Have you heard about the new “Square”? As in, “Are we square?” It’s a new square-shaped gizmo that gives people a way to accept credit card payments on their iPhone, iPad, or Android. It was invented by Jack Dorsey, the founder of Twitter, a guy who knows something about new ideas that catch on with people carrying cell phones.
Prior to this, really only business owners could accept credit card payments. A standard credit card machine costs several hundred dollars, and credit card processing companies charge set-up fees and monthly fees (whether you make any charges or not), as well as high per-transaction fees to boot. That’s why ordinary folks don’t own a credit card machine. According to its Web site, the small Square device is free and plugs into the earphone jack, the downloadable app for it is free, there are no set-up or monthly fees, and the per-transaction costs are much lower. It’s secure, it E-mails the receipts, and it keeps track of all your cash and credit card transactions for you.
The New York Times calls the idea “beautiful, simple, and a joy to use.” Add to that “disruptive, brilliant, and irresistible.”
Disruptive? You bet. Not only is every kid with a lemonade stand--and every Tupperware lady and every cab driver and plumber--now going to be able to take credit and debit cards, big companies like department stores and chain restaurants would be crazy not to switch for the lower fees and free equipment. The credit card companies are not going to like this one bit.
What it does is make it easier for customers to pay small business owners such as women with home trunk shows, day care workers, even dog walkers. Many charities who couldn’t afford a credit card machine for fundraising events could now use this for charitable donations. You can even add tips to the total for people in the service industry. For better or for worse, it could also speed up the transition to a cashless society.
Square is getting its first big debut at the Taste of St. Louis festival this weekend, where all of the food and beverage booths will be using Squares. According to the St. Louis Post-Dispatch, last year 300,000 people attended. That’s good for Square’s business. More importantly, it’s good for those 59 food and drink vendors, who previously could only accept cash. When people run out of cash at outdoor festivals, they tend to go home.
In some ways, Square is its own private sector stimulus package: there’s the immediate economic benefit to the start-up company’s owners that comes with any new innovation, but then there’s the much wider ripple effect this specific product will have. It has the potential to make life much easier for small- and medium-size businesses, especially home-based ones. If Square catches on, think of all the young people with a good idea who will have an easier time launching their businesses and making money. You could call it a license to print money--or really, E-mail money--that crosses all industries and demographics.
Square is an example of innovative, job-creating technology that has been brought to the market by someone who presumably makes a lot more than $250,000 a year. It was not created by a government program or with bailout money. Its economic effect is going to be huge, and the Obama administration should realize that rewarding--not punishing--private sector innovation like this is the best way to economic growth and prosperity for all Americans.