Well, MPW has been wrong before (but not often). In another amazing turn of events for the up and down start-up, Visa has backed Square, investing an unspecified amount in the mobile payments start-up founded by Twitter’s Jack Dorsey.
Square provides merchants with a piece of plastic that fits in to the headphone jack of Android-based handsets, iPhones and iPads, and acts as a card swipe for processing payments.
It has now secured the backing of card giant Visa, whose president told the Wall Street Journal that it “invests in payment innovations that can enable more businesses to accept Visa”.
Square competes with Intuit and Verifone, which offer similar products targeting the millions of small American merchants that do not accept credit cards.
Visa’s faith in the start-up comes shortly after Verifone launched a very public attack on its rival, posting an open letter and video slamming Square, accusing it of “serious security flaws” that put “consumers in dire risk” (MPW 161).
Meanwhile, a Swedish company called iZettle is planning to launch a similar system for turning iPhones into payment terminals and is already asking people to sign up for an invite. However, unlike its American counterparts, iZettle turns handsets into EMV, not mag-stripe, terminals.
Following the high-profile spat with rival VeriFone over its security credentials, Square is set to roll out new, encryption-capable, hardware.
VeriFone launched a public attack on its smaller rival in March over Square’s hardware which cannot encrypt card data. Square boss Jack Dorsey insisted VeriFone’s allegation was “not a fair or accurate claim” and the scuffle was generally viewed as a public relations loss for the aggressor.
However, Visa released a set of mobile acceptance best practices for merchants, software developers and device manufacturers. The guidelines say firms should “encrypt all account data including at the card-reader level and in transmission between the acceptance device and the processor – especially important given the use of wireless or public networks”.
Square COO Keith Rabois took to the Visa Security Summit Web site, writing a blog in which he says: “Of course, Square complies with all current industry standards, and we are committed to meeting or exceeding industry guidelines as they evolve – all while keeping our card reader free.”
Then, according to the StorefrontBacktalk site, Sam Quigley, security lead at Square confirmed at the Visa conference that the firm will begin rolling out an encrypting card reader this summer.