Square has been getting a lot of attention since its launch last month for the iPad, and with today’s official launch for the iPhone, the traction should increase. Square is the free credit card reader for mobile devices, dev
eloped by Twitter co-founder Jack Dorsey. It turns the iPhone or iPad into a credit card processor allowing individuals and small companies to accept credit card payments while avoiding the need for a merchant account and hefty transaction fees.
In all honesty, a big factor in Square’s potential success is the fact that, as opposed to a lot of m-payment services that are coming out, Square is rather backward facing in the sense that is built for a world that still uses credit cards. It’s not expecting users to adopt new behaviors; it’s making it easy for already established behaviors to spread – both physically, with Square’s portability, and socially, as it makes credit card transactions affordable to merchants and individuals who can’t pay the normal fees.
Only one in five businesses with revenue under $100,000 accepts credit cards, according to research by The Federal Reserve Bank of Philadelphia cited in Fast Company. In San Francisco’s Chinatown, for example, you see retailers lose sales everyday because many do not accept credit card payments despite high rates of domestic and international tourist traffic.
While San Francisco is unique in that regulations in many of its neighborhoods have kept chain stores from forcing small business out, being able to process credit card transactions is imperative for these stores' long-term survival. Having an independent ATM is not enough – most people don’t want to pay the hefty fees to get cash when the store down the street takes cards.
Will Square help small business? First of all they need to adopt it, and the devices that drive it, which will be the biggest challenge.
(Fast Company has posted a wonderful overview of Square.)