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16/03/2010 -
When Twitter co-founder Jack Dorsey announced his new mobile debit and credit card processing company, Square, in December 2009, the potential implications for the payment processing industry were huge. However, were they real?One payment processing industry expert, Aneace Haddad, thinks not, doubting that Square really poses a threat to the traditional setup of merchant account and POS terminal.
In an op-ed for Pymnts.com, Haddad reported that Square - which allows customers to pay for a transaction using a device that features an audio input jack, turning something like a mobile phone into a payment terminal - may be an "unnecessary diversion" to VeriFone with regard to industry competition, as the startup's foundation is not particularly solid.
Specifically, Haddad reported that the driving force that would compel customers to use Square instead of a typical terminal is not powerful enough, because they will likely have to carry their wallets anyway.
In addition, an entrepreneur should be able to answer the question, "why me?" to identify what makes him or her particularly qualified to launch this venture. Dorsey's only real qualification, said Haddad, was that he was already successful in the Silicon Valley community because of his role in the founding of Twitter - which has nothing to do with payment processing.
Until Square can solve these questions and present a solid value proposition to businesses and customers - and until the security implications are fully realized - merchants should likely stick with their POS terminals and merchant accounts.
