With over 65,000 applications in Apple’s app store, there really is an app for just about everything. There are games, productivity programs, social networking apps, and apps that turn the iPhone into even the most utilitarian of items like a level. One banking app even allows the user to deposit checks using the iPhone’s camera as a makeshift scanner. There isn’t much that can’t be done with one app or another, no matter where you are. There is, though, one function that has yet to be made available—the ability to accept credit cards.
To be clear, there are apps that allow shopping, and therefore, payment from within the app. The Amazon.com app is a good example. But now one company is taking things a step further, a company run by one of the founders of social networking site Twitter.
Jack Dorsey stepped down as CEO of Twitter last year and took on a new start-up project. It was recently revealed that Dorsey has created a device called the Square iPhone Payment System. It’s a dongle for the iPhone or iPod Touch that acts as a credit card reader. Here’s how it works.
The dongle plugs into the device’s headphone jack. An employee of a business using the Square would enter the amount of the transaction via the touchscreen. The customer would then supply their signature, also via the touchscreen. The employee would swipe the card through the Square, and the accompanying app would record the card’s data from the magnetic strip. The payment would be processed, and the funds would be deposited into the store’s bank account, minus a small percentage and fixed fee that would go to the company producing the Square. The customer then receives an onscreen receipt that includes a geo-tagged map that shows the location where the transaction took place.
The Square seems to be aimed at small businesses that could make use of handheld cash registers. The question is, how many small businesses are going to invest in the technology? It would entail buying enough iPhones or iPod Touches to go around. Then paying for the Square hardware. Businesses already pay fees to credit card companies in order to accept them, and now they would also have to pay not only a fee but a percentage of each transaction in order to use the Square. And in order for the Square and its app to work properly, I’m assuming the iPhone or iPod Touch would have to have data service connected, so there’s another monthly charge.
Wouldn’t it be easier, and less expensive, to just keep using the card readers they already have and not incur all the additional up front and monthly costs? I’m really trying to think of how the ability to scan credit cards with an iPhone would be worth all the extra expense for a small business, but I’m not seeing it. Feel free to enlighten me in the comments.
Photo courtesy Engadget