Gear Review: Square

By Mark Johnson

Which do you prefer, paper or plastic? We’re not talking about shopping bags – do you prefer to handle payments via card, or hand out the old-fashioned greenbacks? The answer is definitely “plastic” for Twitter co-founder Jack Dorsey, and with his new business, Square, he’s only making it easier for plastic-lovers.

At the core of the innovation is Square’s reader, a tiny, white 1″ square (hence the name) with an 1/8 in. jack that fits right into and is compatible with Apple’s iOS and Android-based devices. It accepts all Visa, Mastercard, Discover, and American Express cards and although the transaction fees are higher than the industry standard, Square makes up for this through its lack of other fees, quick set up, and easy-to-use application interface. Once the app is downloaded, businesses must only verify their bank accounts (much like PayPal) to begin accepting credit card payments and depositing the money.

So what’s the catch? Square simply charges 2.75% for every transaction swiped through its proprietary reader, or 3.5% plus 15 cents for manual entries. The transaction fee is the only cost, as both the card reader and software are free.

The low barriers to entry are perfect for musicians and bands, who need the convenience and security of plastic transactions, but are shut out of conventional systems. The fee structure of Square, because it’s percentage based rather than the customary flat feet, is better suited for businesses selling with low price points at low volumes.

This bit of genius holds great promise for the millions of small-time vendors whose work walks the line between hobby and livelihood. For instance, a band holding a couple of shows a week selling albums and tees could grab a card reader for free, and start making sales without so much as a dial-up line required. One of the countless artists at a crafts fair could grab more sales with just a reader, a smart phone, and a quick swipe.

This, of course, allows them to cash in on a reality that larger merchants have used for years: it’s a lot more painful to part with cold, hard cash than to electronically transfer the same funds with a debit or credit card. Now small-time, mobile, or remote operations can benefit from the same phenomenon.

Gear review: 4.5 out of 5

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