Square Brings Credit Card Swiping to the Mobile Masses, Starting Today
Now that Square is publicly available for iPhone and Android OS, with millions of card readers being shipped free-of-charge, Jack Dorsey tells Fast Company how his business model will disrupt the way you pay.
Context & Ripple Effects
Square's public debut follows a December 2009 dispute in which a professor alleged that Square had taken credit-card-reading technology, an unresolved claim rather than an established finding. The May 2010 launch puts the company’s proposition into the market: free reader hardware paired with an app available on both iPhone and Android.
First-order effects
- iPhone and Android users gain a way to swipe payment cards through Square without buying the reader, removing the upfront hardware charge from adoption.
- Square takes on the cost and logistics of distributing millions of readers in exchange for building a larger base of mobile payment users.
Second-order effects
- iPhone and Android become payment-acceptance surfaces, giving the two mobile ecosystems a role beyond consumer apps and communications.
- Card-reading providers must compete against Square’s zero-price hardware entry point, shifting differentiation toward the service and payment experience attached to the reader.
Third-order effects
- If free hardware reliably drives usage, payment acceptance can move from dedicated terminals toward software-led services distributed through general-purpose mobile devices.
The trend: Mobile payments are beginning to use subsidized accessories and app distribution to turn smartphones into points of card acceptance.