The modern credit card began in the 1950’s as a way for affluent diners at high-end restaurants to keep a tab and be billed for their patronage. The Diner’s Card was a small, ID sized card that an individual could present at participating dining establishments in exchange for their meals. There was no interest rate associated with the card; it was simply an easy way for frequent restaurant visitors to pay for their dining experience.
Fast forward 60 years and today’s credit cards serve a much different purpose for the typical American. Many people prefer to pay for everything with a credit card, from food, gas and even their rent if they can get away with it.
Because of this dramatic shift in consumer purchasing behaviour, the payment processing industry has become ripe with competition and new innovators. One of the newest entries into the field is a company called Square, and they were founded by one of the masterminds behind Twitter, Jack Dorsey.
Square Up is a revolutionary new product that allows an individual or business to swipe and process credit cards directly on their iPhone or Android phone. Square offers a free attachment that plugs into the device’s headphone jack, and is no bigger than a silver dollar. The fee for using this device is 2.75% when swiping a card, and the funds can be deposited in the owner’s bank account in as little as 24 hours.
What makes this product so interesting is that almost anyone can sign up for it. You do not have to have a business account or be processing a certain amount of credit cards each month. In fact, there are no fees associated with the account besides the swipe or key in fee when processing an actual transaction. That means you will only pay when it is actually used.
Accepting a credit card payment from a friend or family member may seem a little strange for many, and truthfully it does for me to. But then again, so did sending money via email with PayPal back in the late 90’s. What this product does is show that consumer payment behavior is changing and we should expect to see more of this is the future.
Companies like Google are also getting further into the payment-processing world as part of a new partnership with Citibank. The two companies are working on a device with a near-field communication chip embedded which will allow consumers to use their smartphone as a credit card.