Square Inc. recently released an update for Square, its wireless payment system product.
What is Square?
Square is both software and hardware. It turns a wireless device into a radio-based credit card. Square is compatible for use with devices running Apple’s iOS software or the Google Android operating system. According to a recent review by iLounge,
Square released its first-generation hardware and software in 2010. Use is subsidized by a per-transaction fee of 15 cents
plus 2.75 – 3.5% depending on whether the card is physically swiped or data is entered with a keyboard. Now the company has a second-generation version of the Square Credit Card Reader and version 1.5 of its free Square IOS app and has eliminated the 15 cent transaction fee.
Although the per-transaction fee went zero, fees per transacted amount remain. These fees do become significant, as they increase sharply above a certain threshold.
Target user profile
Square is unsuitable for most high-dollar users, per transaction, and overall high volume. Square is best for occasional transactions for small amounts of money. Pricing is better than PayPal’s money transfer system under these circumstances.
Minimal fraud protection
Square initially sets a limit of $1,000 per-week for transfer into your bank account. If you’re doing more than $1,000 per week in transactions, there should be a delay before the excess drops into your bank account, reducing potential for huge, fraudulent transactions. The details weren’t specified in detail at this time.
Be aware of recent VeriFone allegations about security issues. VeriFone’s revenue has been very adversely affected by the success Square has achieved to-date. VeriFone should be considered a competitor although it is a traditional payment processor, unlike Square. The validity of the allegations is unknown.
Square will soon be experiencing the effects of comparable, competitive technology though:
- American Express released a payment product, Serve a few days ago
- Intuit’s GoPayment uses similar technology as Square, but different marketing, specifically, an up-front credit approval requirement and slightly different pricing.
Expect much competition for market dominance ahead!