At the time I wrote:
Square seems to be aiming at democratizing merchant card acceptance for physical face-to-face card transactions – a heretofore arcane marketplace that required folks like you and I to qualify for traditional merchant accounts from merchant card acquirers.
PayPal had essentially done that earlier – but for online ecommerce merchants. Square was intending to do it for physical world, face-to-face merchants – suitably equipped with iPhones (and, later, iPads).
At the time, many in the industry wondered about the approach that Square was taking and whether its merchant aggregation model would work in the real world. Those questions mostly revolved around the card network rules and how they might or might not accommodate this kind of innovation.
We now have a clear answer.
Today, Square announced that it had received a “strategic investment” from Visa. According to the Wall St. Journal, Visa’s John Partridge said in a statement that Visa “invests in payment innovations that can enable more businesses to accept Visa.” Today’s announcement followed on the heels of recent news about Square’s payment acceptance solution being distributed through Apple’s stores.
Square’s obviously on a roll – and the “democratization of payments acceptance” theme seems to be well established. For the card networks, good business based on the growth of branded volume is the name of the game. Innovators like Square – and its competitors including Intuit’s GoPayment – are all about expanding card usage and simply good business for a card network like Visa.
For a payments geek like me, it’s great fun to watch the winds of changes as they blow through the industry. On the one hand, innovators like Square are pushing the frontiers of making card-based payments easier and more convenient. On the other hand, we see the ratcheting up of requirements to better secure card-based payments going forward. Both are obviously important.
At the end of the day, it’s no longer about card network rules and “sacred cows”. It’s just about good business. And, about growing that good business whenever new technology and new business processes enable new solutions as is clearly the case with Square.
What do you think? Share your comments below, give me a call at +1.650.469.3421 or send me an email: firstname.lastname@example.org.