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.
