First there was bartering and trading, then we paid with coins, then paper money, and finally credit cards. Now, the smartphone innovation has brought about a new way to pay and for many, it will allow consumers to eventually leave their wallets at home. The company is Square and they’ve developed a way to pay by credit card using an IPhone, IPad, or other smartphone.
Square is the brainchild of two people who are well known to technology startups. Jim MeKelvey and co-founder of Twitter, Jack Dorsey started the company along with COO Keith Rabois who is a veteren of Paypal, LinkedIn, and Yelp. They started the company intent on harnessing the power of social media. When a company applies for a merchant account, Square researches their social media history including Facebook, Twitter, and other outlets. They know that in order to get a large amount of followers on Facebook and Twitter, companies have to provide great service.
Their plan is working. By only approving companies with a history of great customer service, chargeback rates stay low keeping overhead costs down for all clients.
Here’s how it works. If you’re a consumer and looking for the perfect deli sandwich. In order to satisfy your hunger, you head to a local deli armed with only your smartphone. Before you enter the deli, you set up your tab on your smartphone. Just like generations ago, your tab is your account with the store. When you’re done with your transactions, you receive a text message saying that your tab was paid out of your bank account.
If you’re a merchant, you can use your IPad as a payment terminal. When a customer purchases something from your company, using a small card reader plugged in to the headphone jack of your phone or IPad, you can accept credit cards and your customer can sign for the purchase right on the IPad.
For the merchant, the fees charged are in line with the industry but if they already own an IPad, there are no expensive credit card terminals to purchase or rent. There are also no monthly fees or contracts.
Square along with Google Wallet, a similar technology, may be the new way to pay for everyday purchases. Square is currently in very few retail stores in the nation but it promises to quickly expand and some experts believe that if consumers can pay from their bank accounts as easily as paying with their credit card, the exploding debt seen today may greatly reduce.