Jack Dorsey, the man behind the idea of Twitter has unveiled his new start-up Square which can transform physical credit card payment system. He launched the company by posting a tweet (Obviously).

What is Square?

The basic idea of Square is that it will let anyone with a web-connected mobile phone (iPhone)  accept credit payments on the fly. Basically, it will help individuals to pay each other (without hard cash or checks).  Square is a device or dongle with magnetic card reader (acts as a credit card machine) which plugs into mobile headphone jack. Also the mobile phone must have the app of Square installed in it. When a credit card is swiped  through the device, it reads the data and sends it to the Square application on the phone. From there the data is send to the back-end servers for further processing and authentication of the user. The profile of the Square owner is attached to the bank much like the system of Paypal. The payer will sign the screen with a finger and also receives the receipt in their email inbox (Saves Paper). It also has an extra layer of security which involves authenticating the photo of the payer.

Square

Who can benefit from it?

Square can help small vendors who usually can’t afford to pay the high amount which the credit card companies charge. It can also help individuals to exchange money among themselves on the move. It will also help charity and social cause by donating one penny from every transaction to a cause of user’s choice.

Who needs to be cautious?

Square has the potential to disrupt the present credit card processing business. Credit card companies charge sizable amount for every transaction and also charge monthly fees. So, the large chunck of small business houses and individuals will flock towards Square for cheaper and faster solution. This can further encourage large business houses to adopt Square.

How they are gonna earn the money?

They don’t intend to earn a huge profit by selling the devices. The will rely more on the services. With the advent of this device every one would have this device from small vendors to taxi drivers, then there will be no need to carry cash. As more and more times you used their services, the more they can earn through the transaction fee (Square will charge much  cheaper transaction fee). They will also get some money by selling the application.

Devices it will support:

Initially it only support iPhone and iPod Touch. But in future they are planing to launch for Android, Symbian and Blackberry devices.

Funding till now

Surprising but Square is one of those rare companies to get funded before its launch. Khosla Ventures has put in $10 million. Square is valued at $40 million before its launch.

Square is a company to watch out for as their product will touch every individual in their day to day life, so possibilities are infinite.

Square Receipt

Payer Verification

Jack Dorsey talks about Square and a demo of it

Image Credit: Square