Squaring Mobile Payments

There’s a good chance you’ve heard of Square before. It’s the newest venture from Jack Dorsey, one of the co-founders of Twitter. The idea behind Square is pretty simple. Download an app for your mobile phone, and you can charge credit cards just about anywhere, with the only charge being a per-transaction fee. Square can also send you a tiny little credit card reader (for free), which reduces the transaction fee as it lowers the chance of fraud.

Pretty cool, right? Square’s been up and running for just about six months, but only recently became able to fulfill requests for readers en masse. The end result of Square is in a sense the democratization of credit card payments; anyone can use their credit card to pay for just about anything anywhere, with little to no hassle.

This is actually pretty similar to a system that’s been in use for a few years in Kenya called M-PESA (the m stands for mobile and pesa is Swahili for money). M-PESA allows individuals to transfer money and mobile phone minutes from one user to another, with little to no interaction with a traditional bank. As a result, financial transactions become location independent and easy to accomplish, since the system can piggyback upon existing mobile networks.

Using mobile phones as a payment device isn’t all that new though. In the U.S. they’ve been used to purchase ringtones and the like for some time, and they’ve acted as complete mobile payment solutions abroad for years. But what’s great about Square is that it could potentially open up the purchasing power of the U.S. consumer credit system to everyone – from independent artists to tiny companies to international charities.

Brings new meaning to the phrase “accepted everywhere,” doesn’t it?