Mobile Commerce Meets iPad

At press event in San Francisco, Calif., on Monday, mobile commerce company Square launched two new mobile applications designed to make mobile commerce easier and more accessible than ever before.

Square Register is an iPad app--available for download today--that facilitates retail checkout, sales tracking, and customer communication. Square Register allows merchants to use an iPad instead of a cash register or credit card terminal.

"We think that this obsoletes credit terminals and cash registers," said Square CEO Jack Dorsey at the press event. "Those are a thing of the past."

A consumer-oriented app for both iPhone and Android users called Card Case complements the Square Register merchant app. Card Case stores virtual merchant-branded information cards that enable and promote local commerce. Think of Card Case as a virtual wallet populated with virtual credit cards, each associated with a particular vendor.

Dorsey likens these information cards to opening a tab at bar: They provide an easy way to return to the seller and charge another item. In essence, these cards combine loyalty cards with a local commerce angle.

For merchants, Dorsey's value proposition goes beyond reducing the friction of commerce. The Square system provides immediate access to useful business metrics.

"It gives you data," said Dorsey. "Every single merchant that uses the Square Register has Google-style analytics for everything they do. They can easily answer the question, 'How many cappuccinos did I sell today?'"

The cost to merchants is a 2.75% transaction fee for swiped credit cards or 3.5% + 15 for credit card numbers entered manually.

Square Register and Card Case include: access to a location-based Directory, which provides merchants with a way to publish information about their business that Card Case users can discover; a Menu feature, for publishing menus, items, and specials to customers; and Tabs, a one-click payment mechanism.

IDC analyst Aaron McPherson expressed skepticism that Square's system will be widely adopted because it requires both the merchant and consumer to have the right software installed. "It's a closed system where both the merchant and consumer have to get involved," he said. "But to the extent this can work purely in software using the mobile network as a communication channel, Square has an advantage."

McPherson said he hoped Square would work to integrate its system with a PC-based point-of-sale system. "The iPad as a tablet is very hard to secure," he said. "People might just rip them off counters."

Square was founded in 2009 by Jack Dorsey, one of three co-founders of Twitter, and Jim McKelvey. The company launched its free, portable credit card reader for the iPhone and Android phones in early 2010. To date, the company says it has delivered 500,000 of credit card readers, resulting in over a million transactions in May. Based on current usage, the company projects $1 billion in annualized gross payment volume.

Businesses that wish to participate in Card Case can apply online; there are presently 50 authorized Square merchants in Los Angeles, New York, St. Louis, San Francisco, and Washington, DC where consumers can have their Card Case accounts activated. An Android version of Card Case is expected to be available shortly.

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