[patio11]

That is what disruptive innovation looks like. "Oh look, a multi-billion dollar problem people were trying to solve by getting two sides of the market to simultaneously ubiquitously install new hardware. How about we solve it with stuff they already own plus new software instead?"

[tansey]

What's even better about Card Case is that you don't need every retailer to have it for it to be useful. The example they show in their demo video is perfect: going to your regular coffee shop. If just that coffee shop supports it, Square is already solving a huge headache for both the customer and the merchant. The customer gets easier payments and a more personalized experience; the merchant reduces transaction friction and time, while increasing customer loyalty.

Brilliant.

[maximusprime]

Because it's stupidly insecure, unregulated, won't reach mass adoption etc?

[vidarh]

Credit cards are stupidly insecure. Last I heard, a few years ago you could buy blocks of thousands of valid, tested credit card with CVV2 values for about the cost of a coffee. Credit cards works because the banks are willing to stretch far to block fraudulent transactions or take them off the bill because having you trust the card makes them lots of money.

The same will be the case here: Unless the fraud takes on truly endemic proportions, far higher than for credit cards, they'll just eat the cost.

[T-hawk]

It's not out of goodwill that the banks will eat the cost of fraud or work hard to prevent it. Banks do this to protect their own pockets, because (US) law says that customer liability for credit card fraud is limited to $50 and anything beyond that is the bank's loss.

For a counterexample, see Paypal. Paypal's unresponsiveness to fraud situations is legendary, because it's not their money at stake and as legally-not-a-bank they can simply stick their customers with the loss. (Paypal's customers are merchants, I don't mean end-consumers here.)

Getting back to Square, as long as they're not regulated like a bank, they will in the long term become more like Paypal in dealing with fraud. The founders may be able to delay or mitigate this with a strong organizational commitment to customer service, but that would be pretty unprecedented in the financial industry; the bottom line always looks better when the corporation can push fraud costs off of itself.

[Saavedro]

Adoption I can see being an obstacle. But I don't see this being particularly insecure.

[_urga]

If the product is right, if it serves people well, adoption will be limited only to that which Square can support.

[thinkcomp]

I respectfully disagree. This is what an investment from Visa looks like with really good design. Not everyone was trying to get both sides to adopt new hardware, either.

As long as Square uses cards for funding, it will be robbing the poor to pay the rich just like every other card company. To me, "disruptive" in the payments world means no cards, period.

[lazerwalker]

You don't think moving people away from physically using cards for the transactions is a big first step?

With the transaction taking place without any physical handling of any paper or plastic, using a card as a payment source is just an implementation detail. It'll be trivial in the future for Square to add alternate funding sources without any pain to the user, and in the mean time it drives adoption because people are already used to the idea of giving Square their credit card info.

[reissbaker]

What were the non-hardware non-card payment methods attempted? I'm familiar with NFC, and somewhat intimately familiar with Square and its card-based rivals, but the only alternatives I know of are those pay-through-your-carrier attempts that are an even bigger can of worms than a card company. Were there others?

To reference your Visa point (which I suspect wasn't serious), Square was card-based long before the Visa investment.

[thinkcomp]

Starbucks (for payments) and the airlines (for boarding passes) have done pretty well with barcode scanners. It requires hardware only on the merchant side than most merchants already have in one form or another.

[reissbaker]

Er. But unless you've given Starbucks direct access to your bank account, those are fundamentally card-based too.

[thinkcomp]

Not quite. Starbucks uses its own pre-paid system that does use a plastic card, but one without any major network's logo on it. It's just store credit.

[vidarh]

So worse than both cash and cards - suddenly you have to have small balances sitting on multiple proprietary cards. No thanks.

[corin_]

And in America (I believe - last I heard it was rolled out in some American cities but not others, nothing here in the UK) the iPhone/Android/Blackberry(?) apps let you manage your account balance, and you hold up your phone for the cashier to scan the barcode off your screen.

[dpark]

And why exactly do you imagine that Square couldn't debit directly from a checking account in the future (as the article mentioned)?

[thinkcomp]

Because they don't have any money transmitter licenses and it will take them a few years to get them.

[mbreese]

You're seriously still beating this horse?

Why couldn't they partner with another institution that already has the appropriate licensing? Or, alternatively, they seem well enough funded to be able to post the appropriate bonds.

I get your position, but with the constant whining, you're not winning over people.

[thinkcomp]

First, I'm not trying to win you over. I'm trying to get a license, as is my right.

Second, a lot of people consider the particular fight I've chosen to pick fairly important, as it would do a lot to corrode the monopoly that banks hold on payment processing. So one person's whining is apparently another's heroic battle (not my words).

Third, the issue of money transmission licenses is also directly relevant to this particular topic.

[mbreese]

I get it, I really do. I also think that freeing up the financial industry is needed. I'm not convinced that your way is the right one, but I'm not opposed.

But I'm worried that you are starting to get into RMS territory... that most of what I read from you here is on this one issue, from a very distinct viewpoint. I'm not saying you're wrong (or that RMS is), just that such a myopic view isn't always the best way to win people over to your viewpoint. Even worse, you risk people tuning you out.

Maybe I'm just getting a sample bias because your most recent posts and comments have been on transmission licenses.

[dpark]

Hence the phrase "in the future". There's no way that Square doesn't see this obvious step. It's probably already in progress.

Also I'm guessing that what Square currently does already requires a money transmitter license, since transmitting money is exactly what they do.

[thinkcomp]

Square does not currently require a license, and they have not yet applied for one in California.

[dpark]

Out of curiosity, where are you getting this info?

From a cursory look, I was under the impression that they would need a license in every state that they'd do business in.