Just finished
an article in Technology Review throughout which I was waiting for the a-ha moment that illustrated what I'd missed with my initially-excited reaction to the news that Jack Dorsey's Square was aiming to empower individuals with the ability to transact without cash, but it didn't happen. Instead, one critic focused on the hardware and the other came straight out of a Business 101 course questioning demand:
Mark Beccue, a senior analyst at Abi Research who studies consumer mobile technology, also has reservations. "What puzzles me is, what market we are addressing here?" he says. "I saw a video of using [Square] in a coffee shop and thought, 'Don't they have a cash register?' " Beccue concedes that the product may work for certain niches, such as markets or art fairs, but he doesn't think it has mainstream appeal. He suggests that most small businesses will prefer traditional point-of-sale systems for managing credit cards, and that ATMs are convenient enough that individuals aren't likely to turn to Square to pay each other.
I'm guessing Mr. Beccue has never started his own company, because the absolute most galling part of the process was not learning how much of revenue would have to be set aside for taxes, it was applying for a merchant account, paying for the privilege, and then jumping through hoops so the parasitic bank would allow me to continue paying them an inflated fee with every transaction. There's a huge market for Square if it takes the banks out of credit/debit transactions and not only levels the field for merchants (which will be largely dependent on its pricing structure), but also empowers individuals in ways that ATM's with two and three dollar service charges just don't.
Getting back to the 'don't they have a cash register' issue,
the Square site mentions different hardware configurations, but the underlying challenge isn't the hardware, as Mr. Paisner suggests; it's rebuilding a trusted cashless transaction infrastructure from the ground up. Once Square does this, they'll be able to leverage their reputation and business model to nearly any piece of technology, handheld or not, plugged into an audio jack, or inherent in every phone. Both critics ignore whether Square will be able to do the wet side of the job and vastly underestimate the portability of the service if it can.
