Finance:Square (payment system)

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Short description: Payments system provided by Block, Inc.
Square
Square, Inc. logo.svg
DeveloperBlock, Inc.
Launch date2009; 15 years ago (2009)
Websitesquareup.com

Square is a payments system developed by Block, Inc. Square is a payments platform aimed at small and medium businesses that allows them to accept credit card payments and use tablet computers as payment registers for a point-of-sale system.[1]

History

The original inspiration for Square occurred to Jack Dorsey in 2009 when Jim McKelvey (a friend of Dorsey) was unable to complete a $2,000 sale of his glass faucets and fittings because he could not accept credit cards.[2]

At the TechCrunch Disrupt conference in May 2011, Square announced the release of two new apps, Square Card Case (later rebranded as Square Wallet)[3] and Square Register. Square Wallet, before it was removed from the Apple App Store and Google Play Store in 2014, allowed customers to set up a tab and pay for their order by providing their name (or a barcode) using a stored credit, debit, or gift card.

In August 2012, Starbucks announced it would use Square to process transactions with customers who pay via debit or credit card.[4] In February 2014, Whole Foods Market announced it would use Square Register in select stores' sandwich counters, pizzerias and coffee, juice, wine and beer bars.[5]

In June 2013, the firm launched Square Market, which allows sellers to create a free online storefront with online payment processing functionality.[6] In March 2014, the firm announced it will start allowing sellers to accept bitcoin on their own storefronts through Square Market. The seller will take no risk on bitcoin value fluctuations.[7]

Devices

Square Reader

In 2010, the Square device communicated with the Square app through the phone's audio jack.

The Square Reader was the firm's first product. It accepts credit card payments by connecting to a mobile device's audio jack. The original version consisted of a simple read head directly wired to a 3.5 mm audio jack, through which unencrypted, analog card information was fed to smartphones for amplification and digitization.[8]

In April 2012, rival payment company Verifone claimed that the Square system at the time was insecure and that a reasonably skilled programmer could write a replacement app which could use the Square device to skim a credit card and return its details, because of the lack of encryption. VeriFone posted a demonstration video and sample skimming app to its web site.[9] Dorsey called VeriFone's claims "neither fair nor accurate", noting that all card data can also be compromised by visually examining the card and that even if there were a compromise, card issuers offered fraud protection.[10]

Square introduced strong encryption on its devices,[11] and neither card numbers, nor magnetic stripe data, nor security codes are stored on Square client devices.[11] The current technology is Payment Card Industry Data Security Standard (PCI) compliant and Verisign certified.[11]

As of March 2013, Square provided its magnetic stripe card readers to users for free.[12] Square charges $99 for Square Stand and $29 for its chip-based Square Reader.[13] The Square app is also freely downloadable from the App Store and the Google Play Store.

In May 2013, the firm announced that its mobile payments service was available in Japan after agreeing to a partnership with Sumitomo Mitsui Card Corporation. The fee for transactions would be 3.25% in Japan.[14] It launched in the UK in 2017.[15]

In July 2014, ahead of the October 2015 EMV liability shift, the firm announced a card reader that would accept chip cards and contactless cards to supplement the standard Reader's support of traditional magnetic stripe card transactions.[16] In June 2015, Apple announced Square would release a new Reader capable of also accepting Apple Pay and other contactless payments.[17] In August 2018, Square released a version of its magstripe reader with a Lightning connector, allowing it to be used on iPhones without a headphone jack.[18]

Square charges a fee of 2.6% plus $0.10 on every electronically scanned credit card transaction[19] or 3.50% plus $0.15 per manually-entered transaction. There are no monthly fees or set-up costs. The firm claims that its costs are, on average, lower than the costs charged by conventional credit card processors.[20] Swiped payments are deposited directly into a user's bank account within 1-2 business days. In some instances, Square may withhold payments to its users pending issues related to chargebacks.[21] The firm also generates revenue from selling other services to businesses, including subscription-based products such as Customer Engagement, Square Payroll, and Square Register. For example, with Square Payroll, Square charges sellers a monthly fee of $20 plus $5 for each employee paid.[22]

Other devices

Square Stand at a coffee shop turned around for the customer to choose a tipping option

In June 2013, the firm unveiled Square Stand, which turns the Apple iPad into a more complete point-of-sale system.[23] In 2015, Square launched a bluetooth-connected reader that works for Android and iOS devices to accept chip and contactless payments through their platform.[24] In October 2017, a standalone point-of-sale system, Square Register, was announced for small to medium-sized businesses.[25] It consists of a merchant tablet and a customer tablet, with a built-in swipe, chip, and tap reader.[26] In October 2018, the company introduced a self-contained Terminal product that features a display, prints receipts, and accepts chip, swipe, and contactless payments.[27]

Services

In December 2012, Square began allowing merchants to issue virtual gift cards; a QR code is scanned from the customer's smartphone to use the funds.[28] Physical gift cards were added in the service in 2014.[29]

In 2013, Square launched Square Market, which enable business to accept online payments.[30]

In 2014, Square launched Square Capital, which offers business financing to merchants using Square.[31]

In 2014, an online booking tool was added to the firm's offerings, allowing small businesses to accept appointments on their website.[32] The service only accepts scheduled appointments based on a service provider's availability, and does not accept restaurant reservations.[33]

In 2015, the firm launched Square Payroll, a tool for small business owners to process payroll for their employees. The product, available in all 50 states + DC, automatically handles a business's withholdings, payroll payments, and tax filings.[34]

In 2018, Square began allowing merchants to develop custom interfaces for the platform, via an application programming interface.[35]

After receiving approval in 2020 from the FDIC and the Utah Department of Financial Institutions, the company announced plans to launch small business-focused Square Financial Services in 2021, based in Salt Lake City.[36]

Reception

Business Insider praised the product for its "ease of use, simplicity and elegance". Business Insider favorably compared Jack Dorsey with Steve Jobs for what they called his "entrepreneurial vision and charisma".[37][38] The Next Web praised Square's website, squareup.com, for its design and aesthetic appeal.[39] The product was also showcased at Apple's iPad 2 event.[40] GigaOM called the product a disruptive innovation.[41]

Banning firearms

In May 2013, Square announced it would no longer allow firearms-related transactions to be performed using its devices or software. The company amended its terms of service for retailers to ban sales of "firearms, firearm parts or hardware, and ammunition; or ... weapons and other devices designed to cause physical injury". The company denied that this move was related to the increased debate over gun control.[42]

Controversy

In June 2019, The Wall Street Journal reported that Square inadvertently sent transaction receipts to the wrong email address, leading to adverse consequences such as outing one woman's impending divorce.[43]

A Canadian food truck which sold Cuban coffee faced a loss of C$14,000 because transactions were processed through a Canadian subsidiary of Chase Manhattan Bank, contracted by Square to handle its Canadian accounts. As the parent company is governed by US laws, the bank would have been subject with charges of trafficking in prohibited Cuban goods if it had processed the fund transactions.[44]

Square marks certain merchants as high risk, a designation that can come suddenly and without warning. Merchants classified as risky can have 20-30% of the funds they acquire withheld to handle chargebacks and disputes, preventing merchants from withdrawing all their earned revenue. Square has received criticism from affected merchants due to the opaque nature of the process, its suddenness, and difficulties in appealing the designation.[45][46]

See also

References

  1. ↑ "How Does Square Work? The Beginner’s Guide To Square For Small Business" (in en). 2019-07-16. https://www.merchantmaverick.com/what-is-square/. 
  2. ↑ "Square Brings Credit Card Swiping to the Mobile Masses, Starting Today". May 11, 2010. http://www.fastcompany.com/1643271/square-brings-credit-card-swiping-mobile-masses-starting-today. 
  3. ↑ Harrison Weber (June 13, 2013). "Square Wallet for iPhone gets redesigned with a visually-driven UI and streamlined payments". https://thenextweb.com/apps/2013/06/13/square-wallet-for-iphone-gets-redesigned-with-a-visually-driven-ui-and-streamlined-payments/. 
  4. ↑ Miller, Claire Cain (2012-08-08). "Starbucks and Square to Team Up" (in en-US). The New York Times. ISSN 0362-4331. https://www.nytimes.com/2012/08/08/technology/starbucks-and-square-to-team-up.html. 
  5. ↑ "Whole Foods signs on to use Square" (in en-US). Washington Post. ISSN 0190-8286. https://www.washingtonpost.com/business/economy/whole-foods-signs-on-to-use-square/2014/02/14/888f7b4c-933e-11e3-b46a-5a3d0d2130da_story.html. 
  6. ↑ "Square Market launches, provides easy online storefronts for small businesses" (in en). https://www.engadget.com/2013-06-26-square-market-launches.html. 
  7. ↑ Protalinski, Emil March 31, 2014. TheNextWeb "Square now lets sellers accept Bitcoin on their own storefronts"
  8. ↑ "Inside the Square Reader". Protean Payment. http://proteanpayment.org/?p=45. 
  9. ↑ Hsu, Tiffany (March 9, 2011). "Square's mobile credit card reader easily hacked, says VeriFone". Los Angeles Times. http://latimesblogs.latimes.com/technology/2011/03/squares-mobile-credit-card-reader-easily-hacked-says-verifone.html. 
  10. ↑ Olivarez-Giles, Nathan (March 10, 2011). "Square answers VeriFone's accusations on security of mobile credit card reader". Los Angeles Times. http://latimesblogs.latimes.com/technology/2011/03/square-answers-verifones-accusations-on-security-of-mobile-credit-card-reader.html. 
  11. ↑ 11.0 11.1 11.2 "Square - Security". Squareup.com. https://squareup.com/security. 
  12. ↑ "Free Credit Card Reader". Block, Inc.. https://squareup.com/reader. 
  13. ↑ Lunden, Ingrid. "Square Eschews Free, Starts $29 Pre-Orders For Chip-Based Card Readers". Techcrunch. https://techcrunch.com/2014/11/12/square-emv/. 
  14. ↑ Davies, Chris (May 23, 2013). "Square mobile payments go live in Japan". Slash Gear. http://www.slashgear.com/square-mobile-payments-go-live-in-japan-23283285/. 
  15. ↑ David Grossman (2 January 2018). "Bank branch closures: How one town has coped". BBC News. https://www.bbc.co.uk/news/business-42541146. 
  16. ↑ Marcus Wohlsen (July 30, 2014). "Square Bets Big on Next-Gen Credit Card Tech". Wired. https://www.wired.com/2014/07/exclusive-square-bets-big-on-next-gen-credit-card-tech. 
  17. ↑ Natt Garun (June 8, 2015). "Square will launch its Apple Pay-compatible wireless reader this fall". Next Web. https://thenextweb.com/gadgets/2015/06/08/square-will-launch-its-apple-pay-compatible-wireless-reader-this-fall/. 
  18. ↑ Fingas, Jon (29 August 2018). "Square finally has a Lightning card reader for newer iPhones". Engadget. https://www.engadget.com/2018/08/29/square-finally-has-a-lightning-card-reader-for-newer-iphones/. 
  19. ↑ "Square's Fees". https://squareup.com/help/us/en/article/5068-square-s-payment-processing-fees-and-pricing. 
  20. ↑ "Square - Pricing". Block, Inc.. https://squareup.com/pricing. 
  21. ↑ Fast deposits intoyour bank account. (June 25, 2013). "Square Merchant Agreement". Block, Inc.. https://squareup.com/legal/ua. 
  22. ↑ Spector, Nicole. "Square Launches Payroll, Expanding Suite of Services for Small Businesses". Street Fight. http://streetfightmag.com/2015/07/02/square-launches-payroll-service-expanding-suite-of-services-for-smbs/. 
  23. ↑ Terdiman, Daniel. “At Square, an obsession with the 'magic' of hardware design”, CNET, June 13, 2013.
  24. ↑ "Square Will Launch An Apple Pay-Ready NFC And Card Chip Reader This Fall" (in en-US). TechCrunch. https://techcrunch.com/2015/06/08/square-apple-pay/. 
  25. ↑ Yurieff, Kaya (30 October 2017). "Square unveils cash register of the future". CNNMoney. https://money.cnn.com/2017/10/30/technology/square-register/index.html. 
  26. ↑ Liao, Shannon (30 October 2017). "Square made its own payment register". The Verge (Vox Media). https://www.theverge.com/2017/10/30/16572864/square-register-new-buying-coffee-what-new-tablet. 
  27. ↑ "Square takes on the clunky old-school payment terminal" (in en-US). Fast Company. 2018-10-18. https://www.fastcompany.com/90253151/square-takes-on-the-clunky-old-school-payment-terminal. 
  28. ↑ Thomas, Owen (December 10, 2012). "Square Now Offers Gift Cards, Thrusting It Deeper Into The Money Business". Business Insider. http://www.businessinsider.com/square-offers-gift-cards-2012-12. 
  29. ↑ McCracken, Harry (November 18, 2014). "Now Square Lets Its Merchants Sell Gift Cards". Fast Company. https://www.fastcompany.com/3038696/now-square-lets-its-merchants-sell-gift-cards. 
  30. ↑ Malik, Om. "Square Market is attracting sellers that have never taken a Reader payment". https://gigaom.com/2013/10/31/square-market-is-attracting-sellers-that-have-never-taken-a-reader-payment/. 
  31. ↑ "Square's cash advance: Don't call it a loan". CNN. May 28, 2014. https://money.cnn.com/2014/05/28/technology/mobile/jack-dorsey-square-capital/. 
  32. ↑ Perez, Sarah (August 11, 2014). "Square Targets Small Business With Launch Of Online Booking Tool "Square Appointments"". TechCrunch. https://techcrunch.com/2014/08/11/square-targets-small-business-with-launch-of-online-booking-tool-square-appointments/. 
  33. ↑ Baldwin, Roberto (August 11, 2014). "Square introduces Appointments online scheduling system for small businesses". The Next Web. https://thenextweb.com/insider/2014/08/11/square-introduces-appointments-system/. 
  34. ↑ "Square feels your pain, debuts payroll service". San Francisco Business Times. June 30, 2015. http://www.bizjournals.com/sanfrancisco/morning_call/2015/06/square-payroll-processing-service-small-business.html. 
  35. ↑ Kastrenakes, Jacob (2 August 2018). "Square checkout systems can now have custom interfaces". The Verge (Vox Media). https://www.theverge.com/2018/8/2/17640310/square-custom-checkout-interface-reader-sdk. 
  36. ↑ Fuscaldo, Donna (March 18, 2020). "Square Gets The Nod To Operate A Bank". Forbes. https://www.forbes.com/sites/donnafuscaldo/2020/03/18/square-gets-the-nod-to-operate-a-bank/. 
  37. ↑ Dan Frommer (June 7, 2011). "Jack Dorsey, Apple CEO? Probably Not". Business Insider. http://www.businessinsider.com/jack-dorsey-apple-ceo-2011-6. 
  38. ↑ "Is Jack Dorsey The New Steve Jobs?". June 2, 2011. http://www.simplyzesty.com/twitter/is-jack-dorsey-the-new-steve-jobs/. 
  39. ↑ "Function is nothing without beauty: 10 sites doing it right". July 10, 2011. https://thenextweb.com/dd/2011/07/10/function-is-nothing-without-beauty-10-sites-doing-it-right/. 
  40. ↑ Rao, Leena (March 2, 2011). "Square Now Processing $1 Million In Mobile Payments Per Day". https://techcrunch.com/2011/03/02/square-now-processing-1-million-in-mobile-payments-per-day/. 
  41. ↑ "Jack Dorsey on Square, How It Works & Why It Disrupts". December 1, 2009. http://gigaom.com/2009/12/01/jack-dorsey-on-square-why-it-is-disruptive/. 
  42. ↑ Sperry, Todd (May 13, 2013). "Mobile-payment service Square blocks gun sales". CNN. https://money.cnn.com/2013/05/13/technology/square-guns/. 
  43. ↑ Rudegeair, Peter. "Square Sends Millions of Digital Receipts, Sometimes to the Wrong Person". The Wall Street Journal. https://www.wsj.com/articles/square-sends-millions-of-digital-receipts-sometimes-to-the-wrong-person-11559640601. 
  44. ↑ Rubin, Josh (2 October 2019). "T.O. food truck caught up in Trump's battle with Cuba". Toronto Star. https://www.thestar.com/business/2019/10/02/toronto-food-truck-caught-up-in-trumps-battle-with-cuba.html. 
  45. ↑ Keyes, Daniel. "Square is under fire for withholding funds from merchants". Business Insider. https://www.businessinsider.com/square-withholding-money-from-merchants-amid-pandemic-2020-6?. 
  46. ↑ Ray, Siladitya. "Square Is Withholding Up To 30% Of Payments Made To Some Merchants". Forbes. https://www.forbes.com/sites/siladityaray/2020/06/23/square-is-withholding-up-to-30-of-payments-made-to-some-merchants/?sh=40eff67d4130. 

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