In a world increasingly dependent on credit cards, almost everyone has had the experience of running into a situation—be it a kettle corn stand, girl scout cookie sellers, or that friend who still owes you $20—where the words “sorry, I don’t have any cash on me,” inevitably come up. Well, with the recent launch of Square, a quarter-sized credit card reader that plugs into your cell phone, that phrase might soon become obsolete.
Conceived by Twitter creator Jack Dorsey, Square brings the ability to process credit cards into the hands of the average consumer. Square has been in beta testing since late last year. Now, with the full launch of Square, anyone with an iPhone, iTouch, or Android can sign up for the Square app, acquire the small square gadget (the company currently is handing out one free Square credit card reader to each user), plug it into their headphone jack, and begin taking credit card payments.
Historically, in order to gain credit card processing ability, a merchant had to sign up for an account with an independent sales organization, purchase a card reader, and pay monthly fees, a gateway fee—as well as transaction fees on each purchase. Square eliminates all of that with the exception of the transaction fee. Further, Square’s credit card processing service charges a competitive 2.75 percent fee, plus 15 cents per transaction.
Square app users who haven’t acquired the Square card reader plug-in can still type in card numbers to collect payment, although they can will pay slightly higher fees for card-less transactions. Since Square can’t prove to issuers that a card was present during the sale, users pay a higher fee for punched-in credit card numbers to cover the higher risk, i.e. 3.5 percent of the transaction amount plus the 15 cents fee.
In addition to facilitating easy credit card transactions, the Square credit card reader also enables users to accept debit, prepaid, and gift cards. And consumers needn’t be concerned about security: Square hides card information from the seller and does not reveal phone number or e-mail address, although it automatically sends the buyer an e-mail receipt of the transaction.
For transactions under $25, no signature is required. For transactions over that amount, the cardholder can simply sign on the iPhone touch screen using their finger. A refund button allows for easy, one-click return of funds.
The Square credit card reader opens a whole new universe of possibilities; to craft makers, community fund-raisers, people hosting garage sales, as well as small businesses and contractors, who no longer have to rely just on being paid in cash or checks. Even people looking to collect overdue debts from friends may find that that almost-forgotten debt is now just one swift credit card swipe away. And, on top of everything else, Square donates one penny from each transaction to the charity of the payer’s choice. What’s not to like?