Entries in Square (5)


New Mobile Payment System Raises Security Concerns

iStockphoto/Thinkstock(NEW YORK) -- A new mobile phone payment system announced by 15 major retailers may change the way Americans pay for purchases, but security concerns could make the exchange a hard sell.

The retailers, which include 7-11, Best Buy, CVS, Publix, Walmart and 11 others, announced Tuesday that their Merchant Customer Exchange will allow customers to pay and receive deals at their stores, with more participating companies to be announced in the coming months.

The exchange hasn't released all the details of its new system, but a spokesman for the group said it will make "shopping less expensive."

The retailers account for $1 trillion sales, according to the exchange.

Other mobile payments systems allow users to input their credit card data into an app on their smart phones. Many merchants have scanners at checkouts which allow users to wave their smart phone with its identifying bar code or identification number to make purchases.

Previous breaches at the point of sale for TJ Maxx beginning in 2005 show how large and costly any problems with payment systems can be. TJ Maxx offered its affected 45.6 million customers who had their credit and debit information stolen credit monitoring and paid up to $24 million in a settlement with MasterCard. Michael's, which is a member of the new exchange, had its own security breach in 2011.

One concern is that consumers will expose their credit card data or personal information to crooks.

"Security is only as strong as the weakest link," said credit and cyber-security expert Adam Levin of "Humans are the weakest link. You may be able to take advantage of great deal but that requires storing information in your cell phone."

"If a cell phone is lost, or you have weak passwords, the danger is you are giving someone access to your information which they can use for themselves," Levin said.

Jeremy Mullman, a spokesman for the new exchange, said he could not get into its technical specifications at this point, but security is a "major consideration."

"We are very confident that we will have world-class security," he said.

Mullman said the new exchange is differentiated from the current mobile payments market, which include Google Wallet and Square, which is "right now very fragmented."

"We believe retailers understand shoppers better. It's their world. Those insights are built into this. We think mobile commerce has enormous potential. The solution has to be ubiquitously accepted."

Levin said the exchange is a "smart" move, but he said the credit card networks like Visa and MasterCard have the "best chance" at succeeding. "They have everything in place. It's just a matter of tinkering with their technology," he said.

Things will be easier for consumers, most likely, but Levin still has reservations, no matter who is running the show. "I always get concerned when you have the recurring question of convenience over security," he said.

Another concern is whether making it easier for consumers to pay for things will lead to financial disaster for individuals in a spending frenzy.

"During the meltdown of 2007 and 2008, there was real estate impulse buying. Everyone saw their shot at the American dream and went wild," he said. "When doing things without thinking or contemplating the ramifications, we run into trouble."

Copyright 2012 ABC News Radio


Starbucks Customers Can Soon Pay With Their Phones

Starbucks Corporation(SEATTLE) -- Caffeine addicts and baristas who work during the frenetic morning rush can now rejoice. Starbucks has announced a partnership with mobile-payment platform Square that will soon allow customers to use Square’s payer app to expedite the process.

Customers will be able to use “Pay with Square” at participating company-operated Starbucks stores, about 7,000 in the United States, “later this fall,” the Seattle-based coffee retailer said.

The premise of Square, which Twitter co-founder Jack Dorsey launched in December 2009, is that “everyone should be able to accept credit cards,” Dorsey wrote in a letter announcing the partnership.

The deal includes a $25 million investment by Starbucks and Starbucks CEO Howard Schultz will join Square’s board of directors.

The company, headquartered in San Francisco, offers users a free app and free Square Card Reader to swipe credit and debit cards. Square takes a 2.75 percent cut per card swipe. Manually entered card numbers cost 3.5 percent plus 15 cents per transaction.

Starbucks fans will also be able to find nearby Starbucks locations and other local businesses within the Square Directory on their cellphones.

With the Square app, available for Apple and Android devices, customers link their credit card to their Square account. When they checkout at a store, their name and photo can appear on the register and a cashier confirms it’s you to complete the sale, according to the Square website.

If Starbucks’ millions of customers download Square and actually use it to pay for coffee, Square hopes more small businesses will sign up and accept Square payments.

“More than 2 million individuals and businesses can already use Square,” Dorsey said in a statement. “This partnership will accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy.”

The two companies say more than two-thirds of the 27 million small businesses in the United States do not accept credit or debit cards, “in large part because of the expensive interchange fees associated with payment processing, cumbersome application process and required credit checks.”

“As an entrepreneur, I understand how critical it is for new businesses to have easy and affordable access to card processing while also giving customers a choice in how they pay," Schultz said. "Because Square’s revolutionary technology allows anyone to accept credit and debit cards, it gives entrepreneurs an essential tool to jump-start their business while providing existing small companies access to new customers.”

Copyright 2012 ABC News Radio


‘PayPal Here’ Turns Phones Into Credit Card Readers

ABC News(NEW YORK) -- You’re likely familiar with PayPal as an online payment system. The company’s logos are frequently found on eBay pages or on other websites. Click it and you can pay big or small retailers online via credit card or checking account.

But the equivalent of those online PayPal buttons are going to start showing up in the world outside of your computer screen. Or at least that’s the company’s mission.

“The mobile phone has revolutionized the way we shop,” PayPal’s director of communications Anuj Nayar told ABC News. “If you are making a purchase from your mobile phone in store, what sort of purchase is that? Is it an online purchase? The reality is it is all about multichannel retail.”

And multiple options are exactly PayPal’s strategy. The company has a number of solutions that allow consumers to use the service to pay away from the computer, but its newest one — PayPal Here — allows small merchants and independent sellers to take credit cards right on their phones.

The entire solution is based around a small triangle-shaped dongle, which plugs into an iPhone. When plugged into the headphone jack, sellers can swipe a customer’s credit card right along the top, and then process the payment on the phone using PayPal’s backend. The dongle is fully encrypted.

A companion app provides a place for the customer to confirm the transaction and sign. The same app allows the seller to invoice the buyer or record a cash transaction. While PayPal’s Internet services paved the way for small sellers to open up shop, the dongle and an iPhone now let small stores, street merchants and others to create a very mobile, electronic cash register.

If a merchant doesn’t have the new dongle they can use the app to just take a picture of the credit card. The little triangle itself doesn’t cost anything, but sellers are required to pay PayPal a flat rate of 2.7 percent on any transaction. PayPal Here will be rolling out soon to select small merchants. It will also be available for Android phones very soon, says Nayar.

Other companies, like Square, provide similar tools to sellers.

Copyright 2012 ABC News Radio


Select Salvation Army Bellringers to Accept Credit Cards This Year

Scott Olson/Getty Images(SAN FRANCISCO) -- The image is familiar: a bright red bucket and a Salvation Army volunteer ringing a powerful bell with a wooden handle, and coins clinking into the bucket.

From classic movies like Miracle on 34th Street and It's a Wonderful Life to modern favorites like TV's Friends, the red kettle is a symbol of giving during the holiday season.

The Salvation Army bellringer is now moving into the digital age with a new feature: Square.

Square is both the name of a product and the San Francisco-based company that produces it, co-founded by Jack Dorsey, the co-founder of Twitter. The postage-stamp-sized device connects to iPhones, iPad and Androids through the headphone jack and turns the gadget into a cashier with the ability to swipe credit cards and make secure payments through a free downloadable app.

The increasingly popular gadet is already being used around the country in food trucks, salons, pumpkin patches and even lawyers' offices.

And starting around Thanksgiving, 10 Salvation Army kettle volunteers in San Francisco, Dallas, Chicago and New York will be equipped with a Square in addition to their bell and kettle.

"We have to be aware of where consumers make transactions. Many people don't want to keep cash in their pockets and are working from credit or debit cards to make donations," Major George Hood, the National Community Relations and Development Secretary for the Salvation Army, told ABC News. "We think it's a way to stay in touch with the consumer who doesn't carry money in their pockets."

The Red Kettle Campaign began on a San Francisco wharf in 1891 when a Salvation Army officer was trying to find a unique way collect food for the needy during the holiday season. He put out a big pot and asked people to donate food, which they did, but he also noticed that people were throwing money in.

"It worked. And from that, it spread all across the country, from West to East," said Hood, who even recalls his own days as a 12-year-old schoolboy volunteering for the Salvation Army and collecting money outside of his local Sears.

Over the past 120 years, the practice has become a tradition and a pop culture standard. Now, the bellringer force is made up of more than 25,000 people each year.

In 2010, people tossed more than $142 million into the kettles, helping buy food, toys and other holiday necessitates for the needy. All of the money donated to local kettles stays in the community.

But Hood said that over the past decade, he began to notice "a transition from a traditional fundraising model to an electronic world and a digital model taking over."

The organization tried credit card terminals at the kettle stands, but found that people did not want to stand around, often in the cold, waiting for the process. But, last summer, Hood was introduced to Square and was instantly interested.

"We just said, 'This is so simple, we've got to try it at the kettle,'" he said. "We've gone from collecting from an old pot to state-of-the-art credit card reading technology."

Hood said he already has Salvation Army members all over the country calling and asking to be part of the move into the digital age, and he said there's a good chance expansion of the technique is in the organization's future.

Copyright 2011 ABC News Radio


No Need to Phone Home for Cash

Photo Courtesy - Getty Images(NEW YORK) -- Now you can use your iPhone, iPad, iPod Touch and Android to process credit card transactions.  The man behind Twitter, Jack Dorsey, has created something called Square which USA Today says he hopes will do for financial transactions what Twitter did for communication.

It involves a plug-in that allows your iPhone, iPad or other device to read credit card information.  There is a free application you can download that will get the consumer or merchant up and running with the new technology.  Merchants will pay 2.75% of the purchase price plus fifteen cents per card swipe.

Its not the first effort at using cellphones and other digital devices as payment mechanisms.  PayPal and Intuit's GoPayment have been doing it for a while, but experts say there's plenty of room in the market for more. 

Copyright 2010 ABC News Radio

ABC News Radio