I got a live demo of Square on Saturday night by donating $50 to Charity Water. My thoughts here.

Square is an attachment for your iPhone that lets you swipe credit cards. Combined with their software and payments infrastructure, it allows anyone to accept money quickly.

It’s definitely a cool product. It’s a tiny device that converts the magnetic signals from your credit card into an audio tone, which feeds into your iPhone headphone jack. The software then converts those tones back into a number for processing.

The demo worked. Technical glitches aside, it was a pleasurable experience. The phone processed the payment quickly, accepted my signature via my finger on the screen, and it emailed me a beautifully designed receipt.



If you have purchased anything in an Apple store recently, you’ve seen they employee similar technology. Store clerks walk around with iPhones that have bar code scanners and credit card readers. But that’s where the similarities end and where I think Square breaks down.

  • How many people really need this? I guess I don’t know much about the market, but I can’t imagine that many people out there want to accept payments via credit card and can’t 
  • Why doesn’t Square use the 30 pin connector instead of the headphone jack? Seems like the current device will break off easily, and simply isn’t as reliable
  • The email I got for my payment was a link to an online receipt. Huge fail. I want the full receipt in my inbox so it’s searchable. Why do I have to go online to see what I bought? 
  • There is no barcode scanner. Adding that would allow a whole other set of features such as inventory management and analytics 
  • The device is expensive. I don’t mean Square, but the iPhone itself. Do I want to hand someone my iPhone and have their grubby paws all over it? Probably not. If this is something I use once a month, then maybe. Although then I’m probably not going to carry Square with me. And if I am someone who uses this constantly, seems odd to build it on top of such an expensive, fragile device. A standalone credit card reader costs as little as $99. Seems like a better price point for a business who needs multiple devices, which might need to be replaced often. 
  • Fraud. Paypal’s core technology revolves around fraud detection, not the payments themselves. Can Square do the same? 
  • Fees. Merchants pay up to 3% in credit card fees. This is fine because they are a retailer with large markups. It’s part of the cost of doing business. If Square is meant for more personal transactions (I’m not sure if it is) then these fees are not acceptable. I’m not going to split rent with my roommates this way if I lose 3%.

I’m interested to see who actually finds that Square solves their payment needs. To me it just seems like a cool gadget


  1. The headphone jack is used to provide compatibility with multiple devices such as Android OS and others. The 30 pin dock connecter would have curtailed down the choice. Also the point of iPhone being expensive, Square can be used with other cheaper devices too.

  2. Thanks for sharing your insights, Sachin. Was really intrigued by this new product given all the launch hype but you bring up some really valid points. I initially thought it would be ideal for highly mobile small businesses like my husband’s French Macaron businesss that sells to gourmet markets, cafes but to be competitive, the merchant fees need to be lower and would like to see the receipt choice like they do at the Apple Stores.

  3. Your phone already has a barcode scanner: its camera. Especially with QR codes.As to the market, it’s just making it easier. The next generation of lemonade stands will accept credit cards, because of technology like square.

  4. yeah, it’s true that Square will bring payments to more people. But it’s unclear to me how many "lemonade stands" there are. Getting traditional credit card billing going isn’t that hard. And some merchants (like burrito shops in SF!) are cash only to save 3% and avoid paper trails.I think the mobile aspect is big though. Flea markets and other on the go services. Plumbers, etc.

  5. Another thought: square seems more responsive, so it would be easier for me to imagine hooking square up to other of your systems. So if you wanted integration between your billing history and your inventory system, I bet square would be easier.And the connected aspect shouldn’t be forgotten. How many small businesses have a phone line dedicated to their CC machine, which has to dial up (and do the modem dance) for each purchase. Just saving those 20 seconds/transaction could make it a more enjoyable experience and save you staff.

  6. Yes, thanks for the review .. I am very interested on it. It will be easy to sell wine after a good wine tasting. People usually after a walk into winegard want to buy some bottles but once in front of the cash… they suddenly forget they wished buy :D…

  7. Awesome dude! I tried it out at the Crunchies party. It was truly amazing. :)It will certainly be the future when you can buy Girl Scout cookies with a credit card. 🙂

  8. People selling items using Craigslist can accept credit/debit cards w/o a merchant account, and consumers don’t have to pay in cash. Huge market there.

  9. It’s also likely to be big for small sellers like the ones who sell at craft fairs and flea markets and the like, who don’t sell enough to warrant getting a merchant account but would still like to accept cards. I’ve been looking for something very similar myself (and now I know this exists, I’m totally looking into it, so thanks!) Not many people carry cash any more, and there’s certainly an expectation that for larger purchases, you can pay by card. I think there is a bigger market for this than you expect – though possibly I’m underestimating the organisational ability of most small sellers – the sort of hobbyist/semi-professional sellers…

  10. I would use Square on the golf course to collect! But seriously, I could use Square to accept payment for lessons as well, being a golf pro.DailyBurn has an app that uses the camera to read barcodes for food. Hopefully someone comes up with a cool app to combines the two but I really see this as a good acquisition for Paypal/eBay.

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