Mobile payments have been around in Africa for years, mainly because there's no legacy systems to compete with, and the lack of a solid banking/payment processing industry has made growth occur unopposed.

Whereas the incumbent players in North America (most credit card and payment processing juggernauts) will most likely put up more of a fight against systems like Square.

There's a recent podcast about the mobile payment industry (http://www.cbc.ca/spark/2011/02/spark-139-february-27-march-...), check out the part about Mobile money in Kenya, and the Smartphone wallet.

Congratulations! The Square reader is one of the coolest things. I hope they come out with an API soon. I'd love to use square as my website's payment processor.

Out of curiosity, why would they do this? It'd be more expensive (you think any deals they have with CC companies will carry through to a new and crowded market?) and they'd have a lot of competitors.

One reason I can think of is high volume small transactions. Since the fee is flat percentage companies could get around the flat rate. This is problematic in settings where you are selling items for 1 or 2 dollars and the 15/30 cent fees eat up your margins.

I'm not entirely sure what the rates are for GC/Paypal but I'm sure you could manage a merchant account that gives you as good of a deal and is optimized for the web.

For instance, how many people will buy through "Square" online when they are so familiar with PayPal.

Huge congrats to the Square team on the milestone, though I suspect they've only scratched the surface.

It's just a matter of time before apple rolls out a platform for payments.

I'll go one step further and speculate that it's just a matter of time before Apple acquires Square as their payment platform moving forward (showcase at iPad 2 event was serious pub...)

I guess they acquire more than I thought they did : http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

From the square website I can't understand if square can be used by international users. There's nothing about that in the faq so I created my account but now I'm not able to create a new identity as it asks for a us address.

Edit: apparently they're working on it, great.

Correct me if I'm wrong, but when setting up an online business that accepts credit cards, you need a merchant account. Do you need something similar with Square? Or do they get around this somehow by keeping your funds in a paypal like account?

Square bypasses that, they deposit into the bank account every business day. There are some exceptions for larger transactions.

Other things to factor in: - fixed costs of rent, computer equipment for personnel - variable costs incurred by servers, power consumption, etc - manufacturing (and support) of the reader

Either way, $1m/day is impressive and I'm sure they're only getting started.

I'm pretty sure most of their 2.75% take is eaten up in fees.

You're absolutely right. The processor (in this case Square) takes the smallest portion of the 2.75% with Visa/Mastercard taking the second highest, and the largest portion (by a large margin) going to the issuing bank.

Here's an illustration: http://upload.wikimedia.org/wikipedia/commons/3/37/Gao-repor...

I agree with your tone...it is a great business they've worked themselves into. However, you are leaving out one major expense; I imagine they're paying the credit card companies between 1-1.5%.

Oh wow, I totally blanked on that - yeah agree. I'll edit that in because it blows my argument.

I suspect, however, that the cc terms will be nicer since, in theory, Square is opening up the market more than it's cannibalising it.

I'd love to see demographics on that... like who is using square - breakdown of average transaction size, merchant size, etc.

I think people would pay for that as well!