| Central Penn Business Journal
Visa adding clout to Square
Last May, Andréa Cecil introduced us to Square, a mobile payment system. The credit-card reader device — founded by Twitter's cofounder, Jack Dorsey — lets anyone accept credit card payments via their mobile device. The apps for iOS and Android are free, as is the card reader. The only fee you'll pay is a per-transaction payment of 2.75 percent.
Since its debut, Square has seen considerable growth with merchants that typically don't accept credit cards. The company processed more than $66 million during the first three months of 2011 and is expected to triple that amount during the second quarter. Merchants of all types are signing up and changing their approach to payment collection. Here are a few examples of the individuals and small businesses (from the Square website) flocking to the service:
- Food trucks needing a simple and easy way to accept payments on the move.
- Small corner stores tired of the complexity and high rates incurred by their credit card machine.
- Photographers who want to be paid on the spot instead of waiting weeks for checks to arrive.
- Arts and craft vendors who don't want to pay a monthly fee for a merchant account since they only sell seasonally.
- Housemates who need to split utility costs.
The big news this week was that Visa announced its strategic investment into Square. The partnership will help Square become mainstream as it competes with entrenched companies that sell terminals to merchants that process credit card payments. The arrangement is also a vote of confidence for Square's enhanced security features; instant email/SMS receipts and photo and location of transaction.
Like many payment companies, Visa is interested in the enormous small-business market. The digital payment juggernaut already offers a cashless person-to-person payment process, but transfers are only available between Visa accounts.
This partnership follows on the heels of Square's agreement with Apple to make its plug-in device available in the 235 U.S. Apple retail stores and the announcement of a new card reader geared at adding additional anti-fraud measures. Visa hopes the arrangement will provide access to the estimated 27 million merchants that don't already accept credit cards.
Charles Palmer is executive director for the Center for Advanced Entertainment & Learning Technologies at Harrisburg University of Science and Technology.