Square, a new mobile phone payment system founded by Twitter co-founder Jack Dorsey, just launched its private beta today. The idea: anyone with a mobile phone can accept credit card payments.
Newsgroups report that the new company, Square, will give practically anybody the ability to accept payment cards without having to go through a costly credit card processing service. Instead, the service will offer its users the ability to use their mobile phones, laptops or desktop computers to accept payment cards and swipe them with the help of a small dongle that will plug into the computer’s or phone’s audio jack.
Currently only working with the iPhone, it’s essentially a small magnetic reader that plugs into the headphone jack. When a credit card is swiped through the reader, it reads it and converts it into an audio signal. The microphone picks up the audio, sends it through the processors and then is routed to Square’s software application on the iPhone which it then authorizes.
So what’s so great about this product? As merchant and buyer-centric newsgroups will relate, it enables anyone to accept credit card payments with their phone, so that means anyone from your local hot dog vendor to a Salvation Army charity stand can now take your money. It could come in very handy for small and medium-sized businesses, especially if it’s robust enough for the enterprise.
Alternative forms of payment are an exciting area for entrepreneurs and investors. Many companies, including eBay’s PayPal unit, are focusing on making it easier to pay for things online. Others, like Obopay, let people text message money to one another.
So, for many people who stink at tracking their personal spending, Square and similar apps could help structure the spending data we generate in our lives into meaningful formats for us to use in making decisions on how we spend.
Square is starting with a limited roll-out and will be available to everyone next year.