Square Issues Cease And Desist On Mobile Payment Competitor mPowa: Hands Off Our Hands Picture
They say imitation is the sincerest form of flattery, but Square is definitely feeling insulted right now. The well-funded and popular mobile-payments startup has issued a cease and desist letter …
Context & Ripple Effects
Square has been the template for mobile card acceptance since at least December 2009, when VeriFone shipped its own iPhone credit-card reader in Square's wake, and the company's position was cemented by Visa's strategic investment in April 2011. With payment volume reported up 25 percent since March and a rumored — unconfirmed — $250 million round at a $2.5–4 billion valuation in progress alongside a new CFO hire, Square is entering a phase where its brand is arguably its most defensible asset.
The cease and desist against UK rival mPowa over its imitation of Square's signature hands imagery is the first move in this corpus where Square litigates that asset directly rather than out-innovating a copycat — notable because the copy is visual, not functional.
First-order effects
- mPowa faces an immediate choice between redesigning its marketing imagery around its reader or contesting Square's trade-dress claim, with legal exposure attached to every day it keeps the look.
- Square establishes that its hands-and-reader visual identity is actively policed, raising the cost of me-too branding for every small merchant-payments entrant.
Second-order effects
- Competitors like mPowa are pushed to differentiate on product substance — pricing, hardware, software — rather than borrowing the category leader's look, since the visual shorthand is now legally contested territory.
- The dispute lands while Square is reportedly fundraising, giving investors a live demonstration that the brand moat behind that rumored valuation is being defended, not just asserted.
Third-order effects
- If dongle-based card readers keep commoditizing, brand and trade dress become the primary moat in mobile payments, pushing the industry toward trademark litigation as a standard competitive tool alongside price cuts.
- A pattern of design-copying followed by legal enforcement would favor well-funded incumbents who can sustain IP fights, thinning the field of undercapitalized imitators.
The trend: As mobile-payment hardware converges on the same card-reader form factor, competition is shifting from features to brand identity, with leaders like Square using intellectual-property enforcement to hold the ground their design created.