checking system - the Square - I thought we might be able to use it in South Africa. But as often happens with a great innovation, the business process they have setup around it seem to be holding it back. I saw some scathing reviews from a merchant that
tried it complaining about their policies regarding holding on to the cash of their customers. Not very market savvy. They sound like they need a good marketing person to tell them some home truths about how to address the market.
- William Jago