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Square Inc. began last week to take the wraps off its new cell phone payment system, according to CardLine Global sister publication American Banker. The company has been attracting attention in the blogosphere since May, when word first emerged that Jack Dorsey, better known for founding the popular Twitter Inc. microblogging service, was exploring a mobile phone payment technology. Square's Web site went live last week, and Dorsey gave interviews to the TechCrunch blog and the Los Angeles Times. TechCrunch described the introduction of the payment system as an ongoing "private beta." The Square system uses a cubical card reader that attaches to the audio jack of Apple Inc.'s iPhone. Though the product appears to be designed for merchants, Square's initial marketing push has focused primarily on how consumers can use it, sometimes even casting its device as a person-to-person payment system. Merchants, however, get little information from those articles or Square's Web site on how the device is set up or what it would cost. As such, observers have come to see the system as more flash than substance. They say Square ignores pertinent business details — such as whether it adheres to the Payment Card Industry Data Security Standard — to instead talk up Dorsey's success and the allure of the iPhone. "The play here that's interesting is: 'We have an app for that,' " says Brian Riley, a research director in the bank cards practice at the research firm TowerGroup in Needham, Mass., a unit of Corporate Executive Board Co. "But in the same token: Do you have a PCI-compliant app for that?" The PCI standard, which governs how companies must protect any payment data they handle, is no trivial concern, he says. The card brands can penalize companies that cannot show that the technology they use meets those guidelines. Square did not respond to repeated interview requests from American Banker. Riley says he attempted to sign up online with Square as a merchant, but all the Web site allowed him to do was join a mailing list. Providers of competing technology make it easier for merchants to sign up directly from their Web sites, he says.
