Apple Square sallies forth from stores
iPhone banky box is go. Bothered?
Square is now in the Apple stores, both physical and virtual, putting the banking revolution in a plastic cube in front of a lot more eyes than its competitors.
For only $10 anyone can drop into an Apple store, pick up a Square box to plug into an iPhone, download the free app and start taking credit card payments. As long as that person is in the USA, and the credit cards were issued in America, and everyone is happy to give 2.75 per cent to Square.
Square isn't really a banking revolution; it's a repacked version of an existing service with slightly worse security and lots of Web 2.0 support (the company was founded by Jack Dorsey, formerly of Twitter fame).
Square claims to be disruptive, but such services have been around for decades in various forms. The company works hard to create an impression that it is something new, and does provide a veneer of usability on what has historically been complicated; but various other companies provide the same functionality with comparable rates, not to mention better security and a better physical fit onto the iPhone.
Feefighters provides a sliding scale to help businesses decide which low-volume credit card transaction processor will be cheaper for them. But iPhone users are notoriously insensitive to price, which is good considering that Square will send you a box for free if you sign up on its website.
Still, being in the Apple store is significant as it puts the product in front of people who might never have considered accepting credit cards before. VeriFone might provide a comparable service, and Roam Data might make a better box, but lots of users won't bother searching for alternatives to what they find on the Apple shelves.
It's hardly surprising that Square wants to charge for the boxes, given that the company has reportedly handed out 300,000 of them for free so far. That means, taking the company's claimed business of $1m a week, that each Square customer is processing something like $3 in transactions each week, and thus paying Square around eight cents every seven days.
At that rate it will take two years for the customer to pay off the cost of the box alone - unless they paid $10 in the Apple store for it. ®
Totally useless for Chip 'n' Pin
Because it swipes the magnetic stripe the tech is totally useless anywhere that Chip n Pin is the standard ... the business model is therefore stalled.
Anything equivalent in the UK?
Put the two together
It's not the device or iOS software that cost so much to develop, it's the business model and fraud detection systems in the back office.
EMV regulations prohibit it, but you don't need it anyway...
European card payments cannot use magnetic stripe data anymore. Terminals can fall back to magswipe (mainly to support the cards issued by US banks who are shamefully dragging their heels on chip+pin), but only if the chip read fails. If you do too many swipes on cards that have chips, you'll get a call from your card processor.
As for the "take payments on iPhone" bit, there are many applications that allow you to do "Card Not Present" (CNP) type transactions using a mobile. Tap the primary account number, expiry and 3-digit CVV into your application and it gets sent to the card processor. If you must have it on an iPhone, Irish company WorldNet TPS do an iPhone app here: http://www.worldnettps.com/feature-tour/iphone-virtual-terminal ... but to be honest, any other card processor that provides a webpage for CNP transactions (and that's most of them these days) will be usable on a mobile browser.
As for Square, I'm astounded at how so little can cost so much to develop. I have worked with magswipe acquisition - it's simple, simple stuff. The reader modules are commodity components, the software is a piece of piss to write (even allowing for Square's additional "difficulty" of demodulating the serial data back off the mic input), and once you've got the track data, you've a choice of payment processors all vying for your business.
One good thing: Square's small-time operator demographic looks to be ideal for card-fraud, so it may be the thing that finally gets the US banks out of the 1960s and onto chip+pin. Then we could all remove magstrips and not have to worry about having our cards skimmed.
2 years to pay back the costs?
I don't think so. The boxes surely cost pennies to make.