Twitter founder's new venture is shaping up
Jack Dorsey's new start-up, Square, will allow anyone with a cellphone or iPod to accept credit card payments, even from a friend who owes you for dinner.
Jack Dorsey, who has developed a way for anyone to accept credit card payments using their cellphones, records a video before he throws out the first pitch at a St. Louis Cardinals baseball game in September. (Chris Lee / St. Louis Post-Dispatch / September 18, 2009)
Twitter was just the beginning. After dreaming up the innovative social-networking medium, Jack Dorsey is looking to revolutionize another core aspect of society: money.
Dorsey, the founder of Twitter, has announced that his new start-up, Square, has developed a way for anyone with a cellphone or iPod to become a merchant and accept credit card payments.
Square is a small plastic device that plugs into a gadget's headphone jack. Buyers swipe their credit cards through the device, which then transmits the payment data to an application running on a connected iPhone or iPod Touch. (Android and Blackberry apps are in development, and computer software will be available later.)
A select few cafes and small vendors are among Square's first beta testers. Intelligentsia Coffee & Tea in Venice will be one of the first in Southern California, starting as early as next week.
Dorsey wants everyone to begin using Square early next year.
"I think we're going to give the Squares away for free because they're pretty cheap for us to make," he said in a telephone interview from San Francisco this week. But in an e-mail later, he said Square "may charge $1 for the app."
Once the company begins producing the hardware, people will be able to sign up for an account, enter a shipping address on the site and receive a device in the mail. Like PayPal, profiles are tied to a bank account.
Dorsey envisions the service replacing virtually every cash transaction. Let's say a friend owes you $30 for dinner last week, but there's no ATM in sight. Grab the Square device from your key chain, plug it into your phone and tell him to pay up.
Then there's the untapped market on Craigslist. The free and ubiquitous classified ad website "is doing more transactions than EBay today and has no inherent payment mechanism," Dorsey said. "It's a huge market for us."
The payment system is secure, Dorsey said. Transactional data is safely encrypted, and the credit card information is never stored on the device, only passed along, he said. Signatures are drawn with a finger on the touch screen.
Buyers with a Square profile can set their photos to display on the vendor's screen to thwart identity thieves or daughters with a penchant for "borrowing" plastic. (It won't stop your twin from charging things to your card, though.)
Even the e-mail address and phone number a customer is asked to enter during the sale is invisible to the seller. It's only used to transmit the digital receipt, which can include a logo and links to the retailer's website or Twitter page.
What's the catch? Well, Dorsey has a hidden agenda, albeit one shared by many: He's sick of cash.
"I, for one, hate getting change," Dorsey said. "I just can't stand it."
The current credit card system isn't without its faults, either.
"I get so annoyed when people give me a paper receipt for something that was like $5," he said. "There's nothing that I would do with that receipt."