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Is anyone aware of any direct competition in the credit card "scanning" space?

FirstData is king. Huge market share.

There's also FaceCash by Think Computers/Aaron Greenspan[1].

[1] http://news.ycombinator.com/user?id=thinkcomp

I mean, there's Square... but they use a hardware piece. I'm interested to understand why the hardware piece is better than the photo scanner. Is it more secure? More reliable?

I might be wrong, but I seem to recall that credit card companies charge less in fees for magnetic strip readings than just entering in the number, which the photo scanner would be analogous to.

No, you're right :) Swiping a card makes it a card present transaction, which have lower rates than keyed entry. Some processors will even shut you down if too many of your transactions are keyed (worried about fraud).

From what I can tell, this just does the scanning and doesn't actually process the transaction though? Could be wrong on that. Also, 15 cents per scan seems expensive.

At the same time it's possible that they cut deals with the processors to be certified in some way, so that if the numbers are retrieved using their service the card is considered present.

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