[thechut]

I think this is it. Square probably means that as they read the bits from the reader they are being encrypted, then sent. Not stored and plain text then encrypted before being sent.

There are already plenty of examples of people hacking Squares[1], mostly to use them as credit card skimmers though. This is one of the coolest most creative hacks I have seen for it though, bravo.

[1] http://cranklin.wordpress.com/2012/01/04/hacking-the-square/

[joering2]

exactly! this was my initial feeling when I saw their first commercial. What stops an evil clerk of switching good square with tweaked one and collecting CC data all day long?

[evanlong]

What prevents the waiter at the restaurant from doing the same. I'd rather pay with card case or my phone in some way.

[shalmanese]

What's to stop an evil clerk from using his eyes to read the card? The credit card industry is designed from the ground up on the assumptions that the card is insecure. The only reason Square is adding encryption is due to a PR war by it's competitors, playing off consumer fear.