I'm not sure if many HN users are familiar with TabbedOut (there are quite a few venues in Austin that support it), but there is definitely some cross-over here with the Square Case. Specifically if this works in bars.
Essentially you can open and close a tab with a bar whenever you want. Forget to close your tab and realize you're a mile away from the bar? No problem, you can close it and add tip from anywhere. Forget your credit card often at bars? You don't give them a CC in the first place because it's stored in your TabbedOut account.
It also does nifty things like allow you to split checks via the app at restaurants, which is super useful.
One of TabbedOut's big accomplishments is they have invested quite a bit of time/money integrating with point of sale systems which is what allows them to have such a slick user experience. I'm curious if this is something Square has done as well.
TabbedOut requires each user to use a five-character alphanumeric code, similar to the kind you'd get when booking an airline ticket. I'm not sure how the bartender is supposed to remember everyone's code (let alone people who have had too much to drink), but that's the general idea.
When I've used this in bars they have asked me to show them or tell them my code. It's already up on their POS system and has my name attached as well, so for future use I can just say my last name like I normally would even if they had my card.
Generally there are only a few people using TabbedOut at any given time, if not just me, so it's not hard for the bartender to remember me (bar tenders are quite good at remembering faces and names as they do it so often).
My local coffee shop here in Tempe, AZ switched over to using an iPad with Square instead of a cash register about a month ago.
As a customer I like it. It's fast and slick. The employees seem to like it too.
Only one thing: if anybody from Square is reading this look into allowing the option of a bigger, sturdier card reader. The little on you ship now is flimsy and doesn't work too well if you use it 500 times a day.
That's what I keep thinking every time I see a picture of the thing. Looks like it would just rotate in the round headphone jack every time you swiped a card.
It's actually not that bad. And it looks like its perfect if you're using it for payments on the move. But if you're not going to be moving the payment station around you should be able to opt into a bigger and sturdier one.
Could someone build a cash drawer/charging dock that is connected to square somehow? Or even disconnected from square but still offer charging functionality
If they become the new merchant-interface, there's nothing stopping them from offering an alternate payment mechanism that doesn't rely on credit or debit cards.
I'm an engineer at Square, so I can neither confirm or deny such speculation ...
but in an interview with Wired, CEO Jack said
"People understand credit cards. They know exactly what to expect from them. They’re used everywhere. But Square is payment-device agnostic. It doesn’t matter how you pay. Some of our users accept only cash."
http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1
Building the technology that could support Visa/MC/Amex alternatives and the userbase that gives it critical mass is probably the best way to get bought out by Visa/MC/Amex at an inflated price. No one says they actually have to ship their alternative payment system.
Another is that Visa believes that Square is a threat, thinks they may be successful and has invested to mitigate that threat, get visibility into their activities, and so on.
You hope the iPhone or iPad doing the payment processing with the Square device is connected via network cable? I'm afraid I have some disturbing news for you.
I think some, but not all, will pay data plans. Square doesn't require a data plan, as evidenced by it being compatible with the iPod Touch, which has no radio:
> Requirements: Compatible with iPhone, iPod touch, and iPad. Requires iOS 4.0 or later.
I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?
If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.
That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.
Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology
Then you'd imagine incorrectly – see above, there's an entire industry around accepting payments for goods and services. The economics are often terrible and the UX sucks for everyone. Square is disruptive because it's better for everyone – the merchant and the customer. The only one getting screwed for a change is the payment processor. Hence, disruption.
How is the processor "getting screwed" here? Again, for a great many businesses Square is the (significantly) more expensive option.
I get that they're killing it at craft fairs, but I'm the with the thread-parent...I don't see what the "disruption" is here.
*edit: Re-reading this I realize that it seems like I'm implying that Square is a bad product... which isn't what I'm saying. I think they're going to make insane amounts of money (I'd invest in them given the chance). They can be huge without being truly 'disruptive', however.
I showed the Square reader to my hippie friend who sells hand-made jewelry in an outdoor booth at a beach resort. He thought it looked pretty cool, and was seriously considering buying an iPhone and service plan just to use it. At his usual transaction size and volume, traditional credit-card payment systems weren't that great a prospect. That's what a disruptive technology does.
Setup is effectively free and incredibly easy. They're disrupting the gorillas of merchant services, by tapping into a market that your Visas, MasterCards, AMEX haven't been able to get to: local, small business owners.
It's disruptive because it changes the customer demographics for some of these businesses and the way they think about payments (customer analytics, payment options, loyalty programs).
Square is poised to gain market share very quickly AND there's a huge play to be made in emerging markets where the mainstream guys haven't found great traction and smartphone usage is growing rapidly.
I didn't read anything about square providing hardware to store cash. It can't replace traditional cash register if the system does not accept cash. There already more mature Mac based cash registers that it would be competing with.
Really stoked about this. I wish they had more details on the process, though.
At first exposure, the idea sounds really, really cool. But it sounds like they're breaking the normal purchase loop. Imagine lunch, for example (assuming you've already set up your tab, which is a lengthier first-run experience). You go up to pay, and then... what? TC explains it as:
> So once you press that button within two blocks of the merchant, you’ll be able to tell the cashier your name and your card will be charged on the merchant’s backend Square register.
So do you pay in advance? Afterwards? (In which case, can I just walk out and screw the retailer?) Do I as the user set up the bill, or does the merchant and I have to review it? Does either party have to wait for the other to confirm something? I've already been at Square retailers that have skipped Square during times of high customer peaks (opting for cash, which was much quicker).
These are probably just early questions that will look obvious and boring once it's all figured out and public, but right now I'm scratching my head a little.
When you open a tab, your name just shows up next to the "charge a card" button. You pay when you normally would. It's not really breaking the normal purchase loop so much as removing all of the crap from it.
I'm assuming that the initial contact (from up to 2 blocks away) just tells the restaurant that you're coming and primes their register with your info.
At the restaurant, you order and eat as usual. When it's time to pay (before or after, as per normal at the restuarant) you just give your name instead of cash or credit card, and it's put on your tab. (Which you have to pay later, of course.)
Again, those are assumptions based on what little I've read... Which is probably the same or less than you've read.
It actually charges your credit card right then - the card is kept on file with Square. Just at the moment when the vendor would normally swipe your card, they pick your name and user icon from a list instead.
I assume that means when you're near your merchant you can order and pay for things before you get to the store. Makes sense for a coffee shop as they can have your coffee and bagel waiting for you when you walk in the door. Doesn't make as much sense if your merchant is a hair salon.
>500,000 Square card readers shipped, 1 million Square transactions in May
So, half a million card readers have been shipped and they've each been used, on average, twice in this month? That seems really low to me. Do a lot of merchants get the reader and not use it at all?
What's the innovation here? I mean its great if I already have an iPad at checkout. But why would I buy a $500 device to sit next to my cash register? Or if I'm going all credit and debit, there are already services that work with $250 netbooks. And beyond that you can just lease the little boxes for like $20/month+some surcharge.
It seems cool for techies, but is it really going to change the game?
UPDATE: Although this seems like more of a win for door to door sales and maybe mall kiosks.
Card processing for everyone, anywhere with internet access without the need for a commitment, a costly investment in hardware or a separate merchant account. The UX isn't just good from a hardware perspective – it's also awesome in how you get paid.
There's a solid chunk of people who could benefit from accepting credit cards for whom the setup you've described isn't really worth it.
Moreover, if you already have an iDevice, which isn't much of a stretch, you now have a credit card terminal for free.
> But why would I buy a $500 device to sit next to my cash register?
Because many "point of sale systems" cost far, far more than $500 and are steaming piles of bad user experience.
> Although this seems like more of a win for door to door sales and maybe mall kiosks.
Definitely, and private instructors as well. I teach dance classes/private lessons and being able to take a card right on the spot is incredibly convenient.
Because many "point of sale systems" cost far, far more than $500 and are steaming piles of bad user experience.
But those systems that cost more than $500 take credit, cash, and check. And you get accounting for all of the different types of sales you do. You still need that machine, if you do cash/check sales.
Square lets you record cash purchases, so you don't need the machine: http://d.pr/dGVT
Yes, if you need a much more complicated system then you'll need to pay more, but many people don't. There's no way I could afford, or would want to use, most POS systems out there.
But it's not just taking the cash, but the complete workflow.
But really that's another point that's not so important. My broader point is that this doesn't feel extremely innovative or disruptive. I knew people who did laptop based credit card processing... what 15 years ago? Didn't have the slider, so you had to type the number. And today I can get the equipment for just CC processing for free. And there is some decent software, but the best, like Intuit's is paid.
But this feels really incremental over the course of 15 years. The SW is cheaper, but the transaction percentage is much higher. This doesn't feel like a shift in the way people buy things or companies collect payment in the same way as checks/credit cards/paypal/debit cards did.
Not saying its a bad product, but I'm not seeing the innovation/disruption. I'm seeing a good next step for some use cases.
This is another brilliant call from Square.
NFC technology is not yet developed and many problems still exist for the implementation (the iPhone 5 might not have the appropriate chip for example), whereas square seems to make it easy for both customers and merchants. The only problem I see is that this square technology is suitable for the US market but I'm not so sure about Europe.
I run a small retail biz and do a lot of trade shows. Square is the best thing to happen to my business since finding funding to start it. It's THAT good.
I don't know if it's even on the table, but I agree with the article; there should be bids out for this company. I'm hoping that Dorsey et al do not sell it. I could see Visa buying them and doing something destructive - intentionally or not.
Because the magnetic stripe contains a security code that's not otherwise represented on the card. Including that code in the transaction gets you a better rate, since the physical presence of a card may signal a lower risk of fraud. (2.75% flat for a swipe versus 3.5% and 15¢ for keying in the number, according to Square's site)
The stripe usually just has the cardholder name, the card number, expiration date, and sometimes the CVV. It depends a lot on what tracks are present on the card, what info your bank has included in the "discretionary data" chunk, which track was read by the reader, etc.
If you grab a cheap USB magstripe reader, you'll find that most things (library cards, student IDs, airline tickets, etc) really don't include much of anything that is not already printed on the item.
There are technologies like MagnePrint (http://www.magneprint.com/) that use the signature of the ferrous oxide particles on the card. But it requires your bank and the merchant to use the tech.
"The first code, called CVC1 or CVV1, is encoded on the magnetic stripe of the card and used for transactions in person. The purpose of the CVC1 or CVV1 is to ensure the data stored on the magnetic stripe of the card is valid and was generated by the issuing bank. This value is submitted as part of transactions and is verified by the issuing bank. A limitation of the CVC1 or CVV1 is that if the entire magnetic stripe is copied, rather than generated, the card can be duplicated. See the Skimming section for more details.
The second code, and the most cited, is CVV2 or CVC2. This CSC (also known as a CCID or Credit Card ID) is often asked for by merchants for them to secure card not present transactions occurring over the Internet, by mail, fax or over the phone. In many countries in Western Europe, due to increased attempts at card fraud, it is now mandatory to provide this code when the cardholder is not present in person."
Does it follow from this that manual carbon copy "imprint" machines are not eligible for card present rates?
This may sound dumb, but why not just put this additional security code in a bar code or QR code somewhere on the surface of the card to allow for the equivalent security using a camera to read the card?
I think it's for the same reason the just using the number increases the rate. It allows someone to snap a picture of your card without ever having to touch it. The magnetic strip adds a bit of complexity to getting the data off the card.
I totally don't agree with your assessment of what is simple and reliable. I've had the mag stripe fail on numerous hotel room keys and a few credit cards over the years. A QR code is readable even if somewhat scuffed, etc.
It would seem that with a small investment in a magnetic stripe writer and a plastic mould, any scammer could create cards that could fool an imprint swiper or magnetic stripe reader.
Further, wouldn't a signature make all of the above close to equivalent?
I can't even remember the last time my credit card couldn't be swiped. What do you do to them?
True, but still even easier to duplicate a QR code.
Signatures don't help very much since the fraudster can sign his own fake card. That's why more stores are asking to see drivers licenses which is annoying.
No, it's just that a manual entry makes errors more likely, and is verification that the card is present. Or rather, that some sort of card with the customer's information is present.
Magstripe may be required for "card present" verification; there are different compliance rules for transactions involving just the information from the card (as when you punch the number in manually).
The numbers on cards become a lot harder to read after the coloring wears off of the numbers. Even as a human it can be hard to read them at times depending on the lighting.
Card layouts also vary a lot, even from the same issuers (for example: the Amex PASS).
Reading the mag stripe prevents fraud and therefore is subject to lower fees by CC companies.
Not to mention, having someone take a picture of my credit card would spook me out a little (yes, even if I'm familiar with the product).
To your last point, how is letting someone scan the magnetic stripe less spooky?
Considering that augmented reality app that translates words on signs in real time, I suspect there is far less entropy in the raised numbers on a credit card... though you may be right that the variety of layouts would make it harder than it would at first seem.
Socially however, I'd wager that fewer people would let you take a picture of their card compared to swiping it. People are simply used to having credit cards swiped, they aren't used to having pictures taken of them.
OCR would be grungy whereas the magnetic stripe is the intended direct machine interface. When you attempt to connect a machine to a human interface all sorts of annoying things can happen. Even if it's simple in theory, the amount of errors generally jumps.
True enough, but we're talking about reading around 20 characters that are raised from the plastic and typically printed using the same font on all cards. As far as OCR tasks go, it's pretty simple, and OCR is an established, evolved technology.
Actually most cash registers start at between $100-$200, and don't do credit card processing, much less SMS receipts, Google-analytics style sales data tracking, etc etc etc... The value of Square + iPad beats the pants off what sort of cash register you can buy for $500.
Not to mention that when the day is over, you have an iPad.
Wonder if all the Square attention is good for the broader "POS disruption" space?
For example Erply (http://www.erply.com/), an award-winning startup, recently made news with porting their web based POS solution to iPads recently. Any others you know?
My company, Cashier Live (http://www.cashierlive.com), is in the same space as Erply and some others. We haven't ran into Square competitively at all, as Square is getting their business traction from mobile businesses & small quick serve restaurants/coffee shops/bakeries etc.. Cashier Live (and Erply, from what I can tell) is targeted towards retailers with inventory on the shelves, something Square isn't good for.
A problem that's immediately been raised by shop owners I know is that of theft - regardless of how much of a brick it might be to them (strong non-numeric passcode etc). You can't just walk off with a cash register, or at least fence it easily & for much.
Thanks! We use Square to handle credit card payments for conventions, but it's quite annoying to swap between an in-house iPad webapp that handles inventory, receipt printing, and sending the order data to a master database.
Allowing simple iOS protocol handlers like "square://pay?product1=Mug&price1=20.00&product2=Shirt&price2=22.00&callback=inventorify%3A%2F%2Fsquare_callback" and it callsback to url "inventorify://square_callback?success=true&paid=42.00" would be amazing as I don't have to have the awkward step of "Exit the inventorify app and charge the customer for $42.00 through the Square app" and then the cashier forgets the amount to charge for.
Most crunchbase entries do come straight from the PR team... Users can edit them, so most companies do and Crunchbase says what you want it to. It's sort of like a moderated wiki.
That's a big when. But in the end, NFC is a hardware issue. Square is adding the most value on the software and financial side of the equation. If anything, Square strikes me as the best positioned party, other than Apple, to capitalize on NFC once it sees some broad adoption.
If Apple makes the NFC APIs private, though, that could put the hurt on Square given their heavy iOS investment.
How would a private NFC API be any different than the non-existent stripe reader on the iphones? Should NFC (finally) start to catch on, couldn't Square just add an NFC module and continue to pipe data in via the headphone jack?
But Square enjoys a tremendous user experience advantage. It's easier for everyone to use.
Now, in my theoretical universe where Apple is a bunch of dicks and decides that they'll keep the NFC APIs to themselves, and assuming they run a service that competes with Square...
Who's going to want to attach a plastic weiner to their phone versus just having the "magical, it just works" action that Apple will provide with their service?
Of course, it may well be that Apple wants a usurious fee for their service (30%!) and Square could still compete on price. Still – a world where Square can harness NFC directly on an Apple device is a much better deal for them than one where they can't.
Yes and no. Adopting Square is much easier for both consumers and retailers than merchants adopting a POS NFC device in store. While I think both have difficult challenges in getting to scale (majority market penetration), I assume Square's route seems easier to adopt than the NFC route. Not to mention Square provides a slew of information/analytics that may be missing with early NFC adoption.
That said, there isn't any reason why Square wouldn't just transition their App to adopt both their physical Square device as well as the built-in NFC chips to have both working with their App (assuming NFC API are available). There's too much speculation and guessing to determine how things will turn out. But Square does have a lot going on for them at the moment between their partnership with VISA and their devices being sold in Apple stores. Hard to believe that they won't be able to innovate and pivot to continue growth even with NFC coming out eventually.
It's also worth noting that Square also works for non-merchants including random street vendors, hot dog stands, and the like to be able to accept credit card payments. NFC would not work for this crowd and that's another disruption Square is going to have in their favor.
I can't really support it, but it also just feels right that Apple would buy Square before they'd compete with them. So I'd wager on either Apple not going after POS or a targeted acquisition.
In regards to your first comment, just because Apple makes their own iPhone and iPad cases doesn't mean they can't sell cases made by other vendors. The metaphor here is even if Apple adopts its own internal NFC system, that doesn't mean it can't continue selling Square devices. Of course its hard to say whether or not Apple would feel Square would be in direct competition at this point or not.
On your second comment, I agree that a targeted acquisition would help Apple get a lead in the payment space but we'll have to wait and see how the whole NFC thing plays out to make that judgement call.
Yes, very positively. Square will be well-positioned to take advantage of this new way to transmit the account-holder's information to the merchant. While this is by far the easiest part of the payment process, Square will undoubtedly capitalize on it.
This is fantastic news for small coffeeshops etc everywhere.. This makes for a very compelling use case. It is now far cheaper than a merchant account or verifone for smaller merchants, when factoring in that you get a free POS system. Hopefully this will stop the insanity of some payment processors giving out "free pos" systems but raping merchants on the credit card processing. We've seen restaurants paying as much as an effective rate of 7%! because they were going with the company that gave them a "free" POS system.
Essentially you can open and close a tab with a bar whenever you want. Forget to close your tab and realize you're a mile away from the bar? No problem, you can close it and add tip from anywhere. Forget your credit card often at bars? You don't give them a CC in the first place because it's stored in your TabbedOut account.
It also does nifty things like allow you to split checks via the app at restaurants, which is super useful.
One of TabbedOut's big accomplishments is they have invested quite a bit of time/money integrating with point of sale systems which is what allows them to have such a slick user experience. I'm curious if this is something Square has done as well.