The vision of using mobile phones as the basis of transactions usually involved the customer him or herself paying using the mobile device.
But Jack Dorsey, founder of social network site Twitter, late last year turned that equation a bit on its head with a new device that easily enables cell phones or other mobile devices to process credit card swipes.
The product and the company are both called Square, and the little plastic readers themselves are given away to merchants or others. They easily connect to a cell phone port, and simply provide a magnetic stripe reader that sends credit card information (card number, expiration date) in the stripe to an application on the cell phone.
The Squares are given away, but the company receives a something like 2.75% of each transaction, not dissimilar to other credit card "merchant" fees. Developers have to build the applications to record the initial sale information and then move to the Square processing application on the phone itself.
The device now has with support for both iPhone and Android cell phone platforms and IPAD computers. As soon as a merchant reads the card number, the transaction is authorized, and a new screen lets the purchaser “sign” their name using the phone's touchscreen, if it has one.
The Square's phone application gives the purchaser an option to have the transaction receipt e-mailed, and it e-mails the vendor as well. The process is all very smooth and takes less than a minute, including e-mail entry. Money shows up in the vendor's bank account one to two days after the transaction.
The AAA, for example, is testing the devices in a pilot program for delivering car batteries to stranded motorists. Delivery personal have smart phones with Squares that can process credit card payments from AAA customers.
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