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Consumer digital wallet options:square

square offers small business simple mobile payment solution AND simple-to-use app for consumers


Square: overview

square product log from squareupCreated by Twitter's Jack Dorsey, fast-growing digital wallet Square (device called square up) is revolutionizing money transactions much like Twitter changes daily communication. With many competitors, Square focused its growth on small business and small vendors using a card-reader on their mobile or tablet. Simple, secure way to take credit/debit payments, and consumers can use the app for a simple, quick way to pay. Think of Square as the 'Apple' of mobile payments, with a focus on simplicity and ease of use. Square is quickly gaining popularity with small business, vendors, shop owners, but for consumers, you can choose to use their app, or will simply swipe your card when asked. If you like to walk into Starbucks with your mobile and just 'say your name' to pay, you'll love square. If that makes you cringe (like me), you'll simply notice their logo when you swipe your credit or debit card at the local florist shop.

more about square

Social aspects are integrated into the functionality the younger folks will find both familiar and useful. Engaging with friends such as sending/receiving gift cards by app, having the clerk 'know who you are' when you walk in the store makes payment simply by saying your own name. Seems like a friendly and quick way to purchase, rather than pulling out your card and loyalty card, punching up your pin.. Quick and easy, which is both good and bad. For others, the social aspect will either be unimportant or for many intrusive and raise security concerns. Not everyone wants the clerk to great you by name, or see your photo. Hard not to see some potential risk in the process. Luckily for Square, the technical aspects of the mobile phone (NFC compatibility) make their technology useful on today's most popular smartphones. .

By turning on location and the app's tabs, Square knows where you are, and let you see available vendors nearby. Also, you can purchase, send, and receive gift cards with a few clicks. Simple, easy. Forgot your friend's birthday and about to meet her for a coffee? A couple of clicks and you've got the gift card to send her if you're both on Square. What husband doesn't love that feature!

Currently available on iPhone 4 and above, Android 2.2 and up, as well as iPad. Free to consumers, and simple fee structure to vendors may spur a quick availability unlike traditional payment systems with large initial vendor costs. Don't be surprised to see these pop up at many vendors soon. update: on 5-22-13 added new vendor cost options: flat monthly fee ($275, 0%/transaction) while retaining 2.75% per swipe (transaction) fee.

what we like?

If you're social and prefer quick convenience, you'll like the 'say your name' feature and everyone will like how quickly transactions are processed. Quicker lines are a huge perk and Square is responsible for the transaction itself, using strong encryption standards to prevent fraud. The simplicity of usage will make it very easy for most people to use it intuitively. Much like Apple products, built to be intuitive and simple, and that's for consumers and the vendor. With low vendor fees and easy usage, we expect local vendors to increase rapidly.


Also, the new monthly flat price option ($275) gives small vendors another cost option to consider.For high volume vendors, we suggest you analyze your recent and expected transactions to choose wisely.

summary points

quick summary chart: Square digital wallet

Type pros cons
  • small business will love the simple structure, vendors likely to grow
  • app helps you find vendors near you
  • Starbucks partnership drives availability
  • availability remains unknown,except Starbucks
  • limited at first, quicker traction in cities


  • data encrypted using level 1 PCI Data Security Standards
  • your data not sold to 3rd party vendors
  • clerk sees your face/name to confirm you, creepy or cool? (you decide)
  • 'say your name to pay' adds some risk, and great risk in crowded vendor and common names (ex John or Sue)
  • perception of risk exists, even if untrue
ease of use
  • expected to be the 'Apple' of e-commerce, very easy to use
  • will sacrifice features for simplicity, which many users will love
  • likely will sacrifice features for simplicity
  • 'say your name' checkout easy, but photo recognition has a creepy factor
key points
  • simple to use
  • social integration with send/receive gift cards
  • full digital wallet, embraces loyalty cards, gift cards, major credit/debit cards
  • availability may be spotty, since other players have stronger existing vendor presence
  • 2 cost options for small vendors: monthly fee ($275, 0% transaction) and per swipe 2.75% along with free reader.



Square comes from the guy who co-created Twitter, and investing from Starbucks.. With Twitter, simplicity is key and social, square's digital wallet app takes a similar approach to payment systems. Everyone expects great things, Dorsey is considered by some as a modern Edison, so square has the buzz, funding, and talent to compete in the crowded digital wallet payment market.

Want to get wonky? Square is a good place to be! Square claims to focus on innovative analytics (deep dive into data) and complex modeling to detect fraud more quickly. Companies do this type of fraud detection today, that's nothing new, and consumers need them to do it well. Fraud detection and prevention lowers costs for all and of course saves much worry and aggravation. Bottom line is security comes first. So why is Square different? Square expects to be able to detect in real-time and also to improve that capability as they grow (more data = more info). The more complicated fraud gets, the more you need innovation in fraud detection. Analytic can be a huge asset. The more consumers who use square, the better their predictions, according to Square. Makes sense.

For consumers, you need to know fraud costs vendors money, and that costs everyone. Since 'say your name' inherently increases security (in our eyes), we like that Square's fraud detecting analytics can reduce or negate these concerns.

what you need to know

You create your account, and add photo and first name as well as the payment (credit card, etc) source charging from square transactions. You can earn rewards, give and receive gift cards, and as long as you have your phone on you, just say your name to purchase at checkout. Obviously, doesn't work on all smarphones, so you have to check out their list or download the app. Got the latest iPhone or android O/S mobile? You should be all set. Is your phone a year or more older? Well, check the list first.

Here's some more. We like the idea that your gift cards are on your mobile phone, who doesn't get the store, realize they could have used their card? We do worry about the fraud of someone 'pretending' to be you, but also love how quickly you can pay. We see the future in many of these digital wallet technologies, can see a day when signing for a credit card becomes like pulling out a checkbook. Rare, and a little annoying.

what's on the horizon

For Square, we see a focus on those small business and local shops, as well as contractors, home-based businesses and chains that are geared to a younger generation. Also, convenience stores, gas stations and other places where speed of purchase matters are places you'll find Square in the next year. Square's partnership with Starbucks gives Square a huge base of consumers to drive acceptance, and we expect that their focus on simplicity and ease will help them complete in a fast-growing digital wallet world.


is it secure?

Yes, as long as your phone is secure. Security is a key part of all digital wallet apps and technology, Square is no different. Square states its use of very sophisticated analytics to monitor transactions in real-time, allowing them greater fraud-detecting ability and faster reaction compared do its financial companies, which seems reasonable as they are a deep-data focused company focused on innovation, including risk and fraud detection. Square takes responsibility of the transaction, in much the way Amazon does with re-sellers on its sites, whether you are on the vendor or customer side, Square is responsible and resolves issues. Obviously firms like MasterCard, Visa and PayPal have a long track record of financial responsibility to allay most fears, but Square's recognizes the value of its security, and as long as customers usage continues to focus on everyday purchases, Square will be a trustworthy financial transactor.

Given all that, however, keep in mind your phone with digital wallet becomes your wallet, so if you lose your phone, fraud can happen if the app security isn't strong enough. As always, you need to notify Square immediately, and we suggest you also ensure to password protect your phone as well. As a side note, we suggest women using the 'say your name' feature turn the feature or your phone off until needed, no reason for every clerk to know your first name.

last updated: by S Laney, 5/22/2013


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