VeriFone follows Square's lead with its own iPhone credit card payment system [Updated]
PAYware Mobile. Courtesy of VeriFone — Not to be outdone by tech visionary Jack Dorsey — one of the brains behind Twitter — and his Square cellphone payment start-up, point …
Context & Ripple Effects
Square put a card reader on the iPhone and let any sole proprietor accept plastic, and the move was enough of a threat that VeriFone — the company whose name is practically synonymous with the countertop payment terminal — has answered with PAYware Mobile, its own dongle-and-app system. The framing in coverage of the launch leans heavily on Jack Dorsey's celebrity as "one of the brains behind Twitter," casting this as an incumbent reacting to a founder-driven startup rather than a product cycle event.
That framing matters analytically: when the dominant terminal vendor builds a me-too product within months of a two-person-feel startup shipping, it is a public admission that the smartphone-attachment category is real commerce rather than a gadget demo. VeriFone brings merchant relationships and payments-industry credibility to a segment Square opened; Square brings the simplicity narrative VeriFone is now copying.
First-order effects
- Micro-merchants and mobile sellers choosing an iPhone card reader suddenly have a choice between a startup product and an incumbent-backed one, which puts immediate pricing and reliability pressure on both Square and VeriFone in exactly the customer segment Square defined.
- VeriFone's sales force now has to sell a product that cannibalizes the logic of its own terminal business — cheaper, software-distributed hardware aimed at customers who would never have bought a traditional terminal.
Second-order effects
- Square is forced to compete on distribution and trust rather than novelty alone, because VeriFone's entry signals to cautious merchants that phone-based card acceptance is safe enough for a public company to stake its brand on.
- Other payments processors and iPhone accessory makers now have a validated template — dongle plus app plus per-transaction fee — lowering the barrier for copycats to flood the micro-merchant segment VeriFone just legitimized.
Third-order effects
- If phone attachments keep eating the low end, the point-of-sale hardware business shifts from selling terminals to acquiring merchants through software, a structural inversion that threatens every vendor whose revenue depends on boxed devices.
- A wave of previously unbanked-by-plastic micro-sellers accepting cards through phones will test how card networks underwrite and police this new class of tiny merchant, likely forcing rule changes at the network level rather than at the device level.
The trend: Point-of-sale payments are migrating from dedicated terminals to smartphone attachments, dragging incumbent hardware makers like VeriFone into categories startups such as Square created.