Wireless Payments{Comments Off on Wireless Payments}


by Jana K
Wireless Payments – paying with the ‘Square’ iPhone credit card reader

Carrying cash around is becoming more and more unpopular – the trend is towards using credit or debit cards payments when going on all kind of daily errands. The Payments Council, a British organisation that sets strategy for payments in the UK, even announced that “cash is no longer King”. After having observed payment trends in the UK between 1999 and 2009, they came to the conclusion that the number of payments made by cash decreased from 79% to 59% (The Times, 2010). As opposed to this, the usage of plastic money increases worldwide. Today cards payments are used in 50% of all consumer purchases in the US, compared to 36% in 2003 (Eichenbaum & Collins, 2010).

With that said, it can be really annoying for customers and clients when they cannot use their plastic money for settling a bill because there is no credit card reader available. This can happen if businesses offer their services at unusual places where a common credit card reader can not be set up for technical reasons or when such costly devices exceed the company’s budget.  Examples are companies selling products during events at variously and shifting places, like during concerts or fairs, etc.

A newly developed device called ‘Square’ can help out in such situations and enable businesses and businessmen to accept credit and debit card payments in literally every place at any time: ‘Square’, the invention of an American software designer named Jack Dorsay, is a payment processing system that enables people to accept credit card payments with their iPhone (Kharif, 2010).

How does the device work?

The device is a small magnetic credit card reader that is attachable to the audio jack of the iPhone. It reads the data saved on the credit card and transforms this information into an audio signal. The microphone of the iPhone recognizes the transformed audio file and forwards it to the processors and to the Square software app, which has to be installed previously. To complete the process the encrypted information is transmitted via Internet connection to back-end servers which correspond with payment networks. To start the payment process as such there are a few steps to take: First you have to launch the Square application on the iPhone and type in the amount of invoice. The next step is to swipe the card reader. After the authorization the amount for payment will be displayed your iPhone together with a signature field. Now you have to sign, using your fingertip as a pen. Finally, confirm with ‘continue’ and the credit card is going to be charged. The customer will be supplied with a receipt of the payment via e-mail (Honan, 2010).

What are the advantages of the Square Card Reader and how does it improve business?

The aim of the card reader is to reduce tethered mode of practice. The small card reader can be used immediately when needed. This is really beneficial for small businesses and people who operate not always at the same place but rather on the move and at switching places. For instance for entrepreneurs who are selling products at events such as fairs the card reader is a very useful tool because the company can make additional profit by selling products outside their usual shops and offices (Mobile Credit Card Processing, 2010).

Another aspect is saving money. When using the common wired card readers provided by the banks, high fees apply. In contrast, users of the Square Car Reader can benefit from lower costs: The fees charged for each credit card transaction are much lower than those typically applied by the banks and there are no monthly base fees. In addition, hardware costs are as low as one dollar (Square Credit Card Reader, 2010). However, an Internet connection is required for using Square.

Conclusion

In conclusion, especially small businesses and companies who want to sell their products beyond their regular stores – at events or on the road – can benefit from this mobile technology. Besides, companies can increase customer satisfaction, because this convenient payment method saves time as it takes only a minute to carry out the charging process. In my opinion, another reason for the high relevance of this device is the booming of smart phones such as the iPhone: Those mobile workstations are replacing gradually spatially limited offices and are increasingly used for business and transactions. Therefore the Square Card Reader is an important supplement to augment the features of the popular iPhone.

References

http://www.timesonline.co.uk/tol/money/consumer_affairs/article7096843.ece
http://www.bloomberg.com/news/2010-08-02/at-t-verizon-said-to-target-visa-mastercard-with-smartphones.html
http://www.wired.com/reviews/2010/02/pr_square_iphone
http://www.businessweek.com/technology/content/may2010/tc20100516_101609_page_2.htm
http://bizroom.net/265/mobile-credit-card-processing-helps-improve-customer-satisfaction/
http://www.intomobile.com/2010/10/24/square-credit-card-reader-is-now-a-go/

Jana Knab