First I would like to congratulate the team presenting on Square. They did a really good job and though I had heard of this app before, there was so much I didn't know about it.
So, getting to the point. Square is basically a really cool alternative to the bulky machine for swiping credit cards. All a business needs to start accepting credit cards for payment is an Ipad, Iphone or android device and the little 'Square' used to swipe the credit card. This app has added a new dimension to the way people transact and has exploited the power of 3G enabled 'smart' devices.
At the heart of this concept is the little 'Square' which plugs into the audio port of any of the aforementioned devices and when one swipes a credit card it reads the magnetic data off it, converts it into audio signals and sends it via the 3.5mm audio jack which is then interpreted by the app. Its cool how the audio port has been treated as just another input port and with it being universal there should be no compatibility issues. This also opens up the exciting idea of looking at many more conventional hardware ports such as accelerometers, Gyrometer etc, found on such devices, to do more.
Compared to 3rd party credit card payment methods, Square provides an economical channel for small and medium-sized businesses to do transactions. Square slaps a 2.75% surcharge on credit card swiped transactions and even though this is higher than its competitiors's, Square has no recurring monthly charges. So this is more economical for smaller transactions such as around $30. Hence, it is more suitable for smaller vendors such as your local barbershop or bakery etc. to start accepting credit cards using Square.
Now, this app offers vendors as well as customers the convenience of paying via credit card easily but does it truly revolutionise the way we pay. Well, I would say no because what I feel would do that is NFC or Near field Communication. Google Nexus S phones already ship with an NFC reader and the Iphone 5 apparently has one. NFC allows us to just tap our phones to pay and paves way for a credit card free world. As, professor Ben always says, the next few years are going to be exciting with the Google Wallet and all. However, for now Square seems to be the best way for small and medium businesses to start accepting credit cards and for credit card payments on the go such as in cabs. Here is a video for more information.
So, getting to the point. Square is basically a really cool alternative to the bulky machine for swiping credit cards. All a business needs to start accepting credit cards for payment is an Ipad, Iphone or android device and the little 'Square' used to swipe the credit card. This app has added a new dimension to the way people transact and has exploited the power of 3G enabled 'smart' devices.
At the heart of this concept is the little 'Square' which plugs into the audio port of any of the aforementioned devices and when one swipes a credit card it reads the magnetic data off it, converts it into audio signals and sends it via the 3.5mm audio jack which is then interpreted by the app. Its cool how the audio port has been treated as just another input port and with it being universal there should be no compatibility issues. This also opens up the exciting idea of looking at many more conventional hardware ports such as accelerometers, Gyrometer etc, found on such devices, to do more.
Compared to 3rd party credit card payment methods, Square provides an economical channel for small and medium-sized businesses to do transactions. Square slaps a 2.75% surcharge on credit card swiped transactions and even though this is higher than its competitiors's, Square has no recurring monthly charges. So this is more economical for smaller transactions such as around $30. Hence, it is more suitable for smaller vendors such as your local barbershop or bakery etc. to start accepting credit cards using Square.
Now, this app offers vendors as well as customers the convenience of paying via credit card easily but does it truly revolutionise the way we pay. Well, I would say no because what I feel would do that is NFC or Near field Communication. Google Nexus S phones already ship with an NFC reader and the Iphone 5 apparently has one. NFC allows us to just tap our phones to pay and paves way for a credit card free world. As, professor Ben always says, the next few years are going to be exciting with the Google Wallet and all. However, for now Square seems to be the best way for small and medium businesses to start accepting credit cards and for credit card payments on the go such as in cabs. Here is a video for more information.
I remember the team said something like the 1000 dollar limit of money out per month. I couldnt find this anywhere actually... But anyway, if this is the case, it kinda limits the use of this to only customer purchase. I mean, i have no idea what kind of business only involve 1000 dollar transaction per month.
ReplyDeleteRemember when ebay first came out, there are a lot of people going around purchasing stuff they dun need on ebay. There is even a song by weird AI about it. Years back when bar to get a credit card lower down drastically, i read a report about a US school girl having like 30k dollar(ok to be honest i forgot about the exact amount, but it was staggering) credit card debt from over purchasing designer shoes and bags stuff.
It is great that people can pay their bills more and more easily. but it raise this issue of overpurchasing. whats your point of view about it?
Thanks for your views. With relation to the limit on transcaction, I think Square has done away with that http://credit-card-processing-review.toptenreviews.com/mobile-credit-card-processing/square-review.html As for the question on whether this is good, well I personally feel that exchange of money is necessary to drive an economy. Only if people buy will there be a demand and a corresponding supply and this is one of the factors that fuels innovation. Setting any kind of limit will hamper the economy in the long run. This is just my opinion (not an econs major :P). I think it is better to let the people decide for themselves in our free market economy. Square makes it easier for people who have already made the decision to pay, to pay. This helps more flow of money and though it has a bad side to it like overspending at the local bakery, it might be for good in the long run.
ReplyDeleteHi guys! I suppose the main driver in Square that'll revolutionize the future as mentioned by Sesha is that increasing the ease of transaction increases the fluidity as well as speed of cash flow in the economy.
ReplyDeleteThis of course is on top of the fact that it changes the way buyers and sellers interact by giving them an addition medium of transaction.
The next step would be to further convenience a user by understanding them. And this, is a vicious cycle. The integration of both worlds is fueling each other mutually. User demands drive technology and in turn, technology further fuels a user's demands.
Absolutely true that user demands and technology go hand-in-hand. However, there is also the idea of creating an entirely new market such as how Apple keeps doing time and again with the ipod, iphone and the ipad.
ReplyDeleteCredit card companies already charge a commission. Don't you think that having more commission slapped on the payment is a problem for the merchant?
ReplyDeleteHi Prof. I guess that would be a price to pay for convenience. Moreover, the minimum transaction fee is still lower than paypal's 2.9%. Also, I feel that the increase in sales of the products would offset the commission. Moreover, the merchant may even choose to trickle it down to the customer, somewhat like how t-shirts in shopping malls cost more than those in a simple store. Its all part of the service I guess
ReplyDeleteLemme get this straight: if retailers use Square, they will have to pay BOTH square and also the credit card company right? Is that still lower than Paypal?
ReplyDeleteI think there is just a flat fee of 2.75% plus 15 cents when using Square. It is not the lowest but it is a flat rate and helps businesses gauge their cash flow apparently. I don't think merchants have to pay both though I am not really sure on this (credit card charges are always confusing).
ReplyDeleteBelow is an excerpt from
ReplyDeletehttp://www.fastcompany.com/1643271/square-credit-card-swiper-iphone-ipad-ipod-touch-android-credit-cards
"To understand the disruption that could be caused by Square, it helps to understand how convoluted the credit card system is now.
Most merchants accept credit cards after being approached by an independent sales organization that offers to set up the process in exchange for a monthly fee, plus a gateway fee, and the cost of a card reader. After that, the card company takes a percentage of every transaction. The lowest rate offered is around 1.79%, but the rate is variable and for reward cards it can run as high as 4% of every sale (it's not the credit card companies that are paying for your free flights, it's the merchants who foot that bill in the end). These fees are deducted from the merchant's account at the end of the month along with any charge backs when someone refutes a sale. This makes it difficult for small and medium businesses to accurately gauge their cash flow from month to month. Maybe that's why, according to a report by the Federal Reserve Bank of Philadelphia, of the 30 million businesses in the U.S. with under $100k in revenue, only 6 million accept credit cards.
"The industry encourages a lot of bad behavior," says Dorsey. And as a result of the financial crisis, "more and more of a microscope is being placed on the industry by Washington."
Enter Square with a more transparent alternative. The fee charged for each transaction is 2.75% plus 15 cents. Not the lowest available, but it's a reliable fee regardless of the type of card used."