Tech Tidbytes: Be There and Be Square


One of the coolest things, in my opinion, to come out of this new wave of smart phones is Square.

“What is Square?” you ask? It’s a company founded by Jack Dorsey and Jim McKelvey in 2010. They make these:

“What is that?” It’s the Square reader. That golden part is a headphone jack, so you can see how tiny it is.

“Yes, but what does it do?” I’m getting to that! When you sign up for a free Square account, they mail you one of these. Alternatively, you can purchase it for $9.95 in an Apple Store, and Square will deposit $10 in your account. You also need to download the free Square app for iOS or Android.

“Okay, what does the app do?” You read my mind. Square is a mobile payment option (that currently only works in the US). What that means is, you get one of the readers and you can accept credit card payments on your iPhone, Android phone, iPad, or iPod Touch from anyone. The best part is, and what has made them a revolutionary force in the payment industry, is that instead of charging a fairly large monthly fee to use their service on top of a percentage cut, they only charge that percentage cut. Each swipe of a credit card costs 2.75 percent, while manually entering a credit card number is 3.5 percent plus 15 cents. You can use the Square reader for as many or as few payments as you like because it will always cost the same percentage. As long as you have a data connection (through your phone connection or through WiFi), you can be like a walking cash register.

“So wait, where does the money go? What do they do with it?” Once you sign up for an account, Square prompts you to enter bank account information (but you can accept payments before you do this; they just keep the money for you until you do). Every evening, they deposit the payments you’ve accepted into the bank account you gave them. Pretty sweet, huh?

“Hang on a sec, what about security? I mean, this is my money we’re talking about.” Yes, it is. There have been some security concerns that Square and new advisor/investor VISA are tackling head on. I’ll try to summarize. Okay, so using Square has two components: the actual physical reader and the Square app. The first concern, raised by competing payment company Verifone, has to do with the app. They said that any experienced programmer could put together a fake Square app that works with the Square reader. What that means is a bad person could swipe your credit card for a purchase and walk away with your credit card information*.

The second concern has to do with encryption**. Credit card readers are not required by industry standards to encrypt credit card card information, including Square. While complying with industry standards is certainly good, it’s more comforting to know that your information is being processed through an extra layer of security. That’s VISA’s point of view, and they’re currently working with Square to improve the service. The new reader, which will encrypt credit card info on the fly, is expected to be shipped to Square users this summer. If you’re curious, Square also has a lovely security information page on its website (www.squareup.com).

“But I don’t have a small business or anything. Why should I get this?” You certainly don’t have to if you don’t want to, but it’s totally free until you actually use it, so why not? There’s essentially nothing to lose. But you won’t hurt my feelings if you decide not to sign up. I just think you’re missing out.

* I find that a concern raised by a competitor who is losing money because of Square seems a little, well, questionable. Also, you should always be aware of exactly who you’re handing your credit card to, but the concern is at least a little valid.

** Remember when you were in grade school and you passed a note to your friend with random letters and numbers on it that wouldn’t make sense if you didn’t have the key? The idea being that if the teacher got it, they wouldn’t know what it said. That’s encryption, and it’s a very important part of keeping sensitive digital information safe. Without the key, a malicious hacker trying to get at your info can’t read it properly.

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