Jack Dorsey on Square, How it Works & Why it Disrupts

Here's what I don't get about this: the physical swipe is already obsolete.

You can just type in a credit card number, address, CCV, and expiration date once into say the Apple Store and then buy stuff from them with one click from that point on. The same is true for Amazon and Paypal and lots of other cos. And you can do it on your iPhone today.

So there is no reason why you can't just have a Paypal app on your iPhone which has two fields: email of the person you want to pay and amount to send. Type that in and everything is done on the server. No hardware dongle or physical proximity needed, you can deploy everything in software.

Starbucks or the like could have a simple mobile web site ordering interface. Maybe use some geolocation to determine when you're in a store, but otherwise use their existing corp website and ecommerce backend.

Some might argue that the dongle gives more security -- but it's weird that you would want MORE transactional security (physical card swipe) when you can see the person than when they are ordering over the web.

that said...I guess this might have some advantages for people receiving payments, as a swipe is quicker than getting your customers to input their info. Also might be faster for payers who buy a lot of stuff online from different merchants and don't save their cc info with them. I guess one would have to know how cheap mobile credit card swipers are today.

I think this technology is awesome and has a lot of potential, but I don't know if it is easily defensible against the giants like motorola and verifone.

How easily can these companies come up with software and a headphone jack that does the same thing? Most importantly they got a huge distribution channel with all those nokia phone and point of payment device users currently using their existing product.

So if these companies do come out with a product that copies square they can quickly roll it out faster to a market they already have an establish presence in.

This device has huge potential in emerging markets FYI.

Also, in the end I think one of larger companies will buy Square out after a couple of years.

The technology isn't the problem, the finances is the problem. Credit card companies are loaning money. If people don't pay, then they get mad. If sketchy people on the street are using this device and then the consumer says, "I got ripped off" and refuses to pay then the credit card companies are going to put an end to this pretty fast.

Paypal had the same issue. They got around it eventually, but there were still barriers to using paypal. How are these guys going to keep out the riff raff?

I'm curious as to how Square will handle chargebacks and disputes. Also, any details on their fee structure?