[the_grind]

What prevents competitors from creating their own app that does this? If this takes off and Square charges X percent, I assume that Competitor Y will develop a similar app and charge X-z percent. I'm having a hard time seeing the barriers to entry for this particular approach.

[shalmanese]

Because they own the POS. You can theoretically have multiple apps installed on your phone but a store is only going to be running one piece of POS software. Because Square got a toehold into the POS market, they can leverage this for network effects. Stores are going to want the POS with the most users installed, users are going to want the card case accepted by the most POS systems.

[pbreit]

It's almost impossible to get slotted in to the point-of-sale. Anyone able to do it has a massive advantage.