Zgradis My .02 on anything

No Cash? No Problem!

In the past we've gone from trading goods to trading coins, then from coins to cash, now we trade with nothing but electrons.  Digital credit has changed the way the world does business.  While there are some downfalls with digital transactions, I'm only discussing the next 2-5 years of digital transactions on a personal level.  While the coin was actually invented back in about 660BC and widely used in the Persian empire, the Greeks and Romans used it as a widespread method of trade.  Archimedes determined the coin's value could be set based on the physical coin itself. The weight would stay constant, and even if the coin had been tampered with the coin was still made of some sort of metal.  This allowed the Greeks to cut down on counterfeited coins.  But today we have similar issues with credit cards, we need to ensure that the credit cards are not stolen or fake. The future is companies like Squareup.com a product for your iPhone in which you can take credit card payments anywhere you have cell service.

Digital Changes

Square, which is founded by Jack Dorsey (Twitter co-founder), is a company that is looking to use a small square dongle that you attach to your iPhone and the digital conversion from the magnetic strip gets converted to a digital signal the phone's special Square software can read.

These dongles cost next to nothing but allow a great new access to the mobile credit processing world.  Not only can small business use this product without all the expensive hardware associated with credit card machines, but it also will allow these small business to process transactions anywhere, giving GPS locations and a signature pad to the consumer and the business owner.  They can even email their receipts to themselves so that they don't have to print out cumbersome (and wasteful) receipts.

Security

The problem or fear many face with digital transactions is that of digital theft.  With Square, they require a digital signature which you sign with your finger, then it also takes into account your GPS location.  They are even working on a digital picture that goes along with the credit card (which it pulls from the credit card companies website) to confirm the person who's card it is actually resembles your customer (I used to be blonde and 150 lbs heavier, I swear!).  This is also more secure because a signature can be copied, while if an image of the cardholder is stored with the credit card company it becomes very hard to replicate in the real world. Some  newer cards even have images stored in an RFID chip on the card itself.

Even the signature can be improved to include a tip or perhaps even in the future show a image of the company your purchasing from (almost like a PayPal verified merchant).

Uses

As a guy who primarily uses a credit card, I sometimes find it hard to go out with friends without cash because the restaurants always have an issue with taking my credit card.  So it would be really nice to have this for myself as a form of fund transfer You can already do this with PayPal by transferring funds to friends or family, but its a hassle and the person needs to have a PayPal account.  If you could eliminate that issue and allow them to take payment via a credit card, you could take payments virtually, from any of your friends.  Or you could also take payments from a group of people for something like dinner, or even an event your having (IE a house party).  The restaurant won't split the check?  Won't take more than one credit card?  Have everyone just swipe your card and give me your share.  The one issue I see with this type of fund transfer is the credit card companies are in it for the money, they want a percentage of the money being exchanged.  So this percentage is passed on to you as the owner of the credit card processor (Square).  It's usually a small amount, something usually under 3%, but for something you trade with a friend (perhaps you bought your friends TV), is now a digital transaction in which you lose 3%.  Not that big of a deal on $10, but on $1000 3% is now $30 lost.  Plus any other fees they charge you monthly for using the service (usually with transactions or not).  If they can somehow overcome this issue of charging for personal transactions (which I highly doubt they will), maybe then this ideal will be a bit more functional for the public as a form of fund transfer. (Please note, at the time of this article, they have not officially announced how the payment structure will be so I am unsure of the exact numbers)  But the really nice thing is there isn't a charge from the company for hardware or from what I understand software.

For now this gives small merchants a VERY easy way to take digital purchases.  I'd even be ok with giving this to my very non-technical mother to use for her business.  Easy to use products are key if you want to capture a large portion of the market.  I'll leave you with a video of Kevin Rose and his YouTube video of the use of the Square product.

P.S. Don't forget to check out the Square website

Related Links:

https://squareup.com/

http://www.engadget.com/2010/01/18/square-payment-dongle-demoed-for-iphone-toting-hippies-and-you/

http://en.wikipedia.org/wiki/Currency

http://en.wikipedia.org/wiki/History_of_coins