At lunch I was talking with my friend Bruce about this article that was in the paper today by David Pogue. On the one hand, this company called Square that has a little doo-dah that plugs into a mobile device could really transform payments and transactions between non-merchants, I thought the more stunning portion was the data on how much the credit card companies get at the point of the transaction (3%-4% of the value of the transaction plus a flat fee of 30 cents). So not only are the credit cards sticking it to people with cartoonish interest rates, they get the merchant on the front end.
Wow.
So you can read the article, but basically with this device, anyone can perform a credit card transaction (no sign up, no monthly fees) in exchange for giving up 2.75% and a 15 cent fee. So if you are at a yard sale and want to buy a mirror, you can just swipe your card on the phone of the seller and conduct the transaction with your credit card. VERY cool. It seems like this would spawn a variety of new software products and it could further reduce the amount of cash people use. I would think the percentage charged would be less, but that may come with volume. $2.90 received for every $100 spent is a LOT of money in any volume.
The article said that Apple declined to modify their phone to have a groove for credit cards, which is why this little slidey doo-dah has to be plugged, in but this sounds like such a great opportunity for Microsoft and their new Windows Phone 7 to have a major area of differentiation from the iPhone.
Fingers crossed.
-Ric
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