Twitter's chairman and one of its co-founders, Jack Dorsey, is launching a totally different company which could transform the way people buy things as much as Twitter transformed the way people communicate.
The company is called "Square" — it's a little plastic device that plugs into your iPhone and allows anyone to accept a credit card payment. (They're working on the applications for it to work from Blackberrys and other mobile devices).
It's remarkably simple — like PayPal on the go. The person getting paid plugs the black square into his or her iPhone and swipes the payers credit card through a slot. The last four digits and expiration date of the credit card show up, and the buyer signs his or her name with a finger. You can input your e-mail address or phone number to receive a receipt via e-mail or SMS.
Dorsey demoed his device for me on Power Lunch today, charging me three bucks, for which I promptly received a receipt. The system is now in Beta testing with a couple hundred customers and vendors as Square irons out security issues. The company has already made deals with all the major credit card companies — Dorsey says they're thrilled at the idea of getting access to all 22 million small businesses in the US, compared to the 6 million small businesses they service now. And now Square is ironing out the details to launch applications on devices other than just the iPhone.
As of now, the company plans to give the plastic device away for free starting next year, at retailers and when requested, through the mail. The business model will rely on taking a percentage of the transaction, just like credit cards.
This could really revolutionize the way small businesses take payments and use credit cards. Even at fancy boutiques, salespeople could take your payment for a dress or handbag right there on their mobile device without asking you to walk to the register. And forget about check books - this could be the new way people pay for couches from Craigslist or how friends settle the bill after dinner. We'll see how it all evolves—obviously security is of prime importance -- but if it all works as promised, it could take the revolutionary concept of PayPal to a whole new level.
Questions? Comments? MediaMoney@cnbc.com