Twitter Co-Founder, Vivienne Tam Offer Device for Entrepreneurs and Retailers

Feb. 13, 2011 — -- When Brandon Arnovick was purchasing a credit card payments system last year for his cupcake bakery in San Francisco, he had not heard about a small device created by Twitter's co-founder that would later transform his business.

Called Square, the mini credit-card reader, slightly larger than a quarter, can attach to iPhones, iPads and Android devices to receive credit card payments.

Arnovick, owner of Mission Minis in the Mission District of San Francisco, said he had just received his credit card machine when he learned about the gadget.

"There was a cumbersome swipe thing with keypad and receipts," said Arnovick, whose store sells mini cupcakes for $1. "Literally when the stuff came in the mail I heard about Square."

Square, which plugs into a device's headphone jack, offers one pricing model to anyone who accepts a credit card payment, which is 2.75 percent of the total charge plus 15 cents per transaction. Square sends the money to your checking or savings bank account. It also tracks tips and taxes and sends receipts via text or e-mail.

He said he immediately went online to SquareUp.com and ordered a free card reader for his 550-square-foot store.

"Not only is Square great for our business, but it is for others. It makes things accessible for small operations, including someone selling things at a concert or fair, or for anyone else," Arnovick said. "I think it makes a lot of sense."

Since using his first Square reader in July, he has expanded its use with an iPad in the store. He is still paying for his three-year lease on the traditional credit card machine, which costs $40 to $60 per month plus potential per-charge fees, though he said he never removed it from its box.

Arnovick, who has 16 employees, said he plans to expand with additional locations in San Francisco and along the West Coast. He said he "definitely" expects to use Square readers in future stores.

Twitter co-founder Jack Dorsey said he hopes more entrepreneurs and retailers will use Square, much like Apple Store employees use mobile iPod Touch EasyPay systems.

"We have retail merchants using it as a full P.O.S. [point of sale] system," Dorsey said. "It's a full-end solution for businesses."

And Square is not only for business transactions, but for personal use also, said Dorsey. If friends owe you money, you can use the Square device and free app to swipe their credit cards on your mobile phone.

Square launched in December 2009 with 50,000 users but opened to the public at the end of last year. Square is now processing $2 -$10 million in transactions each week and adding more than 60,000 new merchants every month and accelerating, according to a company spokesperson. In January 2011, the company added about 65,000 accounts. The average transaction on Square is $80.

After several iterations, and delaying its early 2010 launch, Square seems to have dealt with initial security concerns.

When asked whether he had security concerns for using a new device with sensitive credit card data, Arnovick said he had none and was confident in using Square.

"I've talked to them a lot about it," said Arnovick, who also visited Square's facility in San Francisco. "They've done a lot with merchant accounts."

Credit card numbers, magnetic stripe data or security codes are not stored on Square client devices and card processing applications adhere to payment card security standards, according to the Square website. And like other merchants who accept credit card payments, Square merchants are still subject to chargebacks, a dispute initiated by the credit card holder to reverse a payment.