It all started with a phone call Jack Dorsey received from a friend, a small business owner frustrated because he couldn't easily accept a credit card payment from a customer. Dorsey is not one to let opportunities pass him by. The co-founder of Twitter and two colleagues came up with a prototype for a mobile phone-based payment system.
Yesterday Dorsey unveiled "Square" -- via a tweet, of course. Square is just that, a really small plastic square that plugs into the headphone jack of an iPhone. Swipe a credit card through the device and the payment information is transmitted via an iPhone application. The product is now in beta; applications are expected to be available for the new Droid and Blackberry phones by early 2010.
The brilliance of Square is that it can work on any mobile device via an application, but no information is stored on the device. That's all done through a "person-to-person" payment system Dorsey designed from the ground up.
Dorsey tells GigaOM's Om Malik that Square is intended to be a service both to merchants and consumers. In fact, any consumer can become a merchant, since "Square owners are authenticated and attached to a bank account, much like PayPal." Dorsey offers the example of a Craigslist transaction: A buyer arrives to purchase a couch that may cost a few hundred dollars. Instead of the buyer carrying cash, he can pay the seller with a credit card through Square.
Om Malik sees Square as a potential game-changer in a world that increasingly depends on non-cash transactions:
The marriage of computing and connectivity without the shackles of being tethered to a location is one of the biggest disruptive forces of modern times. It is (and will continue) to redefine business models, for decades. Square is simply riding these waves."
Apparently others agree: Dorsey reportedly already has lined up investors who are putting $10 million into the San Francisco start-up. In this economy, that's something to tweet about.
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