[zbrock]

I think you underestimate the complexity of the payments space. It's pretty heavily regulated by the federal government (OFAC, AML), the payment card companies (MATCH, PCI) and local governments (MTLs, tax laws). Going through the audit process for PCI in particular is pretty rough. On top of that, designing, building and mass-producing a physical device affordably is pretty tough to do.

All that being said, you should definitely give it a shot. Working on payments technology is a blast.

[acgourley]

Well you're right that I know nothing about the regulation aspect of it. But I do know a thing about the hardware production side of things (what my startup is doing). I know enough to say that an existing player in the credit card processing space (regulation problem solved) could find consulting shops to build a audio-port credit card scanner for them. Or 30 pin connected scanner. Or usb connected scanner.

And while I doubt they would have a brilliant product design like Square has, they only need to charge slightly less per transaction to get merchants on board.

[defen]

I think you're committing a fallacy that's common when people analyze startups - just because a company "could" do something - based on your outside perception of their resources and goals - doesn't mean that they will. As I'm sure you know, mass-producing a consumer electronics device is an entirely different ballgame than paying a consultant shop $20K to make a working prototype. For an existing player to do this would require strong leadership from the top, in order to get buy-in from every level of the organization; hiring of key personnel who are skilled in a field that is outside the company's core competency; money for salaries, product development, marketing, etc.

Why didn't Intuit just build a better Mint? Or Google a better Youtube? Or Salesforce a better Heroku? Surely they "could" have done those things?

[acgourley]

I understand what you're saying, and I would never have claimed the same about Mint or Heroku (okay, I may have for YouTube).

I think your argument hinges on the square device being complex. Let me break down what's inside:

A piece of plastic, a single sensor, 2 wires, and a 3.5mm jack. That's not exactly "consumer electronics".

And yes there are consultant firms who could drive the entire production of this device, from design to production, for a large company that can't rally the internal resources.