Square is a revolutionary product, which allows individuals and businesses to accept credit card payments. The credit card reader is developed by the startup with the same name, which is co-founded by Jack Dorsey (also the co-founder of Twitter).
How does it work?
When you swipe the credit card through the reader, it reads the data and converts it into an audio signal. This audio signal is then picked up by the microphone, processed and routed to the Square iOS app. The data in encrypted form is then sent to the back-end servers where it communicates with the payment networks. The app then prompts you with a screen to sign on the iOS device’s multitouch screen and asked whether you prefer a receipt via email or SMS. If the transaction is successful, you promptly get the receipt of the transaction by SMS or email.
If the payment is successful then it credits the funds to the bank account that is linked to your Square account.
Square is currently available only in the US and allows users to accept U.S.-issued Visa, MasterCard, American Express, and Discover cards.
How much does it cost?
Square credit card reader costs $9.95 on the Apple’s online store and you get $10 after activating your Square account, so essentially you don’t pay for anything for the device except the shipping cost (shipping is free if you buy it on their website). You can download the iPhone app from the App Store for free (iTunes link). Square makes money by charging individuals and businesses a fee of 2.75% per transaction, which is cheaper than fees charged by most other credit card payment systems.
Square has reduced the entry barrier for small businesses that currently don’t accept credit cards because of the high costs of a scanning device, which can cost as much as $900 for a system that’s wireless (compared to $229 for the cheapest iPod Touch) and fees associated with processing charges. It’s also a cool way person to person payment system, which can be useful at various occasions. This is the future of payments.
Are you already using or planning to buy the Square’s credit card reader? Please let us know your what you think about it in the comments section below.