Twitter co-founder launches mobile payment apps

Square, a mobile handset payment system designed by Twitter co-founder Jack Dorsey, has finally launched mobile apps in the US that will allow small business owners and individuals to take payment via their handsets.

The company, which has been in the making for some time, has been a pet project of Dorsey’s and has seen him travel the world showing off the service at various trade festivals and tech conventions.

“With Square the goal is to get people in immediately, and make the transaction as smooth and simple as possible,” Dorsey, who is also Twitter chairman, said in a statement.

Square works by combining an iPhone or Android app with a small, plastic card reader that is attached to the phone through the audio jack. The app is opened by the user, with payment details entered, and then a credit or debit card swiped through the reader.

The merchant then allows the customer to “sign” for their name by using the touchscreen, and the payment is sent through with a receipt to be delivered through an email or SMS message.

Both the swiping device and application are free, and also include access to a type of analytics dashboard that allows users to track whatever they have been selling.

All businesses have to do is sign up via where the company will take some basic details including a bank account in which to deposit funds. A free card reader is sent out once the registration process is complete.

The company said on its website the service is convenient for small businesses, as it allows them to keep a definitive record of all their receipts instead of having to deal with cash all the time.

“It’s all about the receipt. Most small businesses make a combination of cash and card sales. With traditional paper receipts cash sales are anonymous. Square’s electronic receipts let you capture and track more vital information about each sale, including location and an itemised purchase list, and also include a photo and link to your website on the customer’s receipt.”

Already, some larger customers including Democratic congressional candidate Reshma Saujani and rock band Spoon are using the app to take donations and sell merchandise. Around 1,000 users, many of them businesses, have already taken part in a pilot program.

However, the company is also placing a large focus on individuals and smaller businesses. The company mentions several features including the ability to load all of a business’s transactions into a file for use in Quicken or other accounting software, and the inclusion of a customer loyalty program in the software.

“This is data that small and medium size merchants don’t have access to,” Dorsey said. “They don’t know how many repeat customers they have, or how many cappuccinos a particular customer buys.”

Other features include a one-click refund button, the ability for a customer to locate where their transaction was sent through on a map, and even the ability for merchants to contact customers directly through the service.

While there is no sign-up fee, a flat fee of 2.75% plus 15 cents for every card swipe is charged, along with a 3.5% fee plus 15 cents for whenever a card is not presented, but a number is used instead.

But while the service is expected to reach the millions of small businesses in the US, there are currently no signs of an international launch. SmartCompany contacted Square to determine whether an Australian launch is on the company’s radar, but no reply was received before publication.

Additionally, the company hasn’t been without problems. An open letter from Dorsey on the company’s website mentions some delays in getting the app up and running. Some critics have said the project is even destined to fail, with rising competition posing a threat.

“We started in February 2009 with what we thought would be a simple task: open a merchant account to accept payment cards. This proved surprisingly difficult for us, and as we asked around, similarly challenging for countless others.”
“Once we were approved for our account, it was unclear how much we were paying, to whom, and why it cost so much. Before us was an industry and a process in dire need of simplification.”

While thousands of businesses have apparently subscribed to the new service, the new company is already facing some competition. VeriFone has announced the launch of Payware Mobile, a type of hardware attachment to the iPhone designed to take small mobile payments.

“Banks and processors are concerned about the security issues of unapproved merchants using unregulated software and insecure fobs to accept card payments,” the company said last year.

“PAYware Mobile leverages VeriFone’s proven payment and security expertise to provide the ultimate in end-to-end protection against payment fraud and misuse on an open and unregulated platform such as the iPhone.”

Analysts have said the competition is a sign that mobile manufacturers will start to introduce more payment-based features, and businesses will soon adopt to technology that will allow payments to be made through smartphones on the spot.


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