The Truth About Square
There's lots of talk today on mobile payment processor Square's outstanding results. 500,000 readers shipped, 1 million transactions so far this month, $3 million in transactions per day. — That's impressive. There really is a real need out there for the everyday consumer …
Context & Ripple Effects
The trajectory here is steep and documented: Square was already stamping out card readers at a rate of 10,000 a day back in September 2010, crossed the $1 million per day processing mark in March 2011 after weeks spent at a few million per week, and today reports 500,000 readers shipped and $3 million in daily volume. Between those datapoints came a $27.5 million Sequoia-led round in January and, last month alone, a strategic investment from Visa alongside confirmed deals putting the reader on Apple's retail shelves and online store.
What makes today's numbers newsworthy beyond the raw growth is how widely the story travelled: Fortune frames Square as 'bringing back the tab' by eliminating the swipe itself, while TechCrunch's same-day take has an iPad-based Square service replacing cash registers outright. Both read the company as aiming past the solo merchant toward the full point-of-sale counter — and both lean on the Apple distribution deal and Visa endorsement as proof the startup is being taken seriously by the establishment.
First-order effects
- Apple's retail and online-store placement turns every store visit into a sales channel for the dongle, directly feeding the shipment run-rate behind the half-million-reader figure, while Visa's stake hands Square instant legitimacy with banks and merchants sizing up a two-person-card-swipe business.
- Square's confirmed plan to harden card-reader security this summer lands squarely against the durability question hanging over the dongle model as volumes scale into millions of dollars a day.
Second-order effects
- If the iPad-register direction in the syndicated coverage holds, incumbent point-of-sale terminal vendors face competition priced like an app plus a free plastic wedge rather than a leased terminal contract, pressuring their small-merchant economics.
- Rival mobile card readers must now match either Apple-shelf distribution or a marquee network backer — or argue security superiority — to stay in the conversation for micro-merchants choosing a processor.
Third-order effects
- A major card network taking an equity stake in a dongle startup rather than shipping its own reader suggests incumbents will route their small-merchant strategy through acquisitions and investments, making fast-growing payment startups consolidation candidates.
- If the swipe-replacement framing generalizes, the dongle becomes transitional hardware and the durable asset shifts to the software layer — tabs, registers, transaction data — where checkout is defined in code rather than in terminals.
The trend: Smartphone-dongle payments are scaling from a tool for tiny merchants toward full point-of-sale replacement, with established players like Visa and Apple attaching themselves to the challenger rather than competing head-on.