Mobile Payments: What Verizon's iPhone Means for Square

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Verizon Wireless
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Verizon Wireless

Today's announcement that Verizon will carry the iPhone is good news for Square and the rest of the mobile payments market as well as small businesses.

Square CEO Jack Dorsey (he's also Chairman and a co-founder of Twitter) says the Verizon news will drive iPhone sales, which means more people will be able to accept credit cards on their mobile devices. This could be a game changer for small businesses — accepting credit cards becomes affordable and allows them to track sales data.

Just yesterday Square raised $27.5 million dollars — will use the money to hire more engineers and spread the news about what Square can do. The company gives away the Square devices for free — you plug them into the earphone jack on your mobile phone. Look out for a big marketing push — the company's going to spend to educate consumers and merchants to go to to request a free device.

Square's metrics so far are impressive — it launched in October and is already conducting millions of dollars of transactions a week and adding about fifty thousand new merchants each month.

But the company is up against some serious competition. Intuit, which makes Quicken, QuickBooks and Turbo Tax accounting software this month launched a free version of its GoPayment service, which also helps small businesses accept credit cards. Intuit's GoPayment system is pretty similar to Square's — it's a magnetic stripe reader that plugs into smart phones that connects to a mobile app. Until now GoPayment has charged a $13 monthly fee, plus up to $219 for the card readers. Now that GoPayment is eliminating those upfront costs, that could pose a threat to Square.

But Dorsey says he's not concerned—they're focusing on their simple design and interface. His goal is to make it easier than anyone else for merchants to sign up for their system without requiring complicated account registration.

We'll see whether small businesses allegiance to Intuit's Quicken and QuickBooks will make the bar higher for Square.

Questions? Comments?