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Comment by CodeMage | Hacker News Reader

Every time someone talks about Square, they call their service "disruptive". Sorry if I'm being dense, but what is it that they're disrupting?

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Nothing. Square further propagates the status quo (plastic cards). There's no disruption involved. That's why Visa is an investor.

It looks more like a trojan horse to me.

If they become the new merchant-interface, there's nothing stopping them from offering an alternate payment mechanism that doesn't rely on credit or debit cards.

Nothing stopping them- until Visa buys them.

Building the technology that could support Visa/MC/Amex alternatives and the userbase that gives it critical mass is probably the best way to get bought out by Visa/MC/Amex at an inflated price. No one says they actually have to ship their alternative payment system.

I'm an engineer at Square, so I can neither confirm or deny such speculation ... but in an interview with Wired, CEO Jack said "People understand credit cards. They know exactly what to expect from them. They’re used everywhere. But Square is payment-device agnostic. It doesn’t matter how you pay. Some of our users accept only cash." http://www.wired.com/magazine/2011/05/mf_qadorsey/all/1

Why not accept FaceCash then? The rate is 1.5%, much lower than what you charge now.

Well, whatever they offer it won't be NFC.

It can't. They still have to deal with acquirers, credit card issuers, and banks. No escaping that.

Besides their existing partners and infrastructure.

They're disrupting cash register manufacturers, not card issuers.

They are still a long way from that.

So does that mean for example starbucks will buy iphones and ipads and pay monthly fee for data plans and use iphone as their cash register?

Starbucks already has wifi. Don't most payment processors use some sort of Internet connection these days?

I would hope they are connected via a network cable, not wifi.

You hope the iPhone or iPad doing the payment processing with the Square device is connected via network cable? I'm afraid I have some disturbing news for you.

You hope the iPhone or iPad doing the payment processing with the Square device is connected via network cable?

No. I was replying to this...

Starbucks already has wifi. Don't most payment processors use some sort of Internet connection these days?

I think some, but not all, will pay data plans. Square doesn't require a data plan, as evidenced by it being compatible with the iPod Touch, which has no radio:

> Requirements: Compatible with iPhone, iPod touch, and iPad. Requires iOS 4.0 or later.

http://itunes.apple.com/us/app/square/id335393788?mt=8

Ipod touch has wifi.

That's one way to look at it.

Another is that Visa believes that Square is a threat, thinks they may be successful and has invested to mitigate that threat, get visibility into their activities, and so on.

The abusive, overly-expensive and often insecure cartel of payment terminal/merchant account service providers.

I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?

You are not their target customer.

If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.

I guarantee that you don't have 1.79% + 22 cents for all transactions. You've got tiered pricing, which is mostly a bait and switch scam. http://feefighters.com/blog/tiered-pricing-for-merchant-acco...

If you'd like, you can email me your statement and I'll tell you what you're really paying

That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.

How exactly are they disrupting that? They are significantly more expensive than my merchant services provider.

The only place they may have an edge is low volume, low price, transactions.

Disruptive technologies generally target early adopters first at a higher cost. Then once they move to a more mainstream market the prices drop.

Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology

What kind of process did you go through to get your merchant account?

What kind of process does one go through to set up a Square account to take payments?

I believe those types of comments are referring to Square drastically lowering the barrier of entry for accepting credit card payments.

I imagine they must be making some vague reference to 'the status quo', nothing more

Then you'd imagine incorrectly – see above, there's an entire industry around accepting payments for goods and services. The economics are often terrible and the UX sucks for everyone. Square is disruptive because it's better for everyone – the merchant and the customer. The only one getting screwed for a change is the payment processor. Hence, disruption.

About time, too.

How is the processor "getting screwed" here? Again, for a great many businesses Square is the (significantly) more expensive option.

I get that they're killing it at craft fairs, but I'm the with the thread-parent...I don't see what the "disruption" is here.

*edit: Re-reading this I realize that it seems like I'm implying that Square is a bad product... which isn't what I'm saying. I think they're going to make insane amounts of money (I'd invest in them given the chance). They can be huge without being truly 'disruptive', however.

I showed the Square reader to my hippie friend who sells hand-made jewelry in an outdoor booth at a beach resort. He thought it looked pretty cool, and was seriously considering buying an iPhone and service plan just to use it. At his usual transaction size and volume, traditional credit-card payment systems weren't that great a prospect. That's what a disruptive technology does.

Setup is effectively free and incredibly easy. They're disrupting the gorillas of merchant services, by tapping into a market that your Visas, MasterCards, AMEX haven't been able to get to: local, small business owners.

It's disruptive because it changes the customer demographics for some of these businesses and the way they think about payments (customer analytics, payment options, loyalty programs).

Square is poised to gain market share very quickly AND there's a huge play to be made in emerging markets where the mainstream guys haven't found great traction and smartphone usage is growing rapidly.

Getting a pseudo-merchant account and a swiper for $0 could be fairly disruptive. It's a massive, very customer-unfriendly, very entrenched indusstry.

You gotta disrupt to get ahead. This can only be achieved after rejection therapy and pivoting.

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