This summer, you will be able to turn your cell phone into a credit card swipe machine. Jack Dorsey, creator of Twitter, has created the Square, a tiny square-shaped (of course) doohickey that plugs into an iPhone and can read the magnetic stripe of credit and debit cards.
The Square uses an app to transfer the credit card information and get authorization instantly, just like those clunky card readers used at retail stores.
Square’s big advantage compared to in-store readers will be that it doesn’t involve any up-front contract, merchant fees or monthly fees. Square has announced it will sell the software for just $1, and mail the doohickey free.
We’ve seen different reports on how much Square will cost to use, and the company hasn’t released official numbers yet. But most sources put it at between 2.75% and 2.9% of the value of each purchase, plus a 15-cent charge. Its small size and low barriers to purchase are designed to entice owners of small businesses like dog walkers, artists and Craigslist sellers, who may not want to deal with the expense and contracts of current payment systems. The types of transactions Square does not condone (and may withhold payment for), to name a few: illegal activities, bankruptcy attorneys, escort services, credit repair agencies and – for what it’s worth – occult materials.
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Image courtesy of Square Inc.