Square deal turns Apple iPhone into iWallet

By Jonny Evans

Square Inc. has introduced a new app which turns your iPhone into a wallet -- and an iPad into a payment terminal, perhaps destined for Apple retail stores. Even better, it hasn't required use of Near Field Communications, at least, not yet.

What a card

Square announced a new service which lets consumers pay for things they want just by giving their name to the merchant. The solution consists of Card Case for consumers and Register for merchants.

The idea is to make cash registers and point-of-sale terminals obsolete. You might consider this puts the company up against Apple in the evolving payment systems market, however, I can't help but see some potential 'synergies' between the two firms. Perhaps we'll find out more about these. Apple's new iPad-happy stores will inevitably add more features as time moves forward, you might call it 'Retail 2.0', this is at least an emerging sector.

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Merchants can update their inventory in real time, add specials and remove out-of-stock items. You can also watch customer behavior.

Someone should tell Groupon

Shoppers use the Card Case app, which lets them see a list of nearby Square dealers (Square Deals? Don't you just love the sound of future product expansion... Groupon should be worried.)

"Cash registers and credit card terminals are relics of an expensive, complicated, and impersonal commercial transaction system," said Jack Dorsey, CEO of Square in a statement. "With Register and Card Case, we're transforming everyday transactions between buyers and sellers into something special," said Dorsey.

"We revolutionized the payment industry with the Square card reader which makes it possible for anyone to accept credit cards on their phone," said Dorsey. "Now, with Square Register, we?re reinventing point of sale with a beautiful, intuitive iPad app. Card Case goes beyond point of sale to transform the entire buyer-seller relationship."

More: merchants can set things up to send nearby Card Case users offers and discounts to tempt them to the shop, and, because customers will have already registered their credit card with Square, they'll be able to simply walk into a shop and wave their iPhone (and say their name) to pay for what they want.

What do you call 'secure'?

Solutions like these are driving us to a discussion about security. When it comes to mobile payments, I'd like to see stronger security. At present under Square's model you need to be a registered customer to pay for stuff with the app. You need to show up (by name) on a list which the merchant can see, and the merchant also gets to see an image of the customer.

Security is a constant challenge, and the solution as is must be considered a starting point, but I can't help but feel that eventually security checks might include retina scans, fingerprint and heartbeat analysis.

Disruptive change

Square's new payment services will be available Monday in New York, San Francisco, Washington, St. Louis and Los Angeles.

The company claims to have shipped over half a million of its credit card readers (which connect to iPhones and iPads, as well as some other devices) and that it expects to process its millionth transaction this month.

As I said, Square has entered a market expected in future to be dominated by NFC devices. Apple has been working away at NFC-based payment solutions, but appears to have taken its pedal off the metal on this, with some reports claiming lack of a standard NFC payment system has cooled Apple's ardor a little. Specifically, a standardized payment system is required, as is wide deployment of payment terminals.

Square has support from Visa, which lends weight to its NFC-free position. But, with Google, PayPal and all the world's banking groups also involved in developing mobile payment solutions, the question is if Square can rapidly exploit its first past the post status in order to ensure it controls a wide number of payment terminals, which, after all, can in future be upgraded to accept whichever form of NFC ends up becoming the industry champion.

Despite these challenges, this does mean that right now, today, your iPhone has become a wallet. All you need's an app, and your name.

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